Washington
(AFP) - Hopes rose for a breakthrough in the political impasse
crippling Washington after "constructive" talks between President Barack
Obama and top Republicans on a short-term fix to stave off a debt
default.
Washington (AFP) - Hopes rose for a breakthrough in the
political impasse crippling Washington after "constructive" talks
between President Barack Obama and top Republicans on a short-term fix
to stave off a debt default.
After days of deadlock, Republicans
proposed a six-week extension of US borrowing authority in return for an
agreement by Obama to negotiate on a budget that would restart federal
operations, which halted on October 1.
Talk of a possible deal
sparked optimism on Wall Street, with the Dow Jones Industrial Average
gaining more than 300 points or 2.2 percent, and the tech-heavy Nasdaq
exchange was also up over two percent.
The White House said
Thursday that Obama would be open to a short-term debt ceiling hike to
avoid the United States defaulting on its debts after an October 17
deadline.
But aides said he would prefer a longer term extension
and would not accept any measure which contained partisan conditions to
hold him to "ransom."
The president also wants Republicans to pass
a temporary budget to reopen the government, bringing hundreds of
thousands of federal workers back to their desks, before he gets into
detailed budget negotiations.
Obama
sat down for 90 minutes at the White House with House Republican
leaders, who quickly returned to Capitol Hill where second-in-command
Eric Cantor offered an upbeat report on the talks, despite no deal yet
being struck.
"It was a very useful meeting, we had a constructive
conversation," Cantor told reporters, adding that both sides would
consult aides and continue discussions later on Thursday evening.
The
White House was more measured, making clear that Obama was still
seeking a deal that would both reopen the government and extend the debt
ceiling.
"After a discussion about potential paths forward, no specific determination was made," a statement said.
"The President looks forward to making continued progress with members on both sides of the aisle."
House
Budget Committee chairman Paul Ryan, the Republican vice presidential
nominee in 2012 and a key figure in any upcoming deal on broader fiscal
issues, sounded encouraged that the two sides were into the nitty-gritty
of negotiations, even though the meeting was inconclusive.
"He didn't say no, he didn't say yes," Ryan said of Obama's reaction to the Republican offer.
Senate Republicans are due to meet with Obama Friday.
"There is a light at the end of the tunnel here," Republican Senator Rob Portman said.
The
maneuvering appeared to indicate that both sides were seeking an exit
to the crisis, particularly with Republicans bound to be feeling the
heat from Americans fed up with the impasse.
A new NBC News/Wall
Street Journal poll Thursday showed that a large majority of Americans
-- 63 percent -- say they believe failure to raise the debt ceiling
would pose "a real and serious problem," compared to just 15 percent who
said it would not.
If there is no extension to the debt ceiling
by October 17, the Treasury would run out of money and could begin
defaulting on US obligations for the first time in history.
Before Obama met Republicans, he huddled with top Senate Democrats.
Asked
whether he would negotiate with Republicans to open the government,
Senate Majority leader Harry Reid replied "not going to happen" and
indicated Obama shared his view.
Earlier, Treasury Secretary Jacob Lew warned that a US default would cause economic chaos.
"If
Congress fails to meet its responsibility, it could be deeply damaging
to the financial markets, the ongoing economic recovery, and the jobs
and savings of millions of Americans," Lew told the Senate Finance
Committee.
Other countries were closely watching the unfolding crisis, fearful of reverberations in their economies.
Gang
Yi, deputy governor of China's Central Bank warned that Washington
should have the "wisdom" to overcome the gridlock as soon as possible.
"The
market doesn't like uncertainty and we watch that drama very closely,"
he said, speaking in a CNN-hosted panel discussion on the sidelines of
the IMF/World Bank annual meetings in Washington.
China is the largest foreign holder of US government debt.
IMF
chief Christine Lagarde said a six to eight week temporary debt limit
extension would be welcome but "much longer would be a lot better" for
the world economy.
Haruhiko Kuroda, governor of the Bank of Japan, said in New York meanwhile that he did not expect a US debt default.
Obama
has said he is willing to talk to Republicans on a long-term budget
deal and other fiscal issues, but only when government is reopened and
the debt ceiling is lifted.
Republican lawmakers said reaction in their caucus to House Speaker John Boehner's plan was mixed.
"What
the speaker is trying to do is just to get this man to sit down and
talk to us," congressman Lou Barletta told AFP, referring to Obama.
Washington (AFP) - Hopes rose for a breakthrough in the
political impasse crippling Washington after "constructive" talks
between President Barack Obama and top Republicans on a short-term fix
to stave off a debt default.
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