WASHINGTON (Reuters) - Here is what is happening on Friday as lawmakers scramble to close in on a deal for Congress to raise the U.S. government’s $14.3 trillion borrowing limit by an August 2 deadline and avoid a debt default:
* President Barack Obama says in a televised statement that if the United States loses its AAA credit rating it won’t be because the country can’t pay its bills. It would be “because we didn’t have an AAA political system to match our AAA credit rating.” He urges the public to let lawmakers know they want a bipartisan compromise that can pass Congress.
* Senate Majority Leader Harry Reid says time is running out and he will start Senate action on a compromise debt and deficit plan backed by Democrats. He calls on Senate Republican leader Mitch McConnell to work with him on a compromise. Reid says a short-term debt limit extension is unacceptable. The Senate could vote early Sunday morning.
* McConnell accuses Democrats of trying to round up opposition to the House Republican plan to “keep this crisis alive.”
* House of Representatives Speaker John Boehner retools his proposal to raise the debt ceiling in two stages to attract more support from conservative Republicans. The reworked plan calls for spending cuts and a short-term debt limit hike. The main change is a provision linking an additional increase in the debt ceiling to passage by both the House and Senate of a balanced budget amendment to the Constitution. The House narrowly passes the Boehner proposal in a partisan 218-210 vote on Friday evening. No Democrats voted for it.
* Senator Charles Schumer, a member of the Democratic leadership, said the balanced budget requirement “will guarantee a default” and that it was “an absurd, absurd proposition.”
* The U.S. Treasury is preparing an emergency plan for how the government would function and pay its obligations if Congress fails to raise the government’s borrowing authority. Treasury officials say they will provide more information on their plans as the August 2 deadline draws near.
* The Treasury is due to announce next week its borrowing needs for the current quarter and its plans for selling debt to meet those needs. The uncertainty over the debt ceiling could jeopardize the plan. Treasury officials met with primary-market dealers and a Treasury official says dealers agree Congress should act quickly and raise the debt limit for as long as possible.
* Investors are growing increasingly alarmed by U.S. lawmakers’ inability to reach accord on the debt ceiling and are watching developments in Washington closely. U.S. stock prices remain weak.
Reporting by Donna Smith; editing by Chris Wilson