Gold price hits all-time high on US debt concerns
The price of gold has risen to a fresh all-time high of $1,594.16 an ounce, and the dollar has fallen, on concerns the US may default on its debts.
The moves came after ratings agency Moody's said it may cut the debt rating of the US, warning there was a "rising possibility" it will default.
To avoid default, US politicians have to agree to raise the country's debt limit by 2 August.
Democrats and Republicans are currently in dispute over how best to do this.
'Shockwaves'
The spot price for gold rose to a record high of $1,594.16 an ounce in Thursday trading, before easing to $1,590.66.
Gold is seen as the number one haven purchase in times of economic uncertainty, but analysts said its rise was also caused by the fall in the dollar, which makes the precious metal more affordable for holders of other currencies.
Against the Japanese currency the dollar fell to 78.45 yen at one point, its lowest level since March, before recovering to 79.00 yen.
The dollar also declined against the European single currency, down 0.2% to 0.70430 euros. The greenback also fell slightly against the pound, with sterling rising 0.1% to $1.61240.
European share indexes were slightly lower in Thursday trading, with both Germany's Dax and the UK's FTSE 100 down 0.4%. Japan's Nikkei earlier lost 0.3%.
The market falls were limited because investors assume that US policymakers will eventually do a deal to prevent a default, BBC business editor Robert Peston concluded.
They believe that President Obama and the Republicans will reach an accommodation on spending cuts that would allow the amount that the state can borrow to be increased, he said.
'Shockwaves'
Federal Reserve chairman Ben Bernanke warned that a default by the US on its debt would cause a "major crisis".
Speaking before Congress on Wednesday, he said it "would send shockwaves through the entire financial system".
As tough negotiations continue on Capitol Hill about raising the debt limit, President Barack Obama reportedly told a top Republican: "Enough is enough."
Talks between Republicans and Democrats are due to resume on Thursday.
"It's a very political environment right now and that's causing all this volatility," said Elke Schoeppl-Jost, chief investment officer at BEA Union Investment in Hong Kong.
Ms Schoeppl-Jost added that markets were concerned about the prospect of further stimulus spending in the US.
On Wednesday, Mr Bernanke said that this remained a possibility if the US economy worsened.
China, the largest holder of US debt, reminded Washington of its need to protect investors.
"We hope the US government adopts responsible policy and measures to ensure the interests of investors," said Foreign Ministry spokesman Hong Lei.
China holds about $1.15tn (£713bn) of US debt.
Chinese government economist Yu Bin, who works for China's Development Research Centre, also expressed concern at the prospect of further stimulus spending by the Federal Reserve.
He said such a move could "have a major impact on China's economy" because it would likely increase global commodity prices, most of which are traded in dollars.
Phone hacking: Murdoch defends handling of crisis
News Corporation's chairman Rupert Murdoch says his company has handled the phone-hacking crisis "extremely well" and will recover.
In an interview with the Wall Street Journal, he said it would establish an independent committee to "investigate every charge of improper conduct".
Earlier he and son James agreed to appear before MPs to answer questions on the scandal on Tuesday.
The men initially declined to appear before the commons media committee.
The Murdoch-owned News of the World (NoW) was shut down last week amid the mounting scandal over the alleged hacking of phones belonging to crime victims, politicians and celebrities.
And on Wednesday, News Corp dropped a bid to take complete control of satellite broadcaster BSkyB.
In the interview with the US paper, which is owned by News Corp, Mr Murdoch said he wanted to address "some of the things that have been said in Parliament, some of which are total lies".
He said: "We think it's important to absolutely establish our integrity in the eyes of the public... I felt that it's best just to be as transparent as possible."
But he insisted the damage to his company was "nothing that will not be recovered".
He said he acted appropriately and quickly: "when I hear something going wrong, I insist on it being put right."
Mr Murdoch also rejected criticism that James Murdoch had acted too slowly in dealing with the tabloid scandal.
"I think he acted as fast as he could, the moment he could," he said.
It comes after Neil Wallis, ex-News of the World executive editor, was arrested on suspicion of conspiring to intercept communications on Thursday morning.
