–White House: Grand Deal Still On Table, Not Likely To Get Pre-Aug 2

By Brai Odion-Esene

WASHINGTON (MNI) – As the August 2 deadline to raise the federal
debt ceiling draws nearer, the U.S. government will make clear the plans
it has in place to operate if Congress does not increase its borrowing
authority, a U.S. Treasury official told Market News International
Thursday.

This as a White House spokesman told reporters that although a
“grand bargain” on the debt limit and deficit reduction remains on the
table, the chances of a sweeping deal being reached before Aug. 2
“aren’t great.”

In a response to a question about how the government plans to meet
its obligations if the ceiling is not raised, the Treasury official
said, “While only Congress has the ability to ensure the government pays
all of its bills, Treasury will provide more information as we get
closer to August 2 regarding how the government would operate without
new borrowing authority if the debt limit is not increased.”

White House Press Secretary Jay Carney told reporters during the
day’s regular briefing that “as we get closer to that date, the Treasury
Department will explain how it will manage a situation that is
essentially an impossible situation.”

And in a separate statement Thursday, the Treasury said the $27
billion in 3-month bills and $27 billion in 6-month bills to be
auctioned Monday will be put towards $87 billion of Treasury securities
that mature next Thursday.

“The bill auctions announced today will allow Treasury to refinance
those maturing securities, and they will not add any additional debt
subject to the statutory limit,” the statement said.

“These auctions will refinance existing debt rather than add new
debt to our balance sheet.”

Meanwhile Carney said the administration still believes a grand
bargain on raising the debt limit and reducing the deficit in the
long-term is possible.

“We still believe that’s possible, that deal is on the table,” he
said. “If there is the political will to make it happen, it could happen
before August 2.”

The White House remains confident that Congress will “do the right
thing,” he said, and that a compromise will be reached. He reiterated
that lawmakers have a “real opportunity” to do something significant
with regard to the U.S. debt and deficit situation.

The House is expected to vote of Speaker John Boehner revised debt
bill between 5:45 p.m. to 6:15 p.m. ET but Carney warned that “the
Senate will reject the Boehner bill … . It ain’t going anywhere.” If
the Boehner bill does pass in the House, the Senate is expected to vote
on it later in the evening as a demonstration by Democrats that it won’t
pass in the upper chamber.

The U.S. economy cannot be held hostage to the debt ceiling
stand-off, Carney said, noting the impasse has already had “significant”
negative impact on the economy.

“This is too serious a matter, we have to get this done and do this
in a way that does not further harm the economy,” Carney said.

However, while the White House ostensibly holds out hope of both
sides reaching some kind of grand deal before Aug. 2, “the chances
aren’t great that we end up, between now and August 2, with a sweeping,
grand compromise between the Republicans and Democrats that reduces
deficit $3 to $4 trillion over ten years … that’s not likely,” he
said.

“But it’s available if the political will is there,” Carney said.

** Market News International Washington Bureau: 202-371-2121 **

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