WASHINGTON (AFP) – US President Barack Obama announced late Sunday that he and top lawmakers had reached an 11th-hour deal to avert a disastrous debt default that would have sown chaos in the world economy.
"I want to announce that the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid default, a default that would have had a devastating effect on our economy," Obama said in hastily announced remarks at the White House.
In the US Congress, leaders of the Democratic-held Senate and the Republican-led House of Representatives said they would present the framework to their rank-and-file on Monday ahead of final votes to approve the deal.
"We're not done yet: I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days," Obama said, with time running short before a midnight Tuesday (0400 GMT Wednesday) deadline.
The US government hit its debt limit on May 16 and has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally -- but can only do so through August 2.
Business and finance leaders have warned default would send crippling aftershocks through the fragile US economy, still wrestling with stubbornly high unemployment of 9.2 percent in the wake of the 2008 global meltdown.
Without a deal, the US government would have to cut an estimated 40 cents out of every dollar it spends, forcing grim choices between defaulting or cutting back programs like those that help the poor, disabled and elderly.