Mr Wallis, also a former member of the Editors' Code of Practice Committee, is the ninth person to have been arrested since the Metropolitan Police launched a fresh phone-hacking investigation in January.
In the US, it is being reported that the FBI is investigating alleged hacking of the phones of 9/11 victims by the News of the World.
A growing group of senators and a senior Republican congressman have been calling for the authorities to investigate the allegations.
Democratic Senator Robert Menendez, who wrote to the attorney general to urge an investigation, said the claims newspapers sought to "exploit information about... personal tragedies for profit" needed to be probed.
'Serious questions'
On Tuesday this week, the UK's Commons culture, media and sport committee invited the Murdochs and News International chief executive Rebekah Brooks to give evidence at the House of Commons in a week's time about the phone-hacking scandal.
In a statement, the MPs said that serious questions had arisen about the evidence Mrs Brooks and Andy Coulson, both of them former News of the World editors, gave at a previous hearing in 2003.
The Murdochs agreed to give evidence after receiving summonses from the committee - they had previously said they were unavailable to attend.
The summonses were the first to be issued by a parliamentary select committee for almost 20 years, since the sons of the late newspaper tycoon Robert Maxwell were ordered to appear in 1992.
Meanwhile, on Thursday evening, London mayor Boris Johnson met Met Police Commissioner, Sir Paul Stephenson, to discuss the hiring of Neil Wallis as a consultant for the force, for which the journalist was paid £24,000.
Home Secretary Theresa May has written to Sir Paul to get the "full picture" on the circumstances surrounding his appointment.
The Home Affairs Select Committee has also written to ask him to give further evidence on the matter next Tuesday.
As part of the contract, Mr Wallis advised the Commissioner's Office, and the Directorate of Public Affairs and Specialist Operations, working closely with Assistant Commissioner John Yates.
Meanwhile, the family of a Brazilian man shot dead by police in London in 2005 has called for the News Corp phone-hacking investigation to be widened.
In a letter to PM David Cameron, Jean Charles de Menezes' relatives say the actions of police who investigated Mr Menezes' death should be probed.
Mr Cameron has asked Lord Justice Leveson to oversee a public inquiry into the News of the World scandal and media regulation.
The inquiry will be in two parts - an investigation of wrongdoing in the press and the police, and a review of regulation in the press.
S&P says it may downgrade the US's triple-A debt rating
Standard & Poor's has become the latest ratings agency to issue a warning of a possible downgrade to the US's debt rating.
It said there was a "one-in-two" chance that it may cut the US's AAA rating if a deal to raise the government's debt ceiling is not agreed upon soon.
The warning comes as cross-party talks in Washington have failed to reach a consensus on the issue.
The US has until 2 August to raise government borrowing limits.
"Today's CreditWatch placement signals our view that, owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the US within the next 90 days," the agency said.
The agency added that it was concerned the talks between the government and the opposition had become "more entangled" and the two sides were not budging from their respective positions.
"Consequently, we believe there is an increasing risk of a substantial policy stalemate enduring beyond any near-term agreement to raise the debt ceiling," S&P explained.
As a result of the stalemate between the parties, the government could find itself in a precarious situation.
If it finds itself unable to borrow more money, there is a likelihood that the government will not be able to make scheduled payments on Treasury bills, bonds and other securities held by investors.
S&P said that in such a scenario, the government may be forced to curtail current expenses in an attempt to avoid such a default.
It warned that such a move would have a negative impact on the US economy.
"We think that the effect on consumer sentiment, market confidence, and, thus, economic growth will likely be detrimental and long lasting," it explained.
The agency said that while cutting government spending would dent consumer confidence, a default on payments had far bigger consequences.
"If the government misses a scheduled debt payment, we believe the effect would be even more significant and, under our criteria, would result in Standard & Poor's lowering the long-term and short-term ratings on the US," it said.
Long-term solution?
The US's public debt has surged from from $10.6tn (£6.5tn) in January 2009 to $14.3tn at the end of May 2011.
