Congress, Federal Deficit | featured news

Ratings agency Moody's warned on Thursday it would consider cutting the United States' coveted top-notch credit rating if the White House and Congress do not make progress by mid-July in talks to raise the debt limit.

A senior banking regulator urged Congress to raise the federal debt ceiling to prevent a "calamitous" government debt default.

Republicans intend to stage a vote in the House next week on legislation to raise the nation's debt limit without requiring spending cuts, a measure expected to fail.

Top congressional Republicans on Sunday suggested they could compromise on the two biggest issues -- healthcare and taxes -- that stand in the way of a deal to get the United States' debt under control.

Treasury Secretary Timothy Geithner warned in a letter to Congress that failure to raise the $14.294 trillion debt ceiling would drive up interest rates, push down household wealth, put more pressure on federal entitlement programs and cause a double-dip recession.

With high gas prices and federal deficits in the political spotlight, senior Democrats believe that Senate Republicans will support an idea they otherwise might not like.

Congress approved a $38-billion spending cut package Thursday, sealing a deal to prevent a government shutdown before plunging into an even more far-reaching debate over spending on federal programs and benefits for the years to come.

In the run-up to a vote, Speaker John Boehner predicted Thursday a $38 billion package of spending cuts would clear the House with a bipartisan majority and said it marks a first step in a longer Republican campaign to rein in federal deficits

President Barack Obama is sending Congress a $3.73 trillion spending blueprint that pledges $1.1 trillion in deficit savings over the next decade through spending cuts and tax increases.

The plan, containing sweeping austerity and reform proposals, receives support from 11 of the 18 members on the bipartisan commission, but 14 votes were needed to require Congress to consider it.