US debt crisis
The White House said that it remained “optimistic” about US lawmakers reaching a compromise on raising the nation's debt ceiling and hence avoiding an unprecedented US default. - File photo

WASHINGTON: The White House on Thursday said it remained “optimistic” that US lawmakers would reach a compromise on raising the nation's debt ceiling to avoid an unprecedented US default.“We continue to believe and remain optimistic that Congress will come to its senses and that compromise will be achieved,” said spokesman Jay Carney.

With only five days to go before the world's richest nation hits its debt ceiling on August 2 and can no longer pay its bills, Democrats and Republicans dug in, although there were hints of intense behind-the-scenes negotiations.

Stock markets remained jittery worried by the global dangers if the US defaults for the first time on its debt obligations, or if ratings agencies carry through with a threat to downgrade its coveted Triple-A credit rating.

Carney warned about the effects of a US default or a downgrade of its credit rating saying it would hit every home owner with a mortgage or every one with a student loan as interest rates would hike.

“Our primary objective here has to be to protect the economy and protect the American people from economic harm,” he said.

“So, if everyone has that as an objective -- has that objective in mind as we move forward, compromise is pretty easy,” Carney told reporters.

He also reiterated the White House's opposition to Republican House Speaker John Boehner's plan for a two-step increase of the nation's $14.3 trillion ceiling.

US President Barack Obama said that a two-stage increase would only push the problem off for a few months, and plunge the country back into crisis early next year.

The debt ceiling should be raised in a single step, Carney argued.

“So we do not have the cloud of uncertainty that is hanging over our economy right now and getting darker and stormier as every day passes for another three months, four months, five month, six months, 10 months,” he added.

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