Political chaos pushes US up against debt deadline

Political chaos pushes US up against debt deadline

WASHINGTON - A day of political disarray Tuesday pushed America to within hours of a debt default deadline, but two veteran senators chased a last-gasp deal to stave off a sudden shock to the global economy.

Just 26 hours before the US government begins to run short of money to pay its bills, hopes for an exit strategy rested with late-night talks between Senate majority leader Harry Reid and Republican minority leader Mitch McConnell.

The two old foes saddled up after efforts by the House of Representatives to send a bill to the Senate dissolved into chaos, as Speaker John Boehner tried and failed to rein in Tea Party conservatives.

If Congress fails to raise US borrowing authority before midnight Wednesday (0400 GMT Thursday) the US Treasury would begin to run out of money to meet all US obligations and slip towards a historic debt default.

In the face of the deadline, the US political system, divided between President Barack Obama's Democrats and Republicans who run the House of Representatives, has effectively ground to a halt.

Major world powers meanwhile looked on in dismay at the brinkmanship and political recriminations in Washington, fearing reverberations that could wreak havoc in their own sometimes weakened economies.

Amid rising anxiety on the markets, the financial rating agency Fitch put the United States on warning for a downgrade from its top-grade AAA spot.

Despite the deepening impasse, Obama said he still expected the issue would be resolved in the end.

"My expectation is that this gets solved, but we don't have a lot of time," he told an ABC television affiliate in New York.

"What I'm suggesting to the congressional caucus is to avoid any posturing ... do what's right, open the government and make sure we pay our bills."

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