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Obama warns of 'deep crisis' is US defaults

US President Barack Obama speaks in a prime-time address to the nation from the East Room of the White House in Washington, 25 July 2011.
US President Barack Obama speaks in a prime-time address to the nation from the East Room of the White House in Washington, 25 July 2011. Reuters/Jim Watson

President Barack Obama and Republican House Speaker John Boehner have blamed each other for the stalemate over the US debt crisis, as a default deadline looms on the horizon.

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In a televised address on Monday night, eight days before the United States begins to run out of money to pay its bills, Obama called the weeks-long debt talks deadlock "a dangerous game" that the country "cannot afford to play".

He blamed the stalemate on Republicans' refusal to raise the 14.3 trillion USD debt ceiling unless deep spending cuts are made without raising taxes for the wealthy, whilst the Democrats wish to protect social programmes for the poor and elderly.

Failure to compromise, Obama said in his speech from the White House,
"would risk sparking a deep economic crisis - one caused almost entirely by
Washington."

Rejecting a Republican proposal for a temporary increase in the debt limit, he argued that the underlying problem would remain unresolved and lead to a repeat of the current crisis in six months' time.

The Republican leader in Congress, John Boehner, responded with a late-night speech of his own, blaming Obama for the crisis and accusing the president of seeking a "blank cheque".

Boehner - who has flatly rejected Obama's call for tax hikes on the rich and on wealthy corporations -is proposing a two-step plan with increases first to February or March 2012, and later to 2013.

The US risks default without a deal to raise the borrowing limit by 2 August.

 

 

 

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