Obama calls for stimulus and debt reduction

President Barack Obama called on Wednesday for new stimulus measures to boost the struggling economy, an effort that is likely to further complicate talks to bring the country's debt under control.
Obama said Congress should approve loans to encourage construction spending and extend tax breaks that benefit middle-income families to bring down the 9.1% unemployment rate.
"There are more steps that we can take right now that would help businesses create jobs here in America," he told a White House news conference.
Those measures likely would add hundreds of billions of dollars to budget deficits at a time when the White House and lawmakers are trying to narrow them by more than $1 trln.
With budget talks at a standstill, Treasury Secretary Timothy Geithner said he would not be able to stave off default if Congress does not reach a deal to raise the $14.3 trln debt ceiling by August 2.
The International Monetary Fund also said failure to reach a deal soon could deliver a "severe shock" to a still-fragile recovery and global markets.
Obama and congressional Republicans are deadlocked over whether tax increases should be part of a spending-cut deal that would give lawmakers political cover to extend the government's borrowing authority.
Financial markets have so far shown little concern, but that could change if a deal doesn't emerge in the coming weeks.
Failure to act by August 2 would impose an immediate 44% spending cut on Treasury outlays, according to the Bipartisan Policy Center, a centrist think tank.
Geithner said investors would still shun U.S. debt after that point even if Treasury made debt payments its top priority — an approach backed by many Republicans.
"Ultimately, the notion of 'prioritizing' payments is futile because the debt limit must be increased regardless of which spending path is adopted," he wrote in a letter to congressional Republicans.
"There is no credible budget plan under which a debt limit increase can be avoided."