Economists have warned that the world's biggest economy needs to come up with a long-term solution to contain the rising debt levels.
President Barack Obama has proposed a plan for up to $4tn in budget deficit reduction over the next 10 years, but Republicans have rejected that and other proposals because it calls for raising taxes.
On Thursday, President Obama told lawmakers he wanted an agreement on a debt deal within 24-36 hours, according to aides.
The comments came as a fifth consecutive day of cross-party negotiations failed to make a breakthrough. The president is scheduled to hold a news conference to discuss the troubled talks at 1100 (1500GMT) on Friday.
S&P warned that if the US authorities are not able to agree on a consensus plan, the issue may linger on for years to come and hurt the US economy.
"US political debate is currently more focused on the need for medium-term fiscal consolidation than it has been for a decade," it said.
"Based on this, we believe that an inability to reach an agreement now could indicate that an agreement will not be reached for several more years."
White House: Friday 'Important Moment' In Debt Talks
White House officials say they will assess Friday whether they can reach a deal with opposition Republicans on raising the U.S. government’s legal borrowing limit. President Barack Obama negotiated with top lawmakers from both parties Thursday, with a deadline fast approaching.
Less than three weeks before the deadline to avoid a government debt default, top Democrats and Republicans ended a fifth straight day of talks Thursday without an agreement.
No discussions are scheduled for Friday, and President Obama has scheduled a news conference at the White House.
The president’s press secretary, Jay Carney, said top administration officials will discuss Friday whether a deal is possible, and what to do if it is not.
“The president views Friday as an important moment where we can make an assessment about whether we are moving toward a significant bipartisan agreement on deficit reduction or not,” Carney said.
Sources say Mr. Obama Thursday asked the eight top Democratic and Republican lawmakers to agree on the outlines of a deal within 36 hours.
The Treasury Department has said the U.S. will no longer be able to pay all of its bills on August 2 if the $14.3 trillion debt ceiling is not increased. Treasury Secretary Timothy Geithner warned that the country is “running out of time” to raise the limit.
Presidential spokesman Jay Carney expressed optimism that a deal could be achieved, but he suggested that Republicans are more focused on political concerns.
"That agreement is right here, within reach. It is on the table. Just have to reach for it and grasp it and be willing to compromise to do it. And you know what? That requires thinking about the broad American public and not the narrow bands or the narrow constituencies within your own party," Carney said.
Democratic lawmakers have rejected Republican deficit-reduction plans that include cuts to social programs. Republicans, including Senate Minority Leader Mitch McConnell, object to Democrats’ insistence on increasing tax revenue.
“Republicans will not be reduced to being the tax collectors for the Obama economy. We will not be seduced into calling a bad deal a good deal. If he and the Democratic Senate would rather borrow and spend us into oblivion, they can certainly do that. But do not expect any more cover from Republicans. None,” McConnell said.
The partisan rancor extended to the Senate floor Thursday. The top Senate Democrat, Harry Reid, called the second-ranking House Republican, Representative Eric Cantor, “childish” and said he should be excluded from further talks.
“Even Speaker Boehner and Minority Leader McConnell seem to understand the seriousness of this situation. They are willing to negotiate, which I appreciate and the country appreciates. Meanwhile, House Majority Leader Eric Cantor has shown that he should not even be at the table,” Reid said.
Cantor Wednesday accused President Obama of storming out of a negotiating session. Cantor himself had walked out of earlier talks with Vice President Joe Biden.
Meanwhile, the leader of one of America’s biggest financial firms implored officials to reach an agreement on the debt limit. Chief Executive Jamie Dimon of JP Morgan Chase said it would be irresponsible for the U.S. to default on its debt because the result could be catastrophic.
And a Chinese credit rating agency, Dagong Global Credit Rating Company, has threatened to downgrade U.S. government debt if the borrowing limit is not raised. China is the largest buyer of U.S. sovereign debt.
Several top U.S. credit agencies have issued similar warnings.
Senegal’s President Looks to Third Term
Senegal's President Abdoulaye Wade says he is confident he could win re-election, a strong indication that he plans to run for another term in February despite street protests against his rule.
