WASHINGTON |
WASHINGTON (Reuters) - House of Representatives Speaker John Boehner on Sunday prodded President Barack Obama to take action on spending cuts while Obama warned congressional failure to raise the debt limit could lead to a worse financial crisis than 2008-09.
Boehner said he is ready to make a deal on raising the debt ceiling but he and fellow Republicans warned of dire consequences to the U.S. economy if the debt limit is not linked to spending cuts and deficit reduction.
"I'm ready to cut the deal today. You know, we don't have to wait until the 11th hour," Boehner said on CBS's "Face the Nation."
He questioned whether Obama was serious about deficit reduction.
"He's talking about it. But I'm not seeing real action yet," Boehner said.
The Treasury Department is expected to hit its $14.3 trillion borrowing limit on Monday, making it unable to access bond markets again.
Republican leaders say they will not approve a further increase in borrowing authority without steps to keep debt under control.
The Treasury Department says it can stave off default until August 2 by drawing on other sources of money to pay its bills.
The department's leeway to manage the debt ceiling issue for another few months has created a sense in Washington that any deal is far off.
In remarks recorded last week and broadcast by CBS News on Sunday, Obama repeated his stance that Republicans should not link the debt ceiling decision to spending cuts as part of deficit-reducing measures.
"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system," Obama said at a CBS News town-hall meeting.
"We could have a worse recession than we already had, a worse financial crisis than we already had."
Top Republicans emphasized that increasing the debt limit must go hand-in-hand with spending cuts.
"The whole reason we're running into the debt limit so soon is because of the spending spree that has occurred over the last two years," Republican House Budget Committee Chairman Paul Ryan said on CNN's "State of the Union."
The White House and congressional Republicans are locked in a debate over the deficit and the debt ceiling.
Vice President Joe Biden is leading talks between the White House and lawmakers on how to reduce the massive U.S. budget deficits and raise the credit limit. He told reporters on Thursday that progress was being made but it was too early to be optimistic about a deal.
"We need to impress the markets, impress foreign countries that we're going to get our act together, and astonish the American people that the adults are in charge in Washington and are actually going to deal with this issue," Senate Republican Leader Mitch McConnell said on CNN's "State of the Union."
A report from the think tank Third Way to be released on Monday outlined the potential consequences should lawmakers and the White House fail to reach a deal on the debt ceiling.
It said a debt default could plunge the United States back into recession, with some 640,000 U.S. jobs vanishing, stocks falling and lending activity stalling.
(Additional reporting by Lucia Mutikani and Andy Sullivan; Editing by Bill Trott)
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