Obama warns against short-term deal on debt limit

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President Barack Obama prodded Congress on Tuesday to reach a sweeping long-term deal within the next two weeks to raise the U.S. government's borrowing limit rather than "kick the can down the road" with a makeshift, short-term solution. He declared the deal must include tax increases Republicans strongly oppose.

Obama said he was summoning leaders of both parties to the White House on Thursday to try to break the congressional impasse and beat an Aug. 2 deadline to avert a first-ever federal default that could shake economic markets worldwide.

He said congressional leaders from the House of Representatives and the Senate, both Republicans and Democrats, were being invited to meet on the issue Thursday at the White House. That would bring the top eight lawmakers together with Obama and top administration financial officials.

The administration says that if the government's borrowing limit is not increased by Aug. 2, the U.S. will face its first default ever, potentially throwing financial markets into turmoil.

Many congressional Republicans indicate they're unconvinced that such scenarios would occur, and some administration officials worry that it could take a financial calamity before Congress acts.

Obama said he opposed a stopgap, short-term increase, as suggested by some lawmakers. He did not rule out a limited extension, however, and his spokesman, Jay Carney, later refused to say whether the president would veto such a measure.

Obama renewed his stand that any deal must include not only spending cuts but also new revenue, which means tax increases vehemently ruled out by many Republicans in Congress.

"We need to come together over the next two weeks to reach a deal that reduces the deficit and upholds the full faith and credit of the United States government and the credit of the American people," Obama said at the White House.

"We've made progress, and I believe that greater progress is within sight, but I don't what to fool anybody: we still have to work through some real differences."

Despite the president's optimism, it remained unclear where compromise could be found. Republicans are insisting they will not vote to raise the debt limit without major spending cuts; Democrats are refusing to sign off on cuts of such magnitude without at least some tax increases as well. Republicans say they will not sign off on any tax hikes at all, including those Obama wants targeting the wealthiest Americans or closing loopholes to corporations.
 
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