As US lawmakers were failing to break the country’s debt impasse, US Secretary of State Hillary Rodham Clinton said Monday that she was “confident” that lawmakers will reach a deal to avert a US debt default.
The US lawmakers reaching a debt deal would have meaningfully cut the nation’s budget deficit, which threatens to reduce the nation’s coveted triple-A credit rating, trigger a default and up-end global financial markets.
As the White House and top lawmakers were scrambling to reach a deal to avoid a disastrous default on the country’s debt, the top US diplomat, who made the remarks in a prepared speech addressing business leaders in Hong Kong, said according to excerpts of the speech released in advance that:
“The political wrangling in Washington is intense right now. But these debates have been a constant in our political life since before the founding of our republic.”
“I am confident that Congress will secure a deal on the debt ceiling and work with President Obama to take steps to improve our long-term fiscal outlook,” she added.
Democrats and Republicans have been sparring over a measure to raise the $14.3 trillion US debt ceiling, allowing Washington to pay its bills past an August 2 deadline, while cutting $2.7 trillion in spending over 10 years.
The lawmakers’ lapse on their self-imposed deadline to produce an agreement by the time Asian markets opened for the new week but they will still plan to outline to produce a deal on Monday.
While analysts still expect a last-minute deal to raise the US debt ceiling and avoid a default next week, it seems unlikely that Democrats and Republicans will agree before the next election in November 2012 how to find $4 trillion through government spending cuts and revenue increases.
Moody’s, Standard & Poor’s and Fitch have said they will downgrade the US credit rating if failure to raise the nation’s $14.3 trillion debt ceiling leaves the Treasury without cash to service its debt obligations in August.
After US failure to reach a debt deal, stocks slipped while the Swiss franc rose, gold hit a record high, and oil dwindled $1 on concerns US default may cut the black gold demand.
The ratings agencies have said the top-notch US rating will only be safe if they see a credible plan from Congress and President Barack Obama to address the country’s growing debt burden.
(Dina Al-Shibeeb, a senior editor at Al Arabiya English, can be reached at: firstname.lastname@example.org)