US inches ahead but deal still elusive

Washington: The White House and the Republicans are painstakingly edging towards a deal to stave off a disastrous US debt default and to end a partial government shutdown now set to hit the two-week mark.

US President Barack Obama met Republican senators and spoke by phone with Republican House Speaker John Boehner on Friday, as subordinates haggled over the terms of an eventual truce to the stand-off.

''We are obviously in a better place than we were a few days ago in terms of the constructive approach we have seen,'' White House spokesman Jay Carney said. ''But there is not an agreement.''

The main principles of a compromise emerged in public statements from both sides. It will include a temporary, or more permanent, extension to US borrowing authority - without which Washington could begin to default on its obligations for the first time in history after Thursday.

The government, shuttered since October 1, will be fully reopened, possibly on an interim basis, and there will be some kind of commitment from both sides to work towards an elusive deal to tackle the deficit, rein in spending and possibly to reform social programs and some aspects of the tax code.

Late in the day, Mr Obama and Mr Boehner, long-time foes who have often struggled to close deals, had what both sides said was a constructive conversation. But there were signs the White House was driving a hard bargain, as Mr Carney said a rise in the debt ceiling could not be linked to long-term fiscal talks with the Republicans, because it could set up repeated threats of default.


The White House had said it would be open to a six-week extension of the debt ceiling after Thursday.

It now appears to be looking for an extension of borrowing authority from the $US16.7 trillion ($17.6 trillion) level for a longer duration.

Republicans from the lower house offered to talk to Mr Obama about a short-term resolution to fund the government, then move to long-term budget and fiscal talks. But the President insists he will not negotiate until the debt ceiling is raised and the government is reopened.

Republican senators emerged from talks with Mr Obama and told reporters they were optimistic.

Republican senator Lindsey Graham was ''confident that in the next 24 to 48 hours the House will produce a continuing resolution that will allow the government to be open in total''. But Senate Majority Leader Harry Reid indicated that the Democrats were driving a hard bargain.

The Senate was due to vote on a 15-month extension of the debt ceiling on Saturday, until after next year's mid-term congressional elections.

We are obviously in a better place than we were.

While the measure is unlikely to become law because it needs House support, it could provide a template for an eventual solution in the event of a longer-term fiscal deal between Mr Obama and the Republicans.

If the US debt ceiling is not raised by Thursday, Treasury would run out of money and could begin defaulting on US obligations for the first time, with possible dire consequences for the world economy.