Under a plan proposed by the leader of the Democratic majority in the Senate, Harry Reid, leader of Republican senators, Mitch McConnell, Obama would get expanded powers to increase the borrowing capacity of the government together would be put in place measures that could lead to cuts in federal spending.
Senator McConnell said that officials would continue to negotiate in the coming days.
An official at the White House said that congressional leaders would consult their colleagues on the backbench budget cuts and tax increases proposed so far by either party. They said that negotiators would meet probably during the weekend.
The day’s discussions were overshadowed by the warning by the chairman of the Federal Reserve issued on Thursday. Ben Bernanke, testifying before Congress, warned politicians that their inability to agree on raising the debt ceiling on time would mean the “mutilation” for the economy, by increasing interest rates and slowing the fragile economic recovery.
It is not known very well at the moment when MM. Reid and McConnell publicly unveil their bill, or if he will want to first present their ideas to President Obama or other officials involved in the daily meetings at the White House.
Mr McConnell said that the participants in Thursday’s meeting did not discuss his plan. The meeting lasted less than 90 minutes.
Threads are blocked because of a disagreement on possible tax increases that would be part of any eventual agreement to control the deficit. Obama and the Democrats want higher taxes, while Republicans oppose it.
The U.S. reached last May, the legal ceiling of government debt, set at 14,300 billion dollars. The Obama administration says the government can no longer meet its obligations and will end up in default if the borrowing government is not relieved by August 2.