World fears the U.S. default, Obama warns

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Deadlock?Barack ObamaPHOTO: AP
Deadlock?Barack ObamaPHOTO: AP

President Barack Obama warned on Tuesday that world leaders were nervous Republicans would “blow up” the U.S. economy, and vowed not to budge on his demand for the debt ceiling to be lifted without conditions.

But House Speaker John Boehner insisted there would be no “unconditional surrender” from Republicans and said Congress would only allow more U.S. borrowing if Obama agrees to cut spending.

There was, however, one glimmer of hope for progress in the bitter showdown. Obama said that, if necessary, he would accept a short-term deal to raise borrowing and reopen the government — a move that would effectively postpone the crisis for a number of weeks.

But the president was adamant that he would not compromise on his refusal to cede ideological concessions to Republicans in return for receiving more authority to borrow money to finance U.S. obligations. “I’m not budging when it comes to the full faith and credit of the United States,” Obama said.

If the $16.7 trillion debt ceiling is not raised by October 17, the United States will be unable to borrow more money and will begin defaulting on its obligations, in a scenario that could tip the economy back into recession and trigger global chaos.AFP



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