President Barack Obama invited U.S. House Republicans to the White House today to resume talks on a political compromise to raise the nation’s debt ceiling in exchange for reductions in spending.
The private meeting in the East Room followed the House’s 97-318 vote yesterday defeating a measure that would have raised the $14.3 trillion debt limit by $2.4 trillion without spending reductions.
“I think it was important to clear the air that we cannot have an unconditional increase in the debt without any sort of spending cuts or budget reforms,” Representative David Camp, chairman of the tax-writing Ways and Means Committee, said today on CNBC. “That was important to send that signal.”
Camp said he hoped House Republicans meeting with Obama at the White House today would hear “from the president some specifics about how he plans to address this problem.”
Obama “will want to hear and listen to their ideas, their concerns,” White House press secretary Jay Carney said at a briefing yesterday, referring to House Republicans. “It’s useful to come together in the same room, talk and listen.
The meeting is closed to press coverage because ‘‘we need it to be, and he wants it to be, an open and frank exchange,’’ Carney said.
Negotiations over increasing the debt ceiling as part of a package of spending cuts began May 5, led by Vice President Joe Biden. There have been four meetings between the vice president and six congressional leaders. Biden has said progress is being made, and that negotiators are trying to find savings of $1 trillion over 10 years.
House Speaker John Boehner, an Ohio Republican, released a statement today signed by more than 150 economists supporting the call for spending cuts exceeding any increase in the debt limit.
‘‘Increasing the debt ceiling without significant spending cuts and budget reforms will send a message to American job creators that we still are not serious about ending Washington’s spending addiction, and this will bring further harm to private- sector job growth in America,’’ Boehner said.
Obama meets with the House Democratic caucus on the same subject at the White House tomorrow.
The cost of insuring U.S. government debt against losses for one year with credit default swaps is rising while the price of protection over longer periods has fallen, as investors bet the standoff over raising the debt ceiling may drag into August.
Credit default swaps that expire in one year rose to 47.425 basis points as of yesterday from 23.74 basis points on May 16, when the U.S. reached its borrowing limit. A 33 percent jump on May 20 was the biggest one-day percentage increase since July 2008, according to data compiled by Bloomberg. A basis point equals $1,000 annually on a swap protecting $10 million of debt.
Reflecting long-term investor confidence in U.S. debt, swaps protecting against default for 10 years has fallen to 55.48 basis points from 61.17 basis points over the same period, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
Credit default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. Rising prices indicate declining investor confidence in a borrower’s creditworthiness.
Amid Washington’s debate about the debt, bond market yields in the U.S. are lower now than when the government was running a budget surplus a decade ago. The yield on the benchmark 10-year Treasury note today fell below 3 percent for the first time in 2011, according to Bloomberg Bond Trader prices.
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