The prospect of a default has potentially large consequences for the US and the world.
World edgy as US goes to the brink over debt
WASHINGTON // Democrats were plunging into another high-stakes battle with Republicans yesterday as they pushed forward with a plan to avoid a US government default.
Senate Democrats were trying to pass a measure to increase the government’s borrowing authority. Republicans were expected to oppose it if it did not contain budget cuts.
The prospect of a default has potentially great consequences for the US and the world. The International Monetary Fund yesterday lowered its global economic growth forecasts and warned that the US would hurt the global economy if it fails to raise its borrowing limit.
The threat of a default was already overshadowing a separate dispute that has partially shut the US government. That standoff is now in its second week with no sign of any breakthrough between the president, Barack Obama, and congressional Republicans who want to cut cash for Mr Obama’s health-care law, despite it already having been passed.
Republicans have said they want spending cuts in exchange for raising the debt limit. Mr Obama said he would not negotiate over reopening the government or raising the debt limit.
Global investors were watching nervously, especially America’s biggest creditors.
* Associated Press