Obama hails debt talks progress

19 July 2011 Last updated at 20:01 GMT Mr Obama urged Republican and Democratic congressional leaders to start "talking turkey" US President Barack Obama has cited "some progress" in debt talks, with the US at the "11th hour" before a deadline to raise the nation's debt ceiling.

At the White House, Mr Obama hailed a plan by a group of senators to cut the budget deficit and raise the limit.

And he urged congressional leaders to put aside "symbolic gestures" and begin writing legislation.

The US risks default on its debt if Congress does not raise the debt limit before 2 August.

'Talk turkey'

At the White House, Mr Obama said a proposal had been put forward on Tuesday by a bipartisan "gang of six" senators.

The group has been meeting on and off in recent months in an effort to craft a plan to reduce the US government's $1.5tn (£928bn) annual budget deficit.

Mr Obama said the proposal was "consistent" with a plan the White House had been urging, and called on leaders in the House and Senate from both parties to start "talking turkey".

Continue reading the main story US government owes itself $4.6tnRemaining $9.7tn owed to investorsThey include banks, pension funds, individual investors, and state/local/foreign governments China: $1.16tn, Japan: $0.91tn, UK: $0.35tnDeficit is annual difference between spending and revenue, $1.29tn in 2010Congress has voted to raise the US debt limit 10 times since 2001

Source: US Treasury, May 2011, Congressional Research Service, Congressional Budget Office

"We don't have any more time to engage in symbolic gestures. We don't have any more time to posture," Mr Obama said. "It's time to get down to the business of actually solving this problem."

The plan was reported to include a mix of new revenues and cuts to military and social spending that in total would cut the budget deficit by about $3.7tn over the next 10 years.

Mr Obama said in particular that the plan would broadly share the "sacrifice" across the political spectrum, with both Democrats and Republicans ceding on some of their policy priorities.

'Cut, cap, balance'

There have been sticking points on both sides of the political divide in recent months.

Continue reading the main story

Uncharted territory but two scenarios emerge

Worst case:

Higher interest rates on mortgages, credit cards and loansGovernment unable to pay wages to staff, including militarySocial security cheques stoppedTurmoil on international markets

Better case:

Default could be avoided by paying creditors, at expense of slashing spending

Sources: Associated Press, CBS, ABC

Republicans have been unwilling to consider raising new tax revenues to counter the growing budget deficits, while the Democrats have been opposed to cutting popular healthcare and welfare programmes for pensioners and the poor.

Meanwhile, on Tuesday the Republican-controlled House of Representatives was set to vote on a so-called "cut, cap and balance" resolution.

That would impose severe and immediate spending cuts, cap future government spending at a certain percentage of the national economy, and call for an amendment to the US constitution to require Congress to pass a balanced budget.

If the bill is passed by the House, it has no chance of passing the Senate, which the Democrats narrowly control. Mr Obama has said he would veto any law if it were eventually passed.