July 28, 2011 / 1:19 PM / 8 years ago

Snapshot: What is happening in the U.S. debt crisis

WASHINGTON (Reuters) - Here is what is happening on Thursday as lawmakers try 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:

* The House of Representatives delays vote on a Republican plan proposed by Speaker John Boehner to raise the debt ceiling in a two-step process that links any borrowing increase with spending cuts. Boehner struggles to round up votes in Republican-controlled House. House vote now expected Thursday night at the earliest.

* House Democrats say they will vote against the Boehner plan and it faces certain defeat in Democratic-led Senate even if House passes it.

* Boehner, in a morning closed-door session with Republicans, urges them to back his bill. Wavering lawmakers get resounding cheers as they stand up to say they will support it. A number of Republicans announce their support, but Boehner appears to be shy of the 217 needed for passage. He can afford to lose only 23 Republican votes.

* The chief Republican vote counter, Kevin McCarthy, declines to say whether the Boehner bill has enough votes to pass. “We’re moving in the right direction. This conference has moved a great deal in a short amount of time,” McCarthy says.

* The top Democratic House vote counter, Steny Hoyer, predicts his party will vote unanimously against the bill.

* White House spokesman Jay Carney calls Boehner’s proposal a “political act” that would not pass the Senate. Carney urges lawmakers to work out a compromise.

* Democratic Senate leader Harry Reid plans a quick vote in the Senate on the Boehner plan if it passes the House. “It will be defeated” in the Senate, Reid says.

* Investors are nervous about the impasse and are watching developments closely. U.S. stocks finished down 0.5 percent as uncertainty about whether lawmakers will reach an agreement weighs on the market. Gold, a safe haven investment, firms.

* International Monetary Fund Managing Director Christine Lagarde says in a television interview that failure to raise the debt limit could lead to drop in U.S. dollar’s value, erode confidence in the currency and raise doubts about its use as a reserve currency.

* Ratings agency Standard & Poor’s, which has warned it may cut the top-notch U.S. rating if a deal on raising the debt ceiling is not accompanied by a credible plan to cut the deficit, says a deficit reduction plan that promises $4 trillion in savings would be a “good down payment.”

* Chief executives from the largest U.S. financial firms send a letter calling on the White House and Congress to reach a deal on the debt ceiling and deficit reduction, saying the consequences of inaction “would be very grave.”

Reporting by Deborah Charles and Donna Smith; Editing by Peter Cooney

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