US stalls over debt reduction talks--Republicans balked at Obama's tax increases; Australia to tax 500 biggest polluters; Chinese exports up 20 per cent in one year; Syrian forces raid city of Homs, killing one; drought in Somalia world's 'worst humanitarian crisis'; fears Eurozone crisis could spread to Italy, Europe's third-largest economy; and more
US Speaker of the House of Representatives John Boehner abandoned plans (NYT) to continue negotiating a broad deficit-reduction plan with President Barack Obama--designed to reduce spending by $4 trillion over ten years--in the face of fierce opposition from fellow Republicans over a potential rise in tax revenues.
A meeting at the White House yesterday ended in a stalemate, as Republican congressional leaders pushed for a scaled-down budget package (WSJ) that would include $2 trillion in savings over the next ten years, absent the $1 trillion in tax increases for which Obama continues to argue.
A deficit-reduction agreement is essential for Congress to move ahead with raising the nation's debt ceiling ahead of an August 2 deadline. US Treasury Secretary Timothy Geithner warned yesterday (WashPost) that if a compromise to raise the debt ceiling is not reached in time, the US could default on its debt obligations, severely damaging the domestic and global economies. Similarly, IMF Chief Christine Lagarde warned that a failure to raise the debt limit could trigger interest hikes (AP) and see "stock markets taking a huge hit."
As the United States approaches the deadline to raise its debt limit, the White House and top lawmakers are attempting to set a course for the nation's long-term fiscal health. The talks have profound national security implications, as this Issue Guide explains.
Gridlock over raising the debt ceiling has already tarnished Washington's image and failure to address the problem this month could cause enormous global financial upheaval, writes CFR's Sebastian Mallaby.
Obama's gamble to dramatically overhaul the US budget and reach a "grand bargain" with Boehner appears to have failed. But maybe the president decided that the debt talks were going to fail anyway, and his main concern was to make sure Republicans got the blame when they did, writes the Financial Time's Clive Crook.
PACIFIC RIM: Australia to Introduce Steep Carbon Tax
Australian Prime Minister Julia Gillard introduced a new carbon reduction plan (SMH)--meant to reduce carbon pollution by 5 percent over the next nine years--that will tax the country's five hundred largest polluters $23 AUD ($25 USD) for every metric ton of carbon dioxide they emit starting July 2012.
China: Just over a year after China started letting the yuan increase against the dollar, exports are up (WSJ) nearly 20 percent, at $162 billion in June, highlighting the country's dominance in global manufacturing.