A Republican deficit reduction plan headed to a lock vote in Congress on Thursday and the White House urged divided lawmakers to clinch a compromise agreement to head off the risk of a debt default by the world's largest economy.
President Barack Obama's priority was to "lift the cloud and create sure that the United States does not default," White House spokesman Jay Carney said, five days earlier than an August 2 deadline for raising the government's borrowing limit.Partisan deadlock among Republicans and Democrats over how best to reduce the U.S. deficit, and over what period, has barren an agreement so far to allow the raising of the $14.3 trillion debt ceiling.
A failure to raise the debt limit by August 2 could trigger a crippling defaulting that would shake the global financial system and might tip the United States back into recession.While most analysts hope a default will be avoid by an eleventh-hour deal, the risk remains for a destructive downgrade of the United States' top-notch credit rating, a move about that would raise U.S. borrowing costs and rattle global investors.
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