In his first major speech since the protests last month, Mr. Wade said Thursday he is willing to hold elections earlier than February if the opposition wants.
He said if the opposition thinks it can win, he will hold elections in 40 to 60 days in order to bring social cohesion and national harmony. However, Mr. Wade said he believes he will be the winner.
Last month, thousands of demonstrators took to the streets, with some rioting, to protest an attempt by President Wade to alter the constitution. Many opponents feared the proposed constitutional changes would make it easier for the president to be re-elected, and place his son in line to eventually become president. Mr. Wade withdrew the proposal to change the constitution before parliament could vote.
The current constitution says a president must be elected with an absolute majority of the vote — 50 percent plus 1. Mr. Wade's ruling party had sought to lower that threshold to 25 percent. The party also sought to create a post of vice president, a move the opposition said was intended for Mr. Wade's son.
US Airstrikes Kill 7 Islamist Militants in Southern Yemen
Yemeni security officials say U.S. drones and fighter jets attacked suspected Islamist militants in the southern province of Abyan Thursday, killing at least seven fighters in a police station they had taken over.
The airstrikes took place before dawn in the town of Mudiya. Dozens of Islamist fighters rushed to the scene to evacuate the wounded and search for the dead.
The New York Times also cites U.S. officials, who spoke on the condition of anonymity, as confirming the strikes, which are rarely acknowledged publicly.
The attacks targeted a region where radical groups believed to have links to al-Qaida are exploiting Yemen's political upheaval to take over entire towns.
The United States provides military aid to Yemen in exchange for Yemeni cooperation in fighting al-Qaida militants based in lawless parts of the impoverished country.
The militants, some linked to al-Qaida, have taken control of several towns in southern Yemen in recent months, as government forces confront a five-month-old opposition uprising in other parts of the country.
The protesters have been demanding an end to President Ali Abdullah Saleh's 33-year autocratic rule.
Sudan Signs Peace Deal With Darfur Rebel Group
The Sudanese government and a Darfur rebel group have signed a peace accord rejected by the region's main rebel groups.
Sudanese President Omar al-Bashir, who is wanted by the International Criminal Court for war crimes in Darfur, attended a signing ceremony in Doha, Qatar on Thursday.
The government entered the pact with the Justice and Liberation Movement , an alliance made up with splinter rebel groups.
A spokesman for Darfur's biggest rebel group, the Justice and Equality Movement , said the accord does not resolve Darfur's main problems. JEM spokesman Gibreel Adam Bilal said those problems include human rights violations, the distribution of power and wealth and the compensation and return of displaced persons.
The United States said the agreement is a positive step forward on the road toward a lasting solution to the crisis. A State Department spokesman said the U.S. will continue to press Darfur rebels who refuse to participate in negotiations to fully engage in the peace process.
The spokesman also urged Sudan's government to be open to more international negotiations so that a comprehensive peace deal can be reached with all Darfur rebel groups.
United Nations-sponsored peace talks in Qatar between Darfur rebels and the Sudanese government have yielded little progress.
Rebels in Darfur took up arms against the government in 2003, accusing Khartoum of neglecting their region.
The United Nations says more than 300,000 people have been killed in the Darfur conflict, and 2.7 million others have been displaced. Sudan's government puts the death toll at 10,000.
The ICC has indicted Mr. Bashir on charges of genocide and war crimes in Darfur. The Sudanese leader has denied the charges and rejected the court's authority.
Pakistan Intelligence Chief CIA Talks Successful
American and Pakistani spy chiefs held what are reported to have been successful talks at the Central Intelligence Agency in Washington Thursday, days after the United States decided to suspend $800 million in aid to Pakistan.
A U.S. official, who requested anonymity, was quoted as saying talks between Ahmad Shuja Pasha and acting CIA Director Michael Morell went well and that the two “agreed on a number of steps that will improve Pakistani and U.S. national security.”
The Pakistani military said the talks were meant to coordinate intelligence matters.
