Last Updated: Mon Jul 25, 2011 17:29 pm (KSA) 14:29 pm (GMT)

Congress fails to reach debt agreement; Hillary Clinton tells Asian leaders that Obama is ‘confident’ over US debt deal

U.S. Secretary of State Hilary Clinton speaks during a luncheon organized by the American Chamber of Commerce at Island Shangri-La in Hong Kong. (File Photo)
U.S. Secretary of State Hilary Clinton speaks during a luncheon organized by the American Chamber of Commerce at Island Shangri-La in Hong Kong. (File Photo)

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: dina.ibrahim@mbc.net)

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