Deadlock over federal debt crisis

Republicans and Democrats come head to head as deadline for averting crisis gets closer.

The stand-off between Democrats and Republicans over how to address US debt reached a new level of intensity on Monday when US President Barack Obama addressed the nation on live television.

Democrats are calling for the debt ceiling to be raised by Congress while resisting the deep spending cuts-only approach associated with the Republican agenda. Their intention is to protect social programmes without raising new tax revenue.

In a live broadcast on Monday night, President Obama overtly criticised the Republicans, accusing the opposition of leaving the American people vulnerable to becoming "collateral damage" to Washington's political warfare:

This is no way to run the greatest country on earth. It's a dangerous game that we've never played before and we can't afford to play it now.

Republican House Speaker John Boehner's response criticised the Obama Administration for failing to recognise the implications of what the Republicans see as drastically inadequate spending cuts. He accused the president of treating the Federal Reserve like a "blank cheque" that allows the Democrats to keep spending.

Despite weeks of negotiation, an agreement is yet to be reached over how to address the US debt crisis. The deadline for a decision over where to go next is putting pressure on America to move beyond the current deadlock. Talks have already broken down on a number of occasions. If the US Treasury were to run out of money to pay its bills, the consequences would spread far beyond the US to have a significant impact upon the global economy as a whole.