Meanwhile, the outgoing commander of U.S. and NATO forces in Afghanistan and incoming CIA director, General David Petraeus, met with Pakistan's army chief, General Ashfaq Parvez Kayani, in Islamabad Thursday. The Pakistani military said the two discussed matters of “professional interest.” Kayani held talks with the head of U.S. Central Command, General James Mattis, the day before.
The meetings follow comments Wednesday by Pakistan's Prime Minister Yousuf Raza Gilani, who expressed concern about the U.S. decision to suspend one-third of its annual military aid to his country. Mr. Gilani said that while the fight against militants on Pakistani territory is Pakistan's war, the country's efforts are benefiting the whole world.
Relations between the United States and Pakistan have been strained since the covert U.S. raid deep into Pakistani territory that killed al-Qaida leader Osama bin Laden on May 2.
A Pentagon spokesman said earlier this week the decision to withhold a third of its military aid to Pakistan is in response to Islamabad's decision to expel American military trainers and put limits on visas for U.S. personnel.
New Nevis cabinet sworn in
At a ceremony attended by the prime minister of St Kitts-Nevis, Dr Denzil Douglas, the five ministers of the Nevis Island Administration (NIA) were officially sworn in on Tuesday.
Joseph Parry remains Premier and Minister of Finance, Statistics and Economic Planning, Education and Library Services, Human Resources, Tourism and Labour.
Hensley Daniel will serve as the island’s Deputy Premier and Minister of Health, Gender, Social Affairs, Youth and Sports, Community Affairs, Trade, Industry, Culture and Telecommunications.
Robelto Hector will serve as Minister of Communications, Works and Public Utilities, Posts, Physical Planning, Natural Resources, Environment, Agriculture, Lands, Housing, Cooperatives and Fisheries.
Junior Minister, Carlisle Powell, will maintain his responsibilities for Communications, Works and Public Utilities, Posts, Physical Planning, Natural Resources and Environment while fellow Junior Minister, Dwight Cozier, was sworn in to retain responsibility for the Ministry of Trade and Industry with special focus on Trade, Consumer Affairs, Industry, Import and Export Control.
Following the oath of allegiance, oath of office and oath of secrecy, Parry delivered an address outlining some of his administration’s plans for the next five years. The re-elected leader also spoke of the anti-crime initiatives and policies that will take effect.
“My party fully understands that our first duty is to keep our citizens safe. This is a sacred duty: a duty that stands at the apex of our national responsibilities and endeavours,” Parry said, as he issued a unity challenge to the people of Nevis.
“I implore all citizens of goodwill to band themselves together, to put your shoulders to the wheel in order for us to accomplish this great endeavour of stamping out crime. United in this great cause, we shall prevail,” he said.
According to Parry, the NIA “would be harsh on crime and criminals” in order to ensure that “the safety and security of Nevisians will always be the number one priority.”
In turn, Douglas congratulated the Nevis Reformation Party (NRP) team on being elected to a second term in office and said that, although his administration had worked, for many years with the former Concerned Citizens Movement (CCM) government, he was particularly pleased with the bond established between his St Kitts-Nevis Labour Party-led administration and that of the NRP.
“I’ve had the support of the people and the blessings of God to work not only with the NRP government for [the] people of Nevis but also with the CCM government on behalf of the people of Nevis. They have been 16 beautiful years but I say to you this evening, that the last five years in particular have been positive and progressive five years with the NRP,” Douglas said.
Latest deficit talks end with a tense exchange
A fourth straight day of negotiations intended to head off a possible government default ended on a tense note Wednesday, with House Majority Leader Eric Cantor and President Barack Obama squaring off over the Republican's call for a short-term extension of the federal debt ceiling.
At one point, Obama said the political wrangling confirmed what the public considers to be the worst of Washington, according to Democratic sources familiar with the talks who spoke on condition of not being identified.
Multiple sources, also speaking on condition of anonymity, said Obama told the gathering that "this could bring my presidency down," referring to his pledge to veto any short-term extension of the debt ceiling. Sources say he vowed, "I will not yield on this."
