With Bipartisan Talks Stalled, Dems, GOP Craft Separate Plans

(Newsroom America) -- Bipartisan talks to resolve the nation's debt crisis stalled again on Sunday, leaving Democratic and Republican leaders to craft their own version of a debt reduction plan.

Both sides moved to assure global markets that a deal would eventually be done in time to avoid an Aug. 2 deadline when the U.S. government would run out of money to pay some of its obligations. Still, Asian markets tumbled overnight in response to the deadlock, as Japan's Nikkei 225 was off .6 percent at 10,068.6 points, while China's Shanghai Composite Index declined by a similar margin to 2,754.97. Hong Kong's Hang Seng Index also lost .6 percent.

Many expect U.S. leaders to reach a last-minute deal to raise the government's current debt ceiling of $14.3 trillion, which would allow Washington to borrow money to continue paying its debts.

Republican leaders have insisted that any deal to raise the limit be accompanied by similar budget cuts and no new taxes. Democrats have been willing to make some of the cuts but are bent on imposing new taxes to make up some of the difference.

Party leaders met with their constituencies last Sunday, in an attempt to gauge support for their respective plans.

"This is about what is doable at the 11th hour," House Speaker John Boehner, R-Ohio, said.

The White House, meanwhile, invited Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., to meet with President Barack Obama in the Oval Office Sunday evening. Reid was developing his own plan to cut some $2.5 trillion in federal spending over 10 years, without tax increases, while extending U.S. borrowing authority until 2013.

Boehner's plan, meanwhile, is a two-part proposal, calling for $1.2 trillion in cuts and a short-term rise in the debt ceiling of $1 trillion. For step two, a bipartisan committee would be established to find another $1.8 trillion in cuts and once they are approved, the debt ceiling authorization would be extended to 2013.

The White House had insisted the debt ceiling limit be extended past the next election.

"A short-term extension would not provide the certainty the markets are looking for, and risks many of the same dire economic consequences that would be triggered by default itself," Reid said in a statement. "Speaker Boehner's plan, no matter how he tries to dress it up, is simply a short-term plan, and is therefore a non-starter in the Senate and with the President."

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