US & Canada

US debt: Boehner tells Republicans to 'fall in line'

A man dressed as a Captain America protested against an increase in the debt limit
Image caption In Washington, conservative Tea Party protesters rallied against any raising of the debt limit at all

Speaker John Boehner is urging Republicans in the House of Representatives to back his plan to cut the US budget and raise the debt limit.

Mr Boehner's appeal to conservative House Republicans came despite a White House veto threat and rejection from Democratic leaders in the Senate.

Wall Street suffered its worst day in two months, as fears mounted the US would fail to authorise more borrowing.

The US risks default if the debt limit is not raised by 2 August.

The federal government runs a budget deficit that topped $1.5tn (£920bn) earlier this year, and has amassed a national debt of $14.3tn.

Mr Boehner's plan would trim $917bn from the US budget deficit over 10 years and would raise the debt limit by up to $900bn.

'Get in line'

Lawmakers have been locked in weeks of bitter negotiations over raising the US borrowing limit by the deadline of 2 August.

The US treasury department has said it will no longer be able to borrow money on that date, and analysts say soon after that it will be unable to pay all of its bills.

The Dow Jones Industrial Average ended the day down 1.59%. The broader S&P 500 index lost 2.03%, while the tech-heavy Nasdaq closed down 2.65%.

In recent decades, the US Congress has increased the government's borrowing authority dozens of times as a matter of routine, but this year conservative Republicans have demanded steep cuts to the budget deficit as the price of an increase.

Meanwhile, Senate Democrats are holding back on a vote to pass their own plan - more than twice the size of Mr Boehner's.

But the 51 Senate Democrats and two independents who vote alongside them released a letter on Wednesday promising to vote against the Boehner plan. The White House has also said President Barack Obama's senior advisers would recommend he veto it.

Top among Democrats' objections is the fact the Boehner plan would only increase the debt limit for about six months, leaving the prospect of another all-consuming debt fight in the 2012 election year.

On Wednesday, Mr Boehner and his lieutenants met restive members of the House rank and file - including some who oppose lifting the debt limit under any circumstances - to persuade them to back his plan.

"Get your ass in line," Mr Boehner was quoted as saying.

He has promised to hold a vote on his plan on Thursday.

The Democrats' plan would cut $2.2tn from deficits over the next decade, about $500bn less than had been claimed. It would raise the debt ceiling by $2.7tn.

No 'off-ramps'

Democratic Senate Leader Harry Reid of Nevada has not said when his bill may reach the Senate for a vote.

At the White House on Wednesday, spokesman Jay Carney warned time was quickly running out to reach a compromise on the US debt limit.

"That deadline is hard and fast," Mr Carney said of next Tuesday's expiry date on the debt ceiling.

"People keep looking for off-ramps. They don't exist," he added.

Mr Carney criticised Mr Boehner for scheduling a vote on his plan despite the White House's express rejection.

"Why are we voting on measures that have no chance of becoming law?" he asked during a news conference.

Budget demand 'bizarro'

Mr Reid said the Boehner plan was "a big wet kiss for the right wing", and Mr Obama has said he will not sign a short-term deal.

Also, in a new twist that analysts say illustrates the discord among the Republican party, Republican Senator John McCain, the party's 2008 presidential nominee, took to the Senate floor to criticise House Republicans who continue to push for a balanced budget amendment to the US constitution as the price of raising the debt ceiling.

A balanced budget amendment - which would require the US government to hold down spending to a certain percentage of gross domestic product and run in the black - was already rejected by the Senate and by Mr Obama.

Mr McCain called the demands "foolish" and "bizarro" and said they were "deceiving many of our constituents" and blamed them on newly elected House members' inexperience.

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