(Reuters) - Wall Street futures fell and the dollar dropped as Washington appeared no closer to raising the debt ceiling in order to avert a devastating default.
S&P 500 futures fell at the open of electronic trading as investors grew increasingly worried at the lack of progress. The benchmark S&P was down 1 percent, or 14 points, to 1326.00.
Early currency trading suggested a move away from the dollar, with the biggest drop in the greenback coming against the Swiss franc. In early Asian trading, the dollar dropped to 0.8121 against the Swiss franc, down 0.7 percent.
The decline in futures points to a poor open for U.S. markets.
White House officials and Republican leaders scrambled on Sunday to reassure global markets the United States would avert a debt default, but the two sides were still not close to a deal. House Speaker John Boehner told fellow Republicans on a conference call that a large-scale debt deal was not possible with President Barack Obama.
Sunday, July 24, 2011
Stock futures, dollar fall on no debt deal | Reuters
Boehner: GOP ready to act alone on debt deal - Yahoo! News
WASHINGTON (AP) — With bipartisan debt-limit talks deadlocked, House Republicans and Senate Democrats readied rival emergency fallback plans Sunday in hopes of reassuring world financial markets the U.S. government will avoid an unprecedented default.
In a conference call, Speaker John Boehner summoned his conservative rank and file to swing behind a "new measure" that could clear both houses of Congress.
"It won't be 'Cut, Cap and Balance' as we passed it," he said, referring to a measure — killed in the Senate on Friday — that would have required spending cuts of an estimated $6 trillion as well as congressional approval of a constitutional balanced budget amendment for ratification by the states.
The new approach is "going to require some of you to make some sacrifices," he added, according to a person familiar with his remarks.
Separately, President Barack Obama invited the two top congressional Democrats to a highly unusual White House meeting Sunday evening.
One of them, Senate Majority Leader Harry Reid, was at work on a Democratic fallback measure, too.
Without congressional action by Aug. 2, the Treasury will be unable to pay all its bills, risking a default that could have severe consequences for the U.S. economy and the world's, too.
Details of the rival plans were sketchy.
Republican officials said Boehner envisioned an increase in the nation's debt limit by $1 trillion and slightly more than that in federal spending cuts, with the promise of additional progress on both sides of the ledger if Congress could agree.
Democratic officials said Reid was at work on legislation to raise the government's debt limit by $2.4 trillion — enough to assure no recurrence of the current crisis until 2013 — and reduce spending by slightly more.
They said that plan envisioned no higher taxes.
Administration officials have stopped just short of promising to veto the approach Boehner outlined. Obama has also said for months any bill must include higher revenue.
The White House was largely consigned to a spectator's role on a weekend that began with Boehner's decision to call off talks with Obama.
But the president arranged an early evening meeting with Reid and House Democratic leader Nancy Pelosi.
Asked earlier what the administration's plan was to avoid default, Treasury Secretary Timothy Geithner said, "Our plan is to get Congress to raise the debt ceiling on time."
The state of play veered between bipartisanship and brinkmanship on an issue of immense economic consequences.
Despite hours of compromise talks in the Capitol, lawmakers' aides had so far been unable to agree on a two-step plan that would satisfy Obama's demand for a large enough increase in the debt limit to tide the Treasury over until after the 2012 elections.
Interviewed on Fox, Boehner said, "I would prefer to have a bipartisan approach to solve this problem. If that is not possible, I and my Republican colleagues in the House are prepared to move on our own."
He arranged to brief the Republican rank and file on a conference call late in the day.
It was unclear when Reid would disclose details of his own plan.
The officials who described the rival fallback plans spoke on condition of anonymity, citing the sensitivity of the issue.
Boehner's plan, still under negotiation on Capitol Hill, is intended to get the nation beyond this crisis and snag enough votes from House Republicans who won't raise the debt limit without spending cuts, too.
Deeper and more complex reductions in the nation's deficits would be part of the deal, but under later timelines.
White House chief of staff William Daley said Obama was insisting that any package must expand the debt ceiling beyond the next presidential and congressional elections and into 2013 to provide economic certainty. Daley said anything short of that would be a gimmick and prompt the world to say: "These people just can't get their act together."
White House and congressional leaders talked past each other on the Sunday TV shows as negotiations unfolded in secrecy.
"There will be a two-stage process. It's just not physically possible to do all of this in one step," Boehner said. "I know the president is worried about his next election. But, my God, shouldn't he be worried about the country?"
Republican leaders called their rank and file back to Washington earlier than expected for the new work week and set a mid-afternoon Monday meeting to go over the debt-limit legislation.
With an eye on the financial markets, Geithner insisted anew the United States would not default.
"It's just unthinkable," Geithner said. "We never do that. It's not going to happen."
The debt deal-making has consumed Washington for weeks and has put on display a government that at times risks utter dysfunction.
Even after talks about between Obama and Boehner broke down in spectacular fashion Friday, Geithner said the two men were still negotiating.
He also suggested the ambitious framework the two leaders had discussed, targeting a deficit reduction of $4 trillion, remained under consideration.
"I don't know. It may be pretty hard to put Humpty Dumpty back together again," Boehner said of that grand plan. "But my last offer is still out there. I have never taken my last offer off of the table and they never agreed to my last offer."
