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Obama still hopes for deal over deficit

Obama still hopes for deal over deficit
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US President Barack Obama still has not pulled off the deal he was hoping for to resolve the country’s budget deficit.

A special meeting of key Democrats and Republicans at the White House lasted less than 90 minutes.

With an August 2 deadline looming, Republicans have rejected a four trillion dollar deficit reduction deal because it included raising taxes.

But the US Treasury Secretary, Timothy Geithner is confident a solution will be found.

“The USA is not going to default. We are a country that pays its bills. We’re going to meet our obligations and the leadership in Congress, Republicans and Democrats, House and Senate, understand that.”

Congressional leaders will meet again later today. The White House fears an American default could push the US back into recession and trigger global financial chaos.

Democrats want to combine budget cuts with scrapping tax breaks for the wealthy. But Republicans reject tax increases and are seeking instead bigger curbs on popular benefit programmes.