US Senate postpones vote on debt ceiling as deadline looms

Published on, by Spencer Kimball and David Levitz, July 30, 2011.

In Washington, Democrats and Republicans remain deadlocked in the race to avoid a new economic crisis. After Democrats killed a Republican plan, they must now find a compromise to avert a debt default … //

… Edging toward default:

The US Treasury has said that it will not be able to meet all its obligations and could risk an unprecedented default on loans, triggering a downgrade of US credit ratings, unless Congress passes an increase in the debt limit by Tuesday. 

The federal debt limit currently stands at $14.3 trillion (10 billion euros).

The Republicans, especially their ultra-conservative Tea Party faction, want to slash federal spending before agreeing to raise the debt ceiling. Boehner’s bill would have raised the debt limit by $900 billion in two phases this year.

However, Obama wants a higher cap so that the US can borrow enough funds to keep it running through the end of next year. Obama has argued that another round of negotiations would be impractical ahead of 2012 elections.

A failure by Congress to meet its August 2 deadline could trigger a payment crunch that would rock the global financial system and could send the US into a new recession. The US Treasury says it is already working out an emergency plan for how the government would function if it did miss the deadline. (full text).

(My comment: best and quickest way to finish a hated system: let it die by itself, by its own stupidity).

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