Senate will work through holiday on debt ceiling debate

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"Talk about Libya? How does that answer the concerns expressed by the president" about the debt limit, said Sen. Roger Wicker, R-Miss.

A confrontational tone dominated the day, with each side accusing the other of lacking seriousness about finding a way to extend the debt ceiling.

"Where is the president? Campaigning," said Sen. Rand Paul, R-Ky., one of a parade of GOP senators who took to the Senate floor to accuse Obama of not tackling the deficit standoff. "We're here, Mr. President."

Democrats focused on the GOP refusal to consider tax increases, including loophole closers Democrats have proposed on companies that ship jobs abroad and on wealthy owners of yachts, race horses and aircraft.

"Protecting them is not protecting America," said Sen. Richard Durbin, D-Ill., the No. 2 Senate Democratic leader.

The stakes of the debate were underscored when a Standard & Poor's executive said the credit-rating agency would give the government its lowest rating should lawmakers fail to agree on raising the borrowing limit and cause a federal default.

Should that occur, S&P would drop the U.S. rating of AAA to D, John Chambers, managing director of sovereign ratings for the company, said on Bloomberg Television.

The United States pays an average of about 3 percent on its existing debt, according to the Treasury Department. In 2010, that added up to $197 billion in interest payments.

The nonpartisan Congressional Budget Office projects interest paid will rise from $463 billion by 2015. That's under the assumption that the U.S. keeps its AAA credit rating. A D rating from would force the government to pay sharply higher interest rates.

Lou Crandall, chief economist at Wrightson ICAP, noted that one of the biggest challenges if the U.S. defaults would be finding enough investors who could buy junk-rated bonds. Pension funds and other institutional investors who buy a large number of Treasurys aren't generally allowed to buy securities with such low credit ratings.

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