Debt crisis could trigger economic meltdown: Obama

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Debt crisis could trigger economic meltdown: Obama

By Saul Loeb | AFP – 2 hours 59 minutes ago

Delay in raising the US debt ceiling could reverse the fledgling recovery and

trigger a new economic meltdown, US President Barack Obama said in a interview

broadcast on Tuesday.

" We could actually have a reprise of a financial crisis, if we play this too

close to the line, " Obama told NBC television's " Today Show " program.

" We're going be working hard over the next month. My expectation is we're going

get it done in a sensible way. That's what the American people expect. "

Obama and congressional Republicans have been engaged in heated wrangling over

raising the debt ceiling, with the GOP demanding deep cuts in exchange for any

deal to raise the spending limit.

The United States government is edging perilously close to an August 2nd date by

which the federal government must increase its debt limit to borrow the money it

needs to pay its bills.

If no agreement between the two sides is reached, the government risks

defaulting on its obligations, an outcome that economists have said could have

dire consequences.

Treasury Secretary Geithner says that he has found stopgap ways to

continue government operation for another couple of months before the government

defaults on its obligations.

" I take the Republican leadership at their word when they say it would be

disastrous for us to not increase the debt limit, " Obama said.

" I do not want to see the United States default on our obligations. "

The president added: " The full faith and credit of the United States is the

underpinning not only of our way of life, it's also the underpinning of a global

financial system, " Obama told NBC.

The current debt ceiling, reached last month, stands at some $14.3 trillion.