Obama attacks Republicans over debt crisis

The US president has warned that the Republicans' unyielding approach to the US debt crisis was a "dangerous game" and urged Americans to press for compromise.

Barack Obama delivered the warning on Monday in a rare prime-time speech as Republicans and Democrats remained deadlocked over a deal to raise the US debt ceiling and agree on how to bring ballooning US deficits under control.

He rejected a Republican proposal to temporarily lift the debt limit, arguing it would leave the underlying problem unresolved and lead to a repeat of the current crisis in six months.

"That is no way to run the greatest country on Earth. It is a dangerous game we've never played before, and we can't afford to play it now. Not when the jobs and livelihoods of so many families are at stake," he said.

But with a potential US default looming in eight days time, Obama appealed to Americans to "make your voice heard."

"If you want a balanced approach to reducing the deficit, let your member of congress know. If you believe we can solve this problem through compromise, send that message," he said.

Republican response

Shortly after Obama spoke, John Boehner, the Republican speaker of the US House of Representatives, said that the US "cannot default on its debt obligations".

"The American people will not accept an increase in the debt without significant spending cuts and reform," he said.

Obama, he said, "has often said we need a 'balanced' approach - which in Washington means: we spend more, you pay more ... those tax increases will destroy jobs".

Obama has called for a compromise package that would see deep cuts in entitlement programs to slash spending, which Republicans urge, and an increase in revenues through tax hikes on higher income earners - a move that Republicans passionately reject.

"How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries?" Obama asked.

"That’s not right.  It’s not fair."

Democrats who control the Senate and Republicans who lead the House of Representatives remain at odds over rival plans for raising the $14.3 trillion US debt limit, allowing cash-strapped Washington to stay open.

The prospect of the world's richest country running out of cash to pay its bills come August 2 has sent stocks sliding, as the IMF warned of a "severe shock" to the world economy absent an elusive breakthrough.