Obama rejects stopgap in favor of major debt reform (2)

15:30, July 12, 2011      

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Obama told reporters he would meet with this group of lawmakers every day until they ink a deal.

He said the top priority for this administration was to put the economy back on track and people back to work, adding that debt reduction should be carried out in a balanced way to facilitate investment in key industries and boost job creation.

With U.S. economic growth losing steam and the unemployment rate at a stubbornly high level, many economists say the nation should make efforts to boost investment and job creation in the short term and improve fiscal sustainability over the long run.

Obama warned he would not sign a short-term, stop-gap solution to raise the debt ceiling, saying the United States could not threaten its credit and economic prosperity on a debt default.

With the debt default deadline approaching, some Republicans suggested a stopgap debt ceiling be worked out to give both parties more time for negotiations, but Obama was strongly against this approach.

U.S. House Speaker John Boehner on Saturday rejected a 4-trillion-dollar deficit reduction deal put forward by Obama, saying it was more realistic to pursue a "smaller measure". But even a smaller deal would involve tax hikes, which Republicans want off the negotiation table, according to officials familiar with the talks.

Obama urged lawmakers to ditch entrenched partisanship and do a deal in a timely manner, adding there could be no debt reduction deal if Republicans failed to compromise on tax increases.

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