The exchange concluded almost two hours of talks that failed to achieve a breakthrough. Another session -- the fifth in five days -- was set for Thursday, participants said.
Administration officials have warned that a failure to raise the current $14.3 trillion debt ceiling by August 2 could trigger a partial default. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
The seriousness of the situation was reinforced when a major rating agency said Wednesday it would put the sterling bond rating of the United States on review for possible downgrade.
Moody's Investors Services said it had initiated the review because of "the rising possibility" that Congress will fail to raise the debt ceiling in time -- something that could lead to a U.S. default on its debt.
Cantor, R-Virginia, told reporters after Wednesday's meeting that he proposed a short-term agreement to raise the federal debt ceiling, a position Obama has previously rejected.
"That's when he got very agitated and said I've sat here long enough -- that no other president -- Ronald Reagan -- would sit here like this -- and that he's reached the point that something's gotta give," Cantor said, adding that Obama called for Republicans to compromise on either their insistence that a debt-ceiling hike must be matched dollar-for-dollar by spending cuts or on their opposition to any kind of tax increase.
"And he said to me, 'Eric, don't call my bluff.' He said 'I'm going to the American people with this,' " Cantor quoted Obama as saying.
"I was somewhat taken aback," Cantor said. When he continued to press the issue, Cantor said, Obama "shoved back from the table, said 'I'll see you tomorrow' and walked out."
The Democratic sources provided a different take on the exchange, saying Obama cut off Cantor at the end after the Virginia Republican changed from a previously held position against a short-term extension of the debt ceiling.
Obama responded that he'd veto such a temporary measure, according to the sources, then went on to say that what was happening in the negotiations confirmed the worst of what the American people think about Washington.
According to the sources, Obama expressed frustration with the unwillingness of congressional Republicans to compromise and called on them to stop posturing and catering to their bases. He then ended the meeting, the Democratic sources said.
Obama has insisted on one deal that will raise the amount of money the government can borrow to sufficient levels to last through 2012 -- after his campaign for re-election. Cantor's call for a short-term agreement also could win the support of House Speaker John Boehner, R-Ohio, an aide to Boehner said.
Democrats and Republicans remain at sharp odds over how to proceed. Obama has indicated a preference for a "grand bargain" that would save up to $4 trillion over the next decade through a combination of spending cuts, raising taxes on the wealthiest Americans and reforming politically popular entitlement programs such as Medicare and Medicaid.
GOP leaders remain adamantly opposed to any tax hikes, arguing that increasing the burden on "job creators" now would derail what has already proven to be, at best, a shaky economic recovery.
On Tuesday, Obama said he cannot guarantee that older Americans will receive their Social Security checks next month if a deal is not reached.
"There may simply not be the money in the coffers to do it," the president told CBS News.
Testifying Wednesday on Capitol Hill, Federal Reserve Chairman Ben Bernanke warned that failure to raise the ceiling would create a "major crisis" and be potentially "catastrophic" for the global economy.
Republicans accused the White House of fear-mongering and failing to negotiate in good faith. Senate Minority Leader Mitch McConnell, R-Kentucky, said Wednesday morning that the administration is pushing for tax hikes now in exchange for illusory spending cuts later.
Specifically, McConnell claimed an administration official had only been able to identify $2 billion in spending reductions when asked what cuts the White House would agree to next year -- a tiny fraction of roughly $4 trillion in deficit reduction savings Obama has claimed he's interested in generating over the next decade.
"Republicans refuse to be drawn into this legislative trap," McConnell said, adding that the White House is "not serious about cutting spending or debt."
White House Press Secretary Jay Carney dismissed McConnell's complaint, calling it inaccurate and asserting that the president is willing to make deep spending cuts.
On Tuesday, McConnell unveiled what he characterized as a last-ditch plan to avert a default if negotiators can't reach an agreement. The Republican leader proposed three short-term increases in the amount the government can borrow while at the same time registering the disapproval of Congress for such a move.
McConnell's proposal would give Obama power to raise the debt ceiling by a total of $2.5 trillion, but also would require three congressional votes on the issue before the 2012 general election. The president would be required to identify spending cuts equivalent to each debt ceiling increase, though there would be no guarantee Congress would adopt the proposed cuts.
