US Republicans hammer Obama on debt talks eve

US President Barack Obama's Republican foes denounced his handling of cash-strapped Washington's debt woes Wednesday, on the eve of White House talks seeking a deal to avert an early August default. Republican Senate Minority Leader Mitch McConnell said the negotiations on a package deal to cut the deficit and raise the US debt limit would test Obama's willingness to do "something big" to get the country's fiscal house in order. "Until now, the president's proposals have been inadequate and, frankly, indefensible," McConnell said in a speech on the Senate floor, taking aim at Obama's call to raise taxes on the very richest US earners. McConnell, who has vowed to block any tax hike, said it was "ludicrous" for Democrats to insist on such an increase or new spending as part of a deal to avert what the US Treasury has warned could be an economic apocalypse. "We're eager to meet with the president to see if he's really willing to do something big here for the country," said McConnell. "So we're ready to meet with the president on Thursday." The talks were due to be part of a final major push to reach a deal to raise the congressionally set limit on US borrowing, now set at $14.29 trillion, in the face of a US budget deficit expected to hit $1.6 trillion this year. With the 2012 US presidential campaign heating up, lawmakers also face US public anger over historically high 9.1 percent unemployment. The Obama administration has said that lawmakers have until August 2 to approve an increase in the debt ceiling or face a possible default on US debt payments, sending catastrophic aftershocks through the fragile US economy and potentially sending the global economy back into a painful recession. Democratic Senate Majority Leader Harry Reid, who canceled a week-long July 4 recess to keep up work on the debt, blasted the Republican refusal to agree to tax increases on as ideological "fanaticism." "That fanaticism is making compromise impossible, no matter how much Democrats are willing to give," Reid scolded. "And we should all be able to agree that millionaires, billionaires, oil companies and the owners of yachts and jets don't need special tax breaks the rest of Americans don't get," he said. Reid aimed to embarrass Republicans this week with a vote on a symbolic resolution that says "any agreement to reduce the budget deficit should require that those earning $1,000,000 or more per year make a more meaningful contribution to the deficit reduction effort." "I am proud that Democrats are standing up for America's middle-class families instead of the richest of the rich," he said, amid public opinion polls showing the Democratic position on the issue is broadly popular. The US ran into its $14.29 trillion debt ceiling on May 16, but has since used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations. But by August 2, the government will have to begin withholding payments to bond holders, civil servants, retirees or government contractors if lawmakers do not raise the ceiling.