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what can we do for you? >> and now "bbc world news." >> and welcome to news day on the bbc. >> the headlines. president obama prepared to address the nation as the deadlock over the country's debt crisis continues. republicans and democrats put their plans forward but are split over how long the new arrangement should last. >> the concern in the global markets about the lack of a deal as the second of august deadline looms. >> a safe haven with so much uncertainty, the price of gold hits a new record high. >> it's 9:00 a.m. here in singapore. >> it's 2:00 a.m. in london, broadcasting to viewers on pbs in america and around the world. ♪

>> now you're joining us as we take a shot of the white house in washington. let's just show you that if we can because we are expecting president obama to address the nation in a televised address about the deadlock in the country's debt crisis. he's expected to appear there before the people in the next minute or so. here he is, actually. we're expecting him to talk about the ongoing crisis over negotiations. let's listen to president obama. >> good evening. tonight i want to talk about the debate we've been having in washington over the national debt, a debate that directly affects the lives of all americans. for the last decade we've spent more money than we've taken in. in the year 2000 the government had a budget surplus. but instead of using it to pay off our debt, the money was

spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation's credit card. as a result, the deficit was on track to top $1 trillion the year i took office. to make matters worse, the reception meant there was less money coming in and required us to spend even more on tax cuts for middle class families to spur the economy, on unemployment insurance, on aid to states so we could prevent more firefighters and police officers from being laid off. these emergency steps also added to the deficit. now, every family knows a little credit card debt is manageable. but if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy. more of our tax dollars will go towards paying off the interest on our loans. businesses will be less likely

to open up shop and hire workers in a country that can't balance its books. interest rates could climb for everyone who borrows money. the homeowner with a mortgage, the student with a college loan, the corner store that wants to expand. and we won't have enough money to make job creating investments in things like education and infrastructure, pay for vital programs like medicare and medicaid. because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it. and over the last several months, that's what we've been trying to do. i won't bore you with the details of every plan or proposal, but basically the debate has centered around two different approaches. the first approach says let's live within our means by making serious historic cuts on government spending. let's cut domestic spending to the lowest level it's been since dwight eisenhower was president.

let's cut defense spending at the pentagon by hundreds of billions of dollars. let's cut out waste and fraud and health care programs like medicare and at the same time let's make modest adjustments so medicare is still there for future generations. finally, let's ask the wealthiest americans and biggest corporations to give up some of their breaks in the tax code and special deductions. this balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. it would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. the cuts wouldn't happen so abruptly it would be a drag on the economy or prevent us from helping small businesses and middle class families get back on their feet right now. this approach is also bipartisan. while many in my own party aren't happy with the painful cuts it makes, enough will be willing to accept them if the

burdenen is fairly shared. while republicans might like to see deeper cuts and no revenue at all, there are many in the senate who have said yes, i'm willing to put politics aside and consider this approach because i care about solving the problem. and to his credit, this is the kind of approach the republican speaker of the house, john boehner, was working on with me over the last several weeks. the only reason this balanced approach isn't on its way to becoming law right now is because a significant number of republicans in congress are insisting on a different approach, a cuts-only approach. an approach that doesn't ask the wealthiest americans or biggest corporations to contribute anything at all. and because nothing is asked of those at the top of the income scale, such an approach would close the deficit only with more severe cuts to programs we all care about, cuts that place a greater burden on working

families. so the debate right now isn't about whether we need to make tough choices. democrats and republicans agree on the amount of deficit reduction we need. the debate is about how it should be done. most americans, regardless of political party don't understand how we can ask a senior citizen to pay more for her medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don't get. 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? how can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for. that's not right. it's not fair. we all want a government that lives within its means but there's still things we need to pay for as a country. things like new roads and

bridges. weather satellites and food inspection. services to veterans and medical research. and keep in mind that under a balanced approach, the 98% of americans who make under $250,000 would see no tax increases at all, none. in fact, i want to extend the payroll tax cut for working families. what we're talking about on a balanced approach is asking americans whose incomes have gone up the most over the last decade, millionaires and billionaires to share in the sacrifice everyone has to make. and i think the patriotic americans are willing to pitch in. in fact, over the last few decades they've pitched in every time we passed a bipartisan deal to pass the deficit. the first time a deal was passed, a predecessor of mine made the case for a balanced approach by saying this. would you rather reduce deficits and interest rates by raising revenue from those who

are not now paying their fair share, or would you rather accept larger deficits, higher interest rates and higher unemployment? and i think i know your answer. those words were spoken by ronald reagan. but today many republicans in the house refuse to consider this kind of balanced approach. an approach that was pursued not only by president reagan but by the first president bush, by president clinton, by myself, and by many democrats and republicans in the united states senate. so we're left with a stalemate. now, what makes today's stalemate so dangerous is that it has been tied to something known as the debt ceiling. a term that most people outside of washington have probably never heard of before. understand, raising the debt ceiling does not allow congress to spend more money. it simply gives our country the ability to pay the bills that