While some congressional Democrats promised to consider the plan, Obama has made clear his opposition to any short-term extension of the debt ceiling.
However, Cantor's statement Wednesday that no viable proposals have emerged was intended to show the McConnell plan had no chance of winning approval from the House, Republican congressional sources said.
Some conservatives are accusing McConnell of capitulating to the Democrats. The website redstate.com posted a story Tuesday with the headline: "Mitch McConnell Just Proposed the 'Pontius Pilate Pass the Buck Act of 2011.' "
In an interview Wednesday with Mandy Connell of WHAS radio, McConnell said his proposal was necessary because an acceptable deficit reduction deal was proving unattainable and the United States must avoid a default that would be "bad for Republicans."
"Given a choice between a bad deal and avoiding default, I choose to avoid default," McConnell said, adding that "if we were to go into default ... the practical effect of that will be to allow the president to make us co-owners of a bad economy."
He also said defaulting is "completely and totally unacceptable, and it's not going to happen."
After Wednesday's meeting, Cantor told reporters that "no one wants to rattle the markets."
Rep. Michele Bachmann, R-Minnesota, unveiled an alternative fallback plan Wednesday, introducing legislation designed to ensure members of the military and holders of U.S. debt are paid in the event the debt ceiling isn't raised. Bachmann, a conservative tea party favorite and 2012 presidential contender, accused Obama of "holding the full faith and credit of the United States hostage so that he can continue his spending spree."
In response, Carney told reporters that Bachmann's proposal amounts to accepting a U.S. default on its obligations, rather than offering a serious effort to prevent it from happening.
"That's not a Plan B. That's not a solution," Carney said.
For now, it remains unclear at best whether the two sides will be able to reach any agreement. Cantor said that during Tuesday's negotiating session at the White House, Obama presented more details of his proposed cuts to entitlement programs. Republicans, according to Cantor, supported much of what they heard.
On Wednesday, Cantor reiterated GOP opposition to higher taxes and called on Obama to make public the details of what he is proposing in the negotiations "so that both Republicans and Democrats can make well-informed decisions about something of this magnitude."
Asked about going public with details of entitlement reforms being discussed, Carney told reporters that would run counter to the negotiating process and the principle that "nothing is agreed to until everything is agreed to."
At the heart of the Republican resistance is a bedrock principle pushed by conservative crusader Grover Norquist against any kind of tax increase. A pledge pushed by Norquist's group, Americans for Tax Reform, has been signed by more than 230 House members and 40 senators, almost all of them Republicans.
However, a letter to Obama and legislators Tuesday from leading business figures and associations urged them to put aside hard-line partisan positions in order to reach a deal.
"Our political leaders must agree to a plan to substantially reduce our long-term budget deficits with a goal of at least stabilizing our nation's debt as a percentage of GDP (gross domestic product) -- which will entail difficult choices," said the letter from the U.S. Chamber of Commerce and others known for traditionally supporting Republicans.
"Now is the time for our political leaders to put aside partisan differences and act in the nation's best interests," the letter concluded. "We believe that our nation's economic future is reliant upon their actions and urge them to reach an agreement. It is time to pull together rather than pull apart."
At the heart of Obama's call for more tax revenue would be allowing tax cuts from the Bush presidency to expire at the end of 2012 for families making more than $250,000. His plan would keep the lower tax rates for Americans who earn less.
Obama noted earlier this week he is not looking to raise any taxes until 2013 or later. He claimed he has "bent over backward to work with the Republicans" and not force them to vote on any revenue hikes in the short term -- a politically toxic move for the GOP's conservative base.
In exchange, Obama said, he wants to ensure that the current progressive nature of the tax code is maintained, with higher-income Americans assessed higher tax rates.
For his part, Treasury Secretary Tim Geithner warned that time is running out. The secretary said he wants to see a deal to raise the debt limit and cut projected spending by the end of this week -- or next week at the latest -- so that Congress will have enough time to turn the deal into law.