Debt crisis: Dems, GOP at odds as debt default risk looms

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(AP, WJLA) — President Barack Obama threatened on Tuesday to veto Republican emergency legislation to avert an unprecedented default as the clash over the U.S. debt deepened with a deadline only a week away.

The impasse extended beyond the long-standing battle over increasing the debt limit between Democrats and Republicans, as a conservative revolt within the Republican party threatened to sink Speaker John Boehner's efforts to line up enough votes for the measure to pass.

Majority Leader Harry Reid said the measure stood no chance of passing the Senate even if it clears the House. He pronounced it "dead on arrival."

Washington is staring down an Aug. 2 deadline to raise the debt limit or face national default.

In the D.C. area, many residents and federal workers are growing concerned that a government default could impact their bottom line.

District resident Laura Ericson, 76, is worried that her Social Security payments may cease.

"I expect a check every month," Ericson says. "If it doesn't come, what is going to happen to me?"

Fears that interest rates on home and car loans may skyrocket also have consumers making alternative plans in case Aug. 2 comes and goes without a deal.

"I was going to wait until next year to buy a new car, but I might do it sooner now," William Troop, an area prospective car buyer, tells ABC7.

Many have predicted dire consequences for the American and global economies should the United States default. Credit rating agencies such as Moody's and Standard & Poor's have threatened to downgrade the United States' gold-plated AAA rating if Congress and the White House don't extend the debt ceiling and take steps to bring long-term deficits under control.

As a price for raising the debt limit, Republicans insist on not increasing taxes and want to force Democrats and the president to cut spending in expensive benefit programs that Democrats have long protected, despite escalating costs.

At stake is the Treasury's ability to continue borrowing money to pay its bills after the current $14.3 trillion limit expires next Tuesday. The Republican House bill would raise the debt limit by $1 trillion while making deep cuts to federal spending of $1.2 trillion — reductions that conservatives say aren't enough.

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