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Congress scrambles for debt deal

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WASHINGTON — Congress will struggle to hammer out a deficit deal and assure investors before Asian markets open that the United States can avert a catastrophic default and hold onto its prized credit rating.

Congressional staff planned to work through the night after President Barack Obama told lawmakers in an emergency White House meeting to find a way to lift the $14,3 trillion limit on US borrowing that would allow the world’s largest economy to pay its bills past next year’s November election.

But new acrimony flared late Saturday on Capitol Hill over that timetable, adding to the difficulties facing negotiators who have been at impasse for weeks over the role of taxes in any deficit reduction plan.

An aide to Republican leaders said lawmakers were working on a plan for $3 trillion to $4 trillion in savings over 10 years, but another high-ranking Republican official said no numbers had been set.

It was not clear if this package contained additional tax revenue alongside cuts in government spending, as Obama has demanded.

Republican leaders wanted “to show progress” by 4pm EDT (2000 GMT) yesterday, before financial market trading gets under way in Asia, and have legislation to unveil today.

“Congressional leaders are working in good faith with the goal of having something to present to their members,” a second Republican aide said.

The United States will run out of funds to service its debt on August 2 if Congress does not approve additional borrowing.

Republicans have insisted the White House agree to deep spending cuts for long-term deficit reduction before they approve any increase in America’s debt burden.

Negotiations toward that agreement have whipsawed for weeks, finally hitting a brick wall over taxes, one of the most ideologically divisive issues in US politics.

A Democratic aide said Republicans were pushing a package that raised the debt limit and cut spending in two steps, while Democrats want a single deal to cover borrowing through 2012.

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