WORLD - President Obama to meet with Congressional leaders on debt limit

14 October 2013 Last updated at 16:12 GMT

President Obama to meet with Congressional leaders on debt limit

Congressional leaders continue to hold meetings at the US Capitol to discuss the ongoing partial 

government shutdown and looming debt ceiling deadline

US President Barack Obama and Vice-President Joe Biden are scheduled to meet congressional leaders from both parties as the deadline to raise the nation's debt limit nears.

The bipartisan meeting will include leaders from both the House of Representatives and the Senate.

A shutdown of the US government, also a result of the political deadlock, has now entered its third week.

Officials warn of economic calamity should the US default on its debt.

"With only a few days until the government runs out of borrowing authority, the President will make clear the need for Congress to act to pay our bills, and reopen the government," the White House said in a statement ahead of Monday's meeting.

Expected to attend are Senate Democratic Majority Leader Harry Reid, Senate Republican Leader Mitch McConnell, Republican House Speaker John Boehner and House Democratic Minority Leader Nancy Pelosi.

Weekend negotiations between US congressional leaders failed to reach a breakthrough to raise the nation's debt limit ahead of Thursday's deadline.

Negotiations between Republican and Democrat Senate leaders continued on Sunday, with both sides reportedly awaiting the Monday opening of US financial markets to reassess their negotiating positions.

Mr Reid described a phone call with Mr McConnell as "productive", but the two did not reach a solution to raise the nation's $16.7 trillion (£10.5 trillion) borrowing limit as Thursday's deadline nears.

Republican Senator Susan Collins acknowledged the Senate did not have a finished agreement, but said senators were "making very good progress".

A separate bipartisan group led by Ms Collins also met for several hours earlier in the day to discuss possible solutions, the Associated Press news agency reported.

“I do sense that people are getting back on the right page here”

Republican Senator Bob Corker

Overreaching

Congressional Democrats are now said to be using the looming debt ceiling deadline as leverage to push back against previously enacted cuts to the US government budget.

Those deep military and domestic spending cuts, known as the "sequester", went into effect in January 2013 after Democrats and Republicans failed to reach a budget compromise.

On Monday, Republican Senator Bob Corker said the Democrats were demanding too much.

"For about 48 hours now, the Democrats have overreached by wanting to spend more, unbelievably," he said in an interview with NBC's Today show.

"But I do sense that people are getting back on the right page here. And I do hope that by the end of the day we'll have an agreement that makes sense for our country."

Analysts say the Senate talks represent the last best hope for a debt deal before Thursday, after talks between the White House and the Republican-led House of Representatives collapsed last week.

Government and private sector analysts have warned for weeks of the dire consequences should Congress fail to reach an agreement on raising the nation's debt ceiling.

The US treasury department has been using what are called "extraordinary measures" to pay the nation's bills since the nation reached its current debt limit in May.

Those extraordinary measures will be exhausted by 17 October, US Treasury Secretary Jack Lew has said.

He has said that letting debt ceiling negotiations run too close to the deadline "could be very dangerous", while financial sector leaders have warned a default would "ripple" through the world economy.

On Sunday, the head of the International Monetary Fund said defaulting on the nation's debt could tip the world into another recession.

"If there is that degree of disruption, that lack of certainty, that lack of trust in the US signature, it would mean massive disruption the world over," Christine Lagarde said in an interview with NBC's Meet the Press.

'Extortion'

Congress and US President Barack Obama have also failed to reach an agreement regarding a partial government shutdown, now in its third week.

A wide swath of government services closed for business after Congress missed a 1 October deadline to pass a budget, with Congress unable to agree a law to keep the government funded.

Hundreds of thousands of federal employees were sent home and government offices closed.

Republicans refused to approve a new budget unless President Obama agreed to delay or eliminate the funding of the Affordable Care Act, his signature healthcare reform law of 2010.

Mr Obama has refused to budge on the matter, accusing Republicans of "extortion" in using the shutdown and the nation's debt limit as leverage in negotiations.