That last offer included $800 billion in new tax revenues as part of a broad overhaul that would lower tax rates. Obama wanted $400 billion more in tax revenue for deficit reduction to help balance out the spending cuts. Or, if not that, a reduction in some of the proposed cuts being discussed to entitlement programs such as Medicare.
The talks halted primarily over that issue and over how to ensure that both parties kept their reform promises in the months ahead.
Any plan must get through the Democratic-run Senate, where Majority Leader Reid has called a short-term debt limit expansion unacceptable.
Obama's role looms, too.
Asked if Obama would veto a plan that did not extend the government's borrowing authority into 2013, Daley said, "Yes."
One key Republican lawmaker scoffed.
"I think that's a ridiculous position because that's what he's going to get presented with," said Sen. Tom Coburn, R-Okla.
Under any scenario, Washington's leaders have run themselves almost out of time.
It will take days to move legislation through Congress. A default could cause catastrophic damage to the standing and the economy of the United States.
Daley said, in fact, the consequences are already taking hold.
"I don't think there's any question there's been enormous damage done to our creditworthiness around the world," Daley said.
Boehner appeared on "Fox News Sunday." Geithner was on Fox, ABC's "This Week" and CNN's "State of the Union." Daley and Coburn spoke on NBC's "Meet the Press," and Daley also appeared on CBS' "Face the Nation."
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Associated Press writers David Espo, Alan Fram and Nedra Pickler contributed to this report.
Jeb Bush doesn't 'anticipate' a run - Maggie Haberman
Jeb Bush, who has made clear he isn't running for president this cycle, raised some eyebrows on Sean Hannity's Fox News show Friday night with this comment about a potential campaign:
"I don’t anticipate that. You never say never. This is a standard answer that I’ve kind of learned how to give which is — you never say never, but I never rule out being on Dancing with the Stars either … there are a lot of ways you can make a difference."
He went on, with respect to whether any of the current field can win, "If you recall, my dad in 1992 had an approval rating that was double what President Obama has right now and he was running against the seven dwarfs I think. … And one of those dwarfs became president … dwarf, you know President Clinton, so the notion that somehow these aren’t folks that are capable of winning I just think is ridiculous. These are good people."
They're also, per Bush, "capable. They’ve made the all-in commitment and this yearning for something else is very flattering for someone if you’re that someone else. But in reality I think this race, we have qualified candidates and as it gets closer to the primaries to the caucuses and primaries, I think people will begin to see the mettle of the men and women that are running."
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Debt Talks Impasse Leads To Market Fears : NPR
The opening of financial markets in East Asia is causing anxiety in official Washington and beyond. The concern is that a Friday night breakdown in talks between President Obama and House Speaker John Boehner on raising the debt ceiling may have negative repercussions when trading gets under way.
More meetings took place all day Saturday, first at the White House, then at the Capitol, seeking that elusive bipartisan deal.
The four top congressional leaders all showed up at the White House for a late Saturday morning meeting convened by President Obama; they all avoided contact with reporters afterward. The White House put out a statement reiterating Obama's opposition to a short-term extension of the debt ceiling, saying it would cause the country's credit rating to be downgraded. It was likely in response to reports that such a short-term deal had been floated at the meeting by the two Republican leaders, Senate Minority Leader Mitch McConnell and Boehner.
McConnell released a statement saying only that the bipartisan congressional leadership was committed to working on new legislation to prevent default. Late in the afternoon, Boehner hosted a meeting in his office, flanked by McConnell and Senate Majority Leader Harry Reid on his right and House Minority Leader Nancy Pelosi on his left. During a brief photo-op, Boehner blithely ignored reporters' questions.
The two Democrats in the meeting, Reid and Pelosi, had just released a statement saying they opposed any short-term fix for the debt ceiling crisis. The two emerged from the meeting nearly an hour later stony-faced and silent. Aides reported they were at an impasse and had no plans for further meetings. Boehner had earlier told fellow House Republicans in a conference call that he hoped to be able to issue what he called a "framework for progress" before the Asian markets opened. The sticking point appears to be the Republican leaders' insistence on a short-term deal to raise the debt ceiling. At the White House Friday evening, just after talks with Boehner had collapsed, Obama made clear he wanted to raise the debt ceiling high enough not to have to do it again before voters go to the polls next year.
"They can come up with any plans that they want, and bring them up here, and we will work on them," he said. "The only bottom line that I have is that we have to extend this debt ceiling through the next election, into 2013."
Boehner aligned himself with the president's stance on that issue when asked about it at the news conference he held Friday evening.
"I'm not really interested in a short-term increase in the debt limit," he said. "I believe that we have two challenges, that we have to increase the debt limit and we have to deal with our deficit and our debt."
But Boehner also made clear he was not backing down on the two conditions he's insisted on for raising the debt ceiling.
"Spending cuts ... must be greater than the increase in the debt limit, and no tax increases," he said.
In other words, all spending cuts and no new taxes to reduce deficits — an approach Obama and Democratic leaders say they cannot agree to. Still, the president said Friday he trusts the debt ceiling will be raised by the deadline a week from Tuesday.
"I am confident simply because I cannot believe that Congress would end up being that irresponsible that they would not send a package that avoids a self-inflicted wound to the economy at a time when things are so difficult," he said.
Boehner was similarly confident:
"No one wants to default on the full faith and credit of the United States government and I'm convinced that we will not," he said.
If that's to happen, a deal to raise the debt ceiling may have to be reached no later than Monday for Congress to enact it by the Aug. 2 deadline.
