The US lawmakers are racing against the time to finalise a last minute deal that will raise the government’s borrowing limit by $2.8 trillion (£1.7 trillion) and avoid an impending default that may push the global economy back to recession.
The democratic leadership delayed a vote by 12 hours to hike the debt ceiling, raising hopes that the Republicans and Democrats could finally reach an agreement behind closed doors after being locked in a stalemate for weeks.
Harry Reid, the Senate Democratic leader will get more breathing space finalising his own legislative proposal to increase US borrowing authority more acceptable to the Republicans. Senate Minority Leader Mitch McConnell, a Republican, said he was optimistic and confident.
“I think we’ve got a chance of getting there,” McConnell said.
There was “still a distance to go”, Reid said indicating difficulties still remain. “There are negotiations going on at the White House now on a solution that will avert a catastrophic default on the nation’s debt,” Reid said on late Saturday on the Senate floor.
The Democrats and the Republicans have agreed on establishing a joint congressional committee to save roughly $1,500 billion in savings and another $1,000 billion in spending cuts.
“There are negotiations going on at the White House now on a solution that will avert a catastrophic default on the nation’s debt,” said the number 2 Democrat in the Senate late on Saturday.
The political deadlock over cutting budget deficit and raising the nation’s debt limit has pushed the US towards a possible default for the first time in history, while the country is also at risk of losing its top notch triple-A ratings.
The global economy and financial markets may witness turmoil if the US defaults. Nervous investors pulled out money last week and US stock markets witnessed this year’s worst fall, while the dollar slumped.
“Our country is not going to default for the first time in its history, that’s not going to happen,” McConnell said exuding confidence for a last-minute compromise deal.