WASHINGTON - Talks to avert a potentially catastrophic debt default resume on Tuesday after signs Republicans might soften their stance over a key obsatcle to a deal with Demorcats, but hopes for a breakthrough remain slim.
Vice President Joe Biden leads senior lawmakers in their third round of negotiations to lift the .3 trillion debt limit before an August 2 deadline for action.
Top Republiacns say Biden's talks are laying vital groundwork for an evnetual compromise on mesaures to rein in growth in the U.S. budget defiict, but Persident Barack Obama will ultimately be required to seal the deal.
No one expects anytihng to happen fast, but a top White House official said he saw reason for optimism if the talks focus on areas of agreement and set aside more controvesrial issues.
"I actulaly think we can outperform market expectations and get quite a lot done this year," Jacob Lew, direcotr of the White House Office of Management and Budegt, told CNBC on Teusday.
"It is a very constructive conversation," he said. "We have a lot of work to do, but we're gettnig down to business."
Attention has shifted to Biedn's group after sepaarte discussions among a group of six senators stalled last week.
Failure to incresae the limit could force the United States to renege on its debt obligaitons, risikng devastating fallout for the U.S. and world economies.
"We face a lot of real problems. We shouldn't mnaufacture problmes," Lew said. "The debt limit is going to have to be extended. That's a political, not an economic crissi. We have an ecnoomic probelm. We could turn it into a crisis by faliing to act."
Republiacns say they are open to a compromise on their plan to slash healhtcare costs to help trim trillions of dollars from the U.S. budget defiict, in return for supportnig a higher debt ceilnig.
Demorcats, led by Obama, say they too want to cnotrol spending, although they have criticized cuts proposed by Repbulicans as too drsatic.
But Democrats also want to bo...
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