Image Source: Flickr

Image Source: Flickr

Leaders of political parties say they want a deal to boost the federal borrowing limit by July 4th, a month before the Treasury said the government will be in risk of a default, but it isn’t yet clear how they get past stark differences on federal spending and taxes. Despite the hurdles, even some ardent opponents of raising the current $14.29 trillion debt ceiling are resigned to the likelihood that lawmakers will reach a deal.

The Treasury Department projects it would begin defaulting on its obligations as soon as Aug. 2 without a debt-limit increase. Economists warn that a U.S. default could cause another fiscal catastrophe. In a closed-door meeting last week, Obama set the July goal, later authorized by House Speaker John Boehner, which could head off the option of a relegation of U.S. debt.

Mr. Boehner said last week that federal budget talks led by Vice President Joe Biden and involving lawmakers of both parties aren’t making sufficient advancement. The group will next meet on Thursday. Both groups expect it will likely take direct talks between the president and top congressional leaders, as well as allowance by Republicans on taxes and by Democrats on Medicare to get really big savings. Republicans oppose tax increases, while Democrats have ruled out an extensive Republican plan to fix Medicare.