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Kicking the deficit-cutting can down the road to Election Day

Business Times - 19 Jul 2011


Kicking the deficit-cutting can down the road to Election Day

Both US parties need to find a way to square the debt-ceiling circle through some legislative trick and political gimmicks

By LEON HADAR
WASHINGTON CORRESPONDENT

US President Barack 'No-Drama' Obama tends to refrain from employing hyperbolic language in discussing policy issues. But last Friday, he was close to sounding apocalyptic. 'Let's avert Armageddon', was the way he addressed the American people during another press conference on the debt-ceiling negotiations.

Unless Republican and Democratic lawmakers raise the current debt limit of US$14.29 trillion by Aug 2, America would plunge towards what could be described as 'Debtmageddon'. The federal government would not be able to pay back its loans or gain access to new ones, leading to soaring interest rates, igniting a financial meltdown and bringing to a halt the fragile economic recovery.

Two major plans to avert this…