No delaying' deadline to lift US debt ceiling

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US Treasury Secretary Timothy Geithner says a 2 August deadline on increasing the US debt limit cannot be extended.

He said that if Congress did not agree to raise the ceiling beyond the current $14.3tn (£8.9tn), there would be catastrophic damage to the economy.

President Barack Obama is to discuss a debt deal with Congressional leaders.

House Speaker John Boehner said he favoured setting a less ambitious target than an earlier proposal of a comprehensive $4tn debt reduction.

The US faces running out of money and defaulting if Congress does not allow the government to take on more debt.

If no agreement is reached, the government would be unable to pay civil servants, government contractors, pensioners or holders of government debt.

Economists and the White House have warned that such a default could push the US back into recession and have a global economic impact.
'No alternative'

When the Congressionally-set debt limit has been reached in the past, Congress has voted to raise it.

This year, however, newly empowered Republicans are determined to prevent any tax increases and want to see aggressive measures to reduce the deficit in exchange for agreeing to raise the debt ceiling.
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US federal government debt

* US government currently runs a $1.5tn budget deficit, requiring it to issue debt in the form of treasury bills, bonds and other securities
* Public debt was $14.3tn on 31 May, up from $10.6tn when Mr Obama took office in January 2009
* Most is held by the public, with the rest held in US government accounts
* Congress has voted to raise the US debt limit 10 times since 2001

Sources: US Treasury, Congressional Research Service, Congressional Budget Office

* Is the US in denial over $14tn debt?

In a round of interviews before Mr Obama's meeting with Congressional leaders on Sunday, Mr Geithner said the US would not default.

He said Republicans had "no alternative" to making a budget deal with the White House and urged them not to walk away from efforts to reach a large, comprehensive deal on debt reduction.

The Obama administration wanted "the biggest deal possible" on debt reduction, Mr Geithner told NBC's Meet the Press.

Last week, Mr Boehner - the senior Republican in the House of Representatives - and Mr Obama had worked on a massive package of spending cuts and new tax measures that would have reduced the debt by $4tn over 10 years.

The proposals included reining in spending on entitlement programmes such as Social Security and Medicare, considered vital by many Democrats.

But it also involved tax hikes and closing tax loopholes for the wealthiest Americans, something opposed by many Republicans.

In a statement released late on Saturday, Mr Boehner said he was pulling back from the $4tn package because it involved tax increases.

"Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," he said.

"I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the [Vice-President Joe] Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase."

A group of Republican and Democratic members of Congress led by Mr Biden had identified about $2tn in cuts in talks over May and June but those ended in an impasse.