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Late stab at debt-limit deal to avert US default

By David Espo

Associated Press

Published: Saturday, July 30 2011 3:50 p.m. MDT

House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., appear at a news conference as the debt crisis goes unresolved on Capitol Hill in Washington, Saturday, July 30, 2011.

Harry Hamburg, Associated Press

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WASHINGTON — After weeks of intense partisanship, the White House and congressional leaders made a desperate, last-minute stab at compromise Saturday to avoid the government default threatened for early next week. "There is very little time," declared President Barack Obama.

Obama met with top Democrats at the White House and spoke by phone with Senate Republican leader Mitch McConnell.

"He needs to indicate what he will sign, and we are in those discussions," McConnell said of the president. He added he had also spoken with Vice President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default.

"We have until midnight," said Senate Democratic leader Harry Reid before leaving for the White House. That meeting lasted about 90 minutes. Reid's talk of a midnight deadline referred to the Senate's complicated rules, which can require multiple votes over several days to pass legislation.

The president is seeking an agreement to raise the government's $14.3 trillion debt limit by enough to tide the Treasury over until after the 2012 elections. He has threatened to veto any legislation that would allow a recurrence of the current crisis before early 2013 but has agreed to Republican demands that deficits be cut — without tax increases — in exchange for additional U.S. borrowing authority.

At a news conference in the Capitol, Speaker John Boehner said that despite the partisanship of recent weeks, "I think we're dealing with reasonable, responsible people who want this crisis to end as quickly as possible and I'm confident it will."

Halfway around the world, on a visit to Camp Leatherneck in Afghanistan, the nation's top military officer fielded questions from troops asking if they would be paid in the event of a default.

"I actually don't know the answer to that question," said Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, although he told them they would continue to go to work each day.

Without a compromise in place by next Tuesday, administration officials say the Treasury will run out of funds to pay all the nation's bills. They say a subsequent default could prove catastrophic for the U.S. economy and send shockwaves around the world. With financial markets closed for the weekend, lawmakers had a little breathing room, but not much. Asian markets begin opening for the new work week when it is late Sunday afternoon in the capital.

To get to the endgame, Republicans and Democrats had to go through the formality of killing each other's bills — scoring their own political points — before they could turn to meaningful negotiations. Given all the acrimony, the shape of any deal was uncertain.

Still, the sudden talk of compromise contrasted sharply with the day's earlier developments as both the House and Senate convened for unusual Saturday sessions.

The House voted down legislation drafted by Democrat Reid to raise the government's debt limit by $2.4 trillion and cut spending by the same amount.

The vote was 246-173, mostly along party lines and after debate filled with harsh, partisan remarks .

Within minutes, White House officials disclosed the meeting with Reid and Pelosi.

Before the House vote, Republicans said the Reid spending-cuts plan was filled with gimmicks and would make unacceptable reductions in Pentagon accounts. "It offers no real solutions to the out-of-control spending problems," said Rep. Alan Nunnelee of Mississippi, part of a group of 87 first-term Republicans who have led the push for deeper spending cuts.

Not even Democrats seemed to like the legislation very much, although many emerged from a closed-door meeting of the rank and file saying they would vote for it.

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