SNAPSHOT-Developments in U.S. debt talks

WASHINGTON, July 20 Wed Jul 20, 2011 3:10pm EDT

Related Topics

WASHINGTON, July 20 (Reuters) - Here is the status on Wednesday in negotiations to raise the U.S. government's $14.3 trillion debt limit by Aug. 2 and avoid a U.S. credit default.

* President Barack Obama is set to meet separately in the afternoon with Democratic and Republican leaders. Obama also is likely make a case for a comprehensive deficit reduction package in a number of interviews with radio and television stations that are set to air starting at 5 p.m. EDT (2100 GMT).

* The White House shifts gears and signals that Obama could support a short-term credit limit extension to provide time to consider a long-term deficit reduction deal. This comes a day after Obama embraces a $3.7 trillion deficit reduction plan offered by the bipartisan "Gang of Six" senators.

* Investors welcome signs lawmakers are moving closer to an agreement on raising the debt limit. But a realization that it will take time for Congress to pass any long-term deficit reduction plan helps push 30-year Treasury bond prices down on Wednesday after they surged higher on Tuesday.

* The Senate later this week hopes to take up a fallback plan to raise the debt limit. It is based on a proposal first offered by Senate Republican leader Mitch McConnell that would allow Obama to raise the debt ceiling and leave it to Congress to block the move, which the president could then veto. Senate Democratic leader Harry Reid has been working with McConnell to include some spending cuts.

* Reid is looking to see if elements of the Gang of Six deficit reduction package can be included in debt ceiling legislation.

* House of Representatives Republican leaders say they like parts of the Gang of Six plan such as lowering income tax rates, which would be paid for by closing loopholes and limiting special interest tax breaks, but question whether the numbers add up. They say they want to see a greater effort to rein in health spending.

* A House-passed Republican plan to "cut, cap and balance" the budget heads to the Democratic-led Senate where it faces certain rejection. Democratic opponents say the bill's goals would require deep cuts to the Social Security retirement program as well as Medicare and Medicaid health programs for the elderly and poor. (Reporting by Donna Smith and Andy Sullivan; Editing by Eric Beech)

FILED UNDER: