July 19, 2011 / 5:05 AM / 8 years ago

SNAPSHOT-Developments in U.S. debt talks

WASHINGTON, July 19 (Reuters) - Here is what is happening on Tuesday 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 says there is no more time for political posturing or symbolic gestures. He throws his support behind a deficit-reduction plan proposed by the “Gang of Six” bipartisan group of senators. Obama, a Democrat, says he wants congressional leaders to continue talks with him on a comprehensive deficit reduction package.

* The Gang of Six senators offer $3.75 trillion in budget savings that include both spending cuts and tax increases. The proposal could help break the congressional impasse over deficit reduction.

* The House of Representatives is set to vote on the Republican “cut, cap and balance” plan that calls for immediate spending cuts and capping the level of federal spending at a percentage of the economy — 18 percent by 2021. The largely symbolic measure sets the stage for the Republican-controlled House to consider an amendment to the U.S. Constitution requiring a balanced federal budget.

* House Speaker John Boehner, a Republican, says at a news conference that a backup plan needs to be considered to raise the debt ceiling by an Aug. 2 deadline when the government is expected to run out of money to pay its bills.

* 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.

* Assistant Senate Republican leader Jon Kyl says he expects a version of the McConnell plan to pass the Senate. Senate Democratic Leader Harry Reid has been working with McConnell to include some required spending cuts.

* Investors are nervous about whether lawmakers will avoid default and raise the U.S. credit limit. But the Gang of Six plan and Obama’s support helped safe-haven gold to retreat below $1,600 an ounce and U.S. stock indices to recover from losses on Monday. (Reporting by Donna Smith)

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