Berita Unik Seputar Dunia: US debt limit: Rival plans unveiled as deadline nears

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House Speaker Boehner (left) and President Obama have been unable to agree on federal spending

Senate Democrats and House Republicans have unveiled competing plans to cut the US budget deficit and raise its debt limit to avoid a default.

The Democrats' plan would trim $2.7tn (1.66tn) over a decade and the Republicans' would trim $1.2tr – but also cut programmes for the poor and elderly popular among Democrats.

Neither plan would raise new revenue.

The US risks default on its $14.3tn (8.7tn) debt without a deal to raise the borrowing limit by 2 August.

Democratic President Barack Obama and Republican and Democratic leaders of the House and Senate have been engaged for weeks in intense protracted negotiations over legislation to raise the debt ceiling.

But talks have foundered over the details of ways to trim the US budget deficit in tandem with raising the debt ceiling.

The talks have broken down several times. In order to become law, any plan would require agreement from disparate factions within both parties and to pass both chambers of Congress.

In Monday's latest round of bargaining, Senate Democratic Whip Chuck Schumer of New York introduced a plan to trim agriculture subsidies and housing programmes. However, the plan would protect health programmes for the elderly and the poor and the Social Security pension scheme.

"This is an offer that Republicans can't refuse," Mr Schumer told reporters about the Senate Democrats' plan.

Republicans had agreed to all those cuts at one point or another during the protracted budget and debt limit negotiations, he said.

"If they refuse this offer it simply means they want a default."

That plan would increase the US debt limit enough to give the government borrowing authority through 2012.

The Senate Democrats' plan won immediate endorsement from the White House, which called it "a reasonable approach that should receive the support of both parties."

Meanwhile, Republican House Speaker John Boehner was expected to unveil his own plan later on Monday.

Aides said Mr Boehner's plan included $1.2tn (736tn) in cuts and spending caps and offered a $1tn debt ceiling increase.

It would also include a second debt limit increase through 2012 contingent on cuts in the health programmes for the poor and elderly, and would not include new revenues, reports said.

Competing plans

In a sign of the growing urgency and concern in global financial markets, the International Monetary Fund (IMF) on Monday called on the US government to act urgently to raise the debt ceiling and for a "comprehensive solution" to reduce the US deficit over the medium term.

Without this, IMF directors warned, the markets could lose confidence in Washington's ability to pay its debts.

"These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets," the IMF said.

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Hillary Clinton says she is sure Congress "will do the right thing"

It went on to call for specific actions to reduce spending saying: "The strategy should include entitlement reforms, including additional savings in healthcare, as well as revenue increases."

But, warning that US growth was likely to remain subdued over the medium term, the IMF advised against fast cuts which could impact on consumer spending.

President Obama meanwhile pulled out of two fundraising events in Washington scheduled for Monday evening so that he could focus on the debt issue.

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He told a Hispanic civil rights convention earlier in the day that the US could not solve its budget problem solely by reducing spending, in a riposte to Republicans who have vigorously opposed raising taxes.

"We can't just close our deficit by cutting spending," Mr Obama said, adding that revenue increases were also necessary.

Global markets were down slightly on Monday amid concerns about a lack of a deal as the 2 August deadline looms.

If the ceiling is not raised, the US Treasury could run out of money to pay all of its bills – which could lead to interest rate rises, threaten the US economy and in turn the global recovery.

US Secretary of State Hillary Clinton has said she is "confident" Congress will reach a deal to raise the US debt ceiling.

"Let me assure you we understand the stakes. We know how important this is for us and how important it is for you," Mrs Clinton told Hong Kong business leaders.

Mr Obama was joined by congressional leaders at the White House again on Saturday, but the deadlock continued.

On Friday, negotiations between Mr Obama and Mr Boehner collapsed, with each side blaming the other.

The US federal government is running a large budget deficit – equal to $1.3tn, or more than $4,000 per person, during the 12 months to June this year.

Mr Obama and fellow Democrats have been seeking a deal with Republicans, who control the House of Representatives, to cut the annual budget deficit in return for a rise in the total debt ceiling.

Mr Obama wants the debt reduction deal to include a combination of spending cuts and tax rises, but Republicans in both houses of Congress are strongly opposed to the latter.

Democrats, meanwhile, are against any cuts to healthcare and welfare programmes for pensioners and the poor.