congress has already racked up. in the past, raising the debt ceiling was routine. since the 1950's, congress has always passed it and every president has signed it. president reagan did it 18 times. george w. bush did it seven times. and we have to do it by next tuesday, august 2, or else we won't be able to pay all of our bills. unfortunately for the past several weeks republican house members have essentially said the only way they'll vote to prevent america's first ever default is it the rest of us agree to their deep spending cuts-only approach. if that happens and we default, we would not have enough money to pay all of our bills, bills that include monthly social security checks, veterans benefits, and government contracts we've signed with thousands of businesses. 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. interest rates would skyrocket on credit cards, on mortgages, and on car loans, which amounts to a huge tax hike on the american people. we would risk sparking a deep economic crisis. this one caused almost entirely by washington. so defaulting on our obligations is a reckless and irresponsible outcome to this debate. and republican leaders say they agree we must avoid default. but the new approach that speaker boehner unveiled today which would temporarily extend the debt creeling in exchange for spending cuts would force us again to face the threat of default just six months from now. in other words, it doesn't solve the problem. first of all, a six-month extension of the debt ceiling might not be enough to avoid a

credit downgrade and the higher interest rates that all americans would have to pay as a result. we know what we have to do to reduce our deficits. there's no point in putting the economy at risk by kicking the can further down the road. but there's an even greater danger to this approach. based on what we've seen the past few weeks, we know what to expect six months from now. the house of representatives will once again refuse to prevent default unless the rest of us accept the cuts-only approach. again, they will refuse to ask the wealthiest americans to give up their tax cuts or deductions. again, they will demand harsh cuts to programs like medicare. and once again, the economy will be held captive unless they get their way. this is no way to run the greatest country on earth. it's a dangerous game that 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. we can't allow the american people to become collateral damage to washington's political warfare. and congress now has one week left to act, and they're still fast forward. the senate has introduced a plan to avoid default which makes a down payment on deficit reduction and ensures we don't have to go through this again in six months. i think that's a much better approach, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. either way, i've 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 and a compromise that i can sign. i'm confident we can reach this compromise. despite our disagreements, republican leaders and i have found common ground before. and i believe that enough members of both parties will

ultimately put politics aside and help us make progress. now, i realize that a lot of the new members of congress and i don't see eye to eye on many issues. but we were each elected by some of the same americans for some of the same reasons. yes, many want government to start living within its means, and many are fed up with a system in which the deck seems stacked against middle class americans in favor of the wealthiest few. but you know what people are fed up with most of all? they're fed up with the town where compromise has become a dirty word. they work all day long. many of them scraping by just to put food on the table. and when these americans come home at night bone tired and turn on the news, all they see is the same partisan three-ring circus here in washington. they see leaders who can't seem to come together and do what it takes to make life just a

little bit better for ordinary americans. they're offended by that, and they should be. the american people may have voted for divided government, but they didn't vote for a dysfunctional government. so i'm asking you all 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. america, after all, has always been a grand experiment in compromise. as a democracy made up of every race and religion where every belief and point of view is welcomed, we have put to the test time and again the proposition at the heart of our founding. that out of many we are one. we've engaged in fierce and passionate debates about the issues of the day but from slavery to war, from civil liberties to questions of

economic justice, we have tried to live by the words that jefferson once wrote. every man cannot have his way in all things. without this mutual disposition, we are disjointed individuals but not a society. history is scattered with the story of those who held fast to rigid ideologies and refused to listen to those who disagreed. but those are not the americans we remember. we remember the americans who put country above self and set personal grievances aside for the greater good. we remember americans who held this country together during its most difficult hours who put aside pride and party to form a more perfect union. that's who we remember. that's who we need to be right now. the entire world is watching. so let's seize this moment to show why the united states of america is still the greatest

nation on earth. not just because we can still keep our word and meet our obligations, but because we can still come together as one nation. thank you. god bless you. and may god bless the united states of america. >> president obama there completing his address to the nation, live from washington there. a primetime address, and not only was he giving a somewhat less than on economy, zrick, of course, the debt ceiling and the problems that are facing government at the moment and indeed the debt crisis and also talking about the bipartisan of politicks that play here and the relationship between the republicans and democrats and this deadlock in which the parties are now facing. he did talk about the consequences of not reaching a decision before next week's deadline, citing, of course,

this would lead to a deep economic crisis caused entirely by washington some. heavy words and also interesting to point out he did very much give examples of americans themselves and the difficulties they would face, for example, in not receiving security payments if the government was to default, and also perhaps unfairly introducing spending cuts on the elderly women, he cited struggling to pay her medical bill and also not the same justification in the large businesses and their ability to pay lower taxes, let's get more on this now and speak to mark wise broch, at the center of economic and policy research. she joins me. listening to that, how did you think president obama came across and did he say enough? >> well, i think he did better

