President Obama warning of ‘self-inflicted wound’ to U.S. economy

That would set the stage for the next round of brinkmanship — a struggle over Republican calls for savings from Medicare, Medicaid and other federal benefit programs.

The Treasury’s ability to borrow is expected to expire in late winter or early spring, and without an increase in the US$16.4 trillion limit, the government would face its first-ever default. Republicans have said they will use administration requests for an extension as leverage to win cuts in spending.

Ironically, it was just such a manouvre more than a year ago that set the stage for the current crisis talks over the fiscal cliff.

Copyright 2012 The Associated Press

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