With the world’s financial markets watching eagerly, US lawmakers said on Sunday they were close to a last-minute agreement to raise America’s debt ceiling.
If the compromise is reached by Tuesday’s deadline, the US$3 trillion deal will prevent the US defaulting on its debt.
But if the plan fails to go through, there are fears that the American government would effectively start bouncing cheques – which could create a new global financial crisis.
The deal is being thrashed out over the weekend between the White House and Republican and Democrat leaders.
The plan means up to 1 trillion dollars of spending cuts with provision to keep public spending at today’s level for 10 years. There’ll also be a vote on a constitutional amendment to balance the budget.
For President Barack Obama, it means America’s debt problem will go away – at least to some extent – until after Presidential elections next year.
But a senior White House official warned that an agreement was “not there yet”.