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US Congress as divided as ever

Published 08/01/2013

Congressional leaders showed no signs of giving ground to resolve the next step in America's financial crisis.

Democrats still talk about higher taxes on the wealthy and the Senate's top Republican suggested a crippling default on US loans was possible unless there were significant cuts in spending.

"It's a shame we have to use whatever leverage we have in Congress to get the president to deal with the biggest problem confronting our future, and that's our excessive spending," said Senate minority leader Mitch McConnell.

Last week's deal to avert the "fiscal cliff" combination of end-of-year tax increases and spending cuts held income tax rates steady for 99% of Americans, but left other major business unresolved.

By late February or early March the Treasury Department will run out of options to cover the nation's debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling, which could trigger global chaos.

Politicians say debt talks will consume Congress in the coming weeks, probably delaying any consideration of an expected White House proposal on gun curbs.

Republicans are willing to raise the debt ceiling but insist any increase must be paired with significant savings from Medicare, Medicaid and other programmes.

Democrats are reluctant to cut Medicare, which provides health care for the elderly, and Medicaid, which covers the poor.

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