U.S. debt ceiling talks stall despite Moody's warning

14:09, July 14, 2011      

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U.S. President Barack Obama's debt ceiling negotiations with congressional leaders were still in a deadlock Wednesday, despite a credit downgrade warning from the rating agency Moody's.

It was the fourth straight day that Obama hosted the talks with congressional leaders to avert a looming default crisis.

Moody's Investors Service warned it was placing the U.S. top-notch debt rating on a downgrade watch, prompted by prospects that the U.S. debt limit won't be raised in time to prevent a default. This put even more pressure on the bipartisan negotiations.

The borrowing limit, currently at 14.29 trillion U.S. dollars, was reached on May 16. The U.S. Treasury Department warned the world's largest economy would default without an agreement to lift the limit by Aug. 2.

U.S. Federal Reserve Chairman Ben Bernanke, when giving testimony to Congress, said a U.S. debt default would spark a major crisis and have global economic repercussions.

Republican House Speaker John Boehner told reporters that he hadn't been able to get commitments from the president and Democrats on scaling back entitlement spending. "Dealing with them the last couple months has been like dealing with Jell-O," he said.

Republican lawmakers have put forward a balanced-budget amendment to the Constitution, a measure many Republicans believe would force the White House to balance its budget.

But White House spokesman Jay Carney said there is no need for such an amendment, as this practice amounted to "ducking responsibility" rather than tackling challenges.

"What we need to do here is not complicated," Carney said, adding it requires leaders of both parties to work out a compromise to achieve a significant deficit reduction deal.

However, Obama didn't succeed in wringing concessions out of Republicans to strike a deal of raising the federal government's borrowing capacity.

Obama will meet the group of congressional leaders Thursday afternoon to search for a deal to stave off an unprecedented default crisis.

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