Obama’s battle to avoid ‘financial calamity’

They’ve got three weeks to make a deal – and avoid a potentially disastrous default on America’s debt. As Republicans and Democrats head into their fifth day of talks, it’s all getting way too heated, pushing the two sides further apart than ever.

Now the two leading ratings agencies – Standard & Poor’s and Moody’s – have raised the stakes still further, warning that the United States could be downgraded if there’s no agreement on raising the $14.3tr limit on the amount it can borrow.

The chairman of the Federal Reserve, Ben Bernanke, put it in apocaylptic terms: warning of a “huge financial calamity”. And late on Wednesday night, that news created a whole new level of antipathy between President Obama and his chief nemesis in the talks, House Majority leader Eric Cantor.

Read more: US debt in stacks of dollar bills would wrap world 35 times

When the whole budget talks process first started, the Republicans appeared to have the advantage – pushing for major concessions from the White House, over spending cuts and taxes. But sticking to that position is leaving the leadership with very little room to negotiate – and opens them up to blame if everything falls apart.

According to South Carolina Senator Lindsay Graham: “How many Republicans have been on TV saying ‘I am not going to raise the debt limit’? We have no one to blame but ourselves.”

Fractious debates

Accounts vary as to what exactly happened last night. According to Mr Cantor, things became so fractious that the President stormed out. Mr Cantor told reporters: “He said he had sat here long enough. ‘No other President – Ronald Reagan – wouldn’t sit here like this.'”

The chairman of the Federal Reserve, Ben Bernanke, put it in apocalyptic terms: warning of a ‘huge financial calamity’.

Democrats described Obama’s behaviour as “impassioned”.

“Eric, don’t call my bluff,” he said, after the Virginia congressman proposed a short-term debt limit alongside smaller spending cuts. According to an aide, Cantor interrupted the President three times as he tried to bring the meeting to a close.

“This is just more juvenile behaviour,” added the aide – saying that more senior Republican leaders should “rein him in, and let the grown ups get to work”.

Frustrations and rebukes

At this, Obama left the room, apparently telling another official, “This confirms the totality of what the American people already believe” about political posturing in Washington. Last month the President got so frustrated with it all, he reverted to professorial mode, telling Republicans off for their failure to make tough decisions on the budget.

“We’re going to… have to stay here until we get it done,” he opined, comparing Congress to naughty schoolchildren who can’t get their work done on time, in contrast to his own daughters.

“You know, Malia and Saskia generally finish their homework a day ahead of time,” he said.

“Impressive,” a reporter remarked.

“It is impressive. They don’t wait until the night before. They’re not pulling all-nighters.”

But there’s much more at stake than an A-grade paper – as the 2 August deadline for agreeing the debt ceiling looms ever closer. The two sides will be back at the White House today, and in the last few minutes the administration has said it’s considering a weekend crisis meeting with Congressional leaders at Camp David before it becomes too late to stop that “huge financial calamity” becoming a reality.