Biden debt talks some way from deal -White House

Tue, 24 May 2011 01:46 GMT

Source: reuters // Reuters

* Budget director says default is "unthinkable"

* Biden-led debt talks to resume on Tuesday afternoon

* Republicans says Obama input needed for eventual deal

By Alister Bull

WASHINGTON, May 23 (Reuters) - Vital bipartisan negotiations led by Vice President Joe Biden to raise the U.S. debt ceiling are progressing but a deal is still "quite a few weeks" away, the White House budget chief said on Monday.

Biden was to resume talks on Tuesday to avert a potentially disastrous U.S. debt default.

"We have a lot of work ahead of us and quite a few weeks of discussions," said Jacob Lew, director of the White House Office of Management and Budget.

"We're now engaged in a process where I think there is a lot of trust being built up so you can discuss serious options," Lew said.

Lew, speaking at a dinner hosted by The Economic Club of Washington, also said it was unthinkable that the U.S. Congress would fail to eventually vote to lift the debt limit.

"I think there is a shared understanding that it is just unthinkable for us to default," he said.

Biden must craft a compromise between Republican and Democratic lawmakers over trillions of dollars in budget deficit cuts, to win support to lift the U.S. debt ceiling before it hits an early August deadline for action. Four Democratic and two Republican lawmakers are involved in Biden's talks.

But the vice president's efforts, which are the only visible negotiations still being held in Washington to raise the debt ceiling, were only laying the groundwork for a deal.

"Ultimately, decisions are going to be made between the speaker (of the U.S. House of Representatives), the president and those in the Senate," said Representative Eric Cantor, the No. 2 Republican in the House. [ID:nN23185169]

"We are engaging in these discussions right now in the Biden commission to really understand where both sides are," said Cantor, a participant in the talks.

The Biden group has so far agreed on roughly $150 billion in proposed spending cuts -- far short of the trillions of dollars in savings that will be necessary to win Republican support for raising the debt limit.

Republicans wants deficit savings that match the amount by the administration wants to raise the borrowing limit. The U.S. Treasury sees a $2 trillion increase in the debt ceiling needed to last through the November 2012 elections.

The United States reached the congressionally mandated $14.3 trillion limit on its borrowing on May 16. Administration officials are using special accounting measures to avoid a default for now but they warn their leeway to do that will run out on Aug. 2. (Reporting by Alister Bull, editing by Bill Trott)

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