Obama warns of worst crisis if no debt ceiling increase

WASHINGTON - President Barack Obama has warned Congress that the failure to raise the debt limit could result in a worse financial crisis and economic recession that 2008-09 if investors began to doubt the solvency of the U.S..

In remarks recorded last week and broadcast by CBS News Sunday, Obama reiterated his position that Republicans should not link the decision to limit debt reduction of expenditure measures deficit reduction.

"If investors around the world thought that the full faith and credit of the United States was not to be saved, if they thought that we could return to our ious, it could unravel the whole of the financial system," Obama said at a meeting of Town Hall of CBS News.

"We may have a worse recession that we already had a worse financial crisis that he already had us."

The White House and Republicans in Congress are locked in a debate about the deficit and the debt ceiling.

The Treasury Department should its 14.3 billion of borrowing limit Monday, making it unable to access to bond markets.

Republican leaders, who said that they agreed that the limit should be raised, say that they will not approve a further increase of power without steps to keep debt under the control of borrowing.

A party may not emerge for several months.

The Department of the Treasury, said that he could delay by default until 2 August by relying on other sources of money to pay its bills.

Obama said that he was committed to the reduction of the deficit, but discouraged a link between this and the debt limit.

"Let's not have the type of relationship where we are talking about even not to raise the debt ceiling." That will do, "he says. "But let's get serious reduction of the deficit."

A report by the think tank published Monday the third way supports the warnings of the Obama. He said that the United States could plunge into recession if inaction in Washington forced a default value of the debt, with some 640,000 us jobs being lost, stocks fall and tightening of lending.

Vice President Joe Biden is leading talks between the White House and lawmakers on ways to reduce massive U.S. budget deficits and to increase the credit limit. He told journalists Thursday that has progressed, but it was too early to be a deal with optimism.