President Barack Obama's advisers believe the debt limit legislation proposed by Republican House of Representatives Speaker John Boehner should be vetoed and would recommend that the president reject if it reaches his desk, the White House said today.
The administration said in a written statement that it "strongly opposes" the Boehner bill.
The United States has edged closer to a devastating default as Republicans and Democrats are deadlocked over competing plans to raise the debt ceiling, one week before a deadline to act.
Mr Obama, in a televised address yesterday aimed at rallying public support for a package proposed by Democrats, warned that failure to increase the borrowing limit would severely hurt the nation.
"For the first time in history, our country's triple-A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet," he said in remarks in the East Room late last night.
Americans wasted little time answering Mr Obama's request to make their voice heard on the looming debt crisis, crashing websites with e-mails and flooding the telephone lines of lawmakers in Washington with thousands of calls today.
Some lawmakers' websites went down due to the high traffic, including those for Mr Boehner, the top Republican in Congress, and Republican presidential candidate Michele Bachmann, a favourite of the conservative Tea Party movement that has steadfastly rejected compromise.
The website for Republican Senator Jim DeMint, who has questioned the need to rush into a deal to raise the debt ceiling, crashed in the morning. Phone calls to the House's main phone line yielded a longer ring or a busy signal.
"We're getting hundreds of calls today on the president's speech last night. Most folks just want Congress to act," Senator Bill Nelson, a Democrat, said in a statement.
The White House today said the 14th Amendment of the US Constitution was "not available" to Mr Obama to avoid the August 2nd deadline to raise the US debt ceiling.
"There are no easy ways out here. There are no tricks, there is no citing of the Constitution that suddenly allow us to borrow," White House press secretary Jay Carney told reporters. "It's not available."
Earlier, the administration had not ruled out invoking the 14th Amendment to sell debt, even if Congress fails to raise the borrowing ceiling.
Republican and Democratic lawmakers, despite weeks of intense talks, are far apart on a deal to reduce the budget deficit, which would clear the way for Congress to lift the $14.3 trillion (€9.9 trillion) borrowing limit by an August 2nd deadline, when the country runs out of cash to pays its bills.
Markets have been rattled by the descent of negotiations into an acrimonious stalemate, with both sides offering competing plans that are unlikely to win bipartisan support.
Mr Obama warned a default would inflict a tax hike on all Americans by pushing up borrowing costs on things like credit card loans and mortgages, but he sought to assure markets a deal could be reached.
"I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress - a compromise I can sign. And I am confident we can reach this compromise," he said.
Rating agency S&P warns it could downgrade the United States unless lawmakers agree on steps to reduce the deficit by $4 trillion over 10 years.
A credit rating cut would be felt around the world. Investors will likely demand a higher return for holding US government debt, a benchmark for almost all other financial markets, forcing up interest rates and sapping asset prices.
Republicans and Democrats both insist they will not allow the United States to default, and many investors expect the two sides to come to an agreement as well.
Democrats, who hold sway in the Senate, want to shield cherished healthcare programmes such as Medicare and Medicaid and say any spending cuts in these must be balanced by changes in the US tax code that generate more revenue in the future.
But Republican lawmakers, who control the House, are adamant they will not vote for a deal that includes tax increases, reflecting the determination of Tea Party conservatives elected last year to shrink government.
Mr Boehner, the top Republican in Congress, must placate these demands and yesterday advanced a two-stage deficit reduction plan that would start with an initial $1.2 trillion in savings over 10 years.
It is sure to be rejected by Mr Obama though because it would raise the debt limit for only a few months. The issue would have to be revisited in early 2012 ahead of elections due in November, making it even harder for lawmakers to come to an agreement.
Reuters