WASHINGTON - President Barack Obama suspended budget negotiations for the day Friday to give congressional leaders a chance to come up with a "plan of action" on how to unblock talks meant to cut deficits and avert a debt default.
Obama, who had vowed to meet top lawmakers every day until a deal is reached to raise the debt limit, gave top Democrats and Republicans until Saturday morning to reconsider their positions in the high-stakes negotiations.
He will hold a news conference Friday at 11:00 a.m. EDT while awaiting feedback from meetings on Capitol Hill due to take place in the morning.
The debt negotiations may resume over the weekend.
"It's decision time. We need concrete plans to move this forward," Obama said on the fifth straight day of debt negotiations Thursday, according to a Democratic official.
Financial markets are starting to worry that Republicans and Democrats are too far apart to reach a major budget agreement by August 2, when the United States would run out of money unless the cap on government borrowing is raised.
Obama, who is running for re-election in November 2012, has rejected the idea of a stopgap or short-term agreement that would require the debt ceiling to be raised again next year.
"A short-term solution is not something I will sign," he said Thursday.
Republicans are pressing for at least $1 in spending cuts for every $1 that the $14.3 trillion debt ceiling is lifted, and say the White House needs to get serious about reducing spending to properly address the debt problem.
Democrats are open to certain cuts but want some tax increases and other revenue-builders to be included in any deal so that the burdens of the austerity are shared.
Obama thinks a deal worth $2 trillion could be feasible if both sides bend a bit, officials familiar with the talks said.
Compromises required for such a deal could be awkward for both Democrats and Republicans as the 2012 campaign heats up.
But a failure to raise the debt ceiling stands to hurt the fragile U.S. economy and reverberate worldwide, driving up interest rates and shaking currency, equity and bond markets.
China, the United States' biggest foreign creditor with more than $1 trillion in Treasury debt as of March, fears even a small U.S. default. The Chinese foreign ministry said on Thursday it hopes Washington adopts responsible policies to protect investor interests.
South Korea, which has more than $300 billion in foreign exchange reserves, was more upbeat. Finance Minister Bahk Jae-wan said he was optimistic that the United States will resolve the debt crisis and avoid default.
"We are not at a stage at which we need to consider steps such as (reviving) a currency swap," Bahk told Reuters in an interview, referring to currency arrangements set up with the Federal Reserve during the global financial crisis.
"I am optimistic the U.S. Congress and government will find a good solution before the August 2 deadline."
The ratings agencies Moody's and Standard & Poor's have also signaled they may cut the gold-plated U.S. credit rating if the borrowing limit isn't raised and bills are not paid.
White House spokesman Jay Carney said a debt deal must take shape soon to assuage markets and make clear that no matter what, the United States won't default.
"The clock is ticking. We need to get further down the road here," Carney said. "We need to get to the point where we know whether or not we can achieve a significant compromise, bipartisan compromise, on deficit reduction.
"And if not," he said, then we have to make sure we do the bare minimum, which is not default on our obligations."
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