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Lawmakers will skip holiday break to resolve debt debates

U.S. President Barack Obama delivers a speech on Mid East and North Africa policy in the Ben Franklin Room at the State Department May 19, 2011 in Washington D.C.

STEVE CHIOTAKIS: First, the debt ceiling showdown between the White House and Congress continues with no resolution in sight. But the work will go on despite next week's holiday.

Marketplace's Nancy Marshall Genzer is with us live from Washington to explain. Good morning Nancy.

NANCY MARSHALL GENZER: Hey Steve.

CHIOTAKIS: All right -- the latest on the debt talks, now?

MARSHALL GENZER: Well the White House says a deal to raise the debt ceiling now has to be reached by July 22. The thinking is that would give Congress enough time to pass it before the August deadline. The president has also talked a lot about scaling back a tax break for companies that buy corporate jets. Republicans like Senator Marco Rubio of Florida say the president is exaggerating how much that would save.

MARCO RUBIO: It's not only misleading. I think it's disappointing. It's class warfare and it's the kind of language you would expect from the leader of a third world country. Not the president of the United States.

CHIOTAKIS: That doesn't sound promising, Nancy. Is there a plan B then?

MARSHALL GENZER: Well, there's talk of a scaled-back deal. It would raise the debt ceiling to get us through the next seven months, and include budget cuts of about $1 trillion. That would avoid a default next month.

Larry Summers was one of President Obama's top economic advisers. He told Marketplace there's no way leaders in Washington will allow the U.S. to default.

LARRY SUMMERS: They want to avoid Lehman Brothers on steroids, but I think it's essentially inconceivable that there will be a default.

And Steve another thing that the White House wants the markets to believe is inconceivable that Treasury Secretary Tim Geithner might be leaving. There were rumors to that effect yesterday, until Geithner said he'd stay for the foreseeable future.

CHIOTAKIS: Those were his words. All right Marketplace's Nancy Marshall-Genzer. Thanks Nancy.

MARSHALL GENZER: You're welcome.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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