on the politics than he had in the past. he should have been saying from the beginning a very important point, what the republicans are trying to do is cut off money for appropriations that have already been made. it's kind of like if you bought a car and deciding whether or not you should make the payments or not. it's completely inappropriate. and i think he should have gone further on that an done that from the beginning and said this is a hostage taking kind of situation. instead, i think he made the mistake of buying into their whole idea of -- >> we're just going to leave it there because we're going to take you again to washington where the republican, john boehner, the speaker of the house of representatives is making a statement. let's listen in. >> before i business in ohio. i was amazed at how different washington, d.c. operated than every other business in america, where most american businesses make the hard

choices to pay their bills, live within their means, in washington more spending and more debt is business as usual. well, i've got news for washington, those days are over. president obama came to congress in january and requested business as usual. he had another routine increase in the national debt but we in the house said not so fast. here is a president asking for the largest debt increase in american history on the heels of the largest spending binge in american history. and here's what we got for that massive spending binge, a new health care bill most americans never asked for. a stimulus bill that's more effective than producing material for late-night comedians than it was for producing jobs. and a national debt that's gotten so out of hand it's sparked a crisis without precedent in my lifetime and yours. the united states cannot default on its debt obligations. the jobs and savings of too many americans are at stake. we told the president in

january that the american people would not accept an increase in the debt limit without significant spending cuts and reforms. and over the last six months we've done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country, something that will boost confidence in our economy, renew a measure of faith in our government and help small businesses get back on track. last week the house passed such a plan and with bipartisan support. it's called the cut, cap and balance act. it cuts and caps government spending and paves the way for a balanced budget amendment to the constitution which we believe is the best way to stop washington from spending money that it doesn't have. before we even pass the bill in the house, the president said he would veto it. i want you to know i made a sincere effort to work with the president to identify the path forward that would implement the principles of cut, cap and balance in a matter that could secure bipartisan support and be signed into law.

and i'll tell you, i gave it my all. unfortunately, the president would not take yes for an answer. even when they thought we might be close to an agreement, the president's demands changed. the president has often said we need a balanced approach which in washington means we spend more and you pay more. having run a small business, i know those tax increases will destroy jobs. the president is adamant that we cannot make fundamental changes to our entitlement programs. as a father of two daughters, i know these programs won't be there for their kids unless significant action is taken now. and the sad truth is that the president wanted a blank check six months ago and he wants a blank check today. this is just not going to happen. you see, there's no stalemate here in congress. the house passed a bill to raise the debt limit with bipartisan support. and this week, while the senate is struggling to pass a bill filled with phony accounting and washington gimmicks, we're

going to pass another bill, one that was developed with the support of the bipartisan leadership of the u.s. senate. obviously i expect that bill can and will pass the senate and be sent to the president for a signature. if the president signs it, the crisis atmosphere he has created will simply disappear. the debt limit will be raised and spending cut by more than $1 trillion and a serious bipartisan committee of the congress will begin the hard but necessary work of dealing with the tough challenges our nation faces. the individuals doing this work will not be outsiders but elected representatives of the people doing the job they were elected to do as outlined in the constitution. those decisions should be made based on how they're going to affect people who are struggling to get a job, not how they will affect some politician's chances of getting re-elected. this debate isn't about president obama and house republicans. it isn't about congress and the white house. it's about what is standing between the american people and

the future we seek for ourselves and our families. you know, i've always believed the bigger the government, the smaller the people. and right now we've got a government so big and so expensive it's zapping the drive out of our people and keeping our country from running at full capacity. the solution to this crisis is not complicated. if you're spending more money than you're taking in, you need to spend less of it. there is no symptom of big government more menacing than our debt. when it gets gripped and we liberate our economy and our future. we're up to the task. and i hope president obama will join us in this work. god bless you and your family, and god bless the united states of america. >> the house of representatives speaker there, john boehner, saying it's significant cuts and reforms that are needed to help the u.s. economy.

and this is not debates or differences between congress and the white house but is more about american people and the future they seek for themselves and their families. let's return to mark who has been listening to that. sorry to interrupt you earlier but we wanted to hear what john boehner was saying and almost at times was replicating the tone of president obama there. >> yes. there's so much about this debate that's ridiculous. it's hard to know where to start from an economic point of view. and first of all, boehner is talking about a crisis. the crisis completely manufactured, this is a debt ceiling that, as president obama said, has been raised, you know, dozens of times and they're just trying to use it to get something they can't win at the ballot box, you know. they only have the house, they don't have the senate, they don't have the president, they don't have any backing among the population to cut social security and medicare and a lot

of other programs. so it's definitely a form of extortion, and unfortunately, the president gave into it way too much and started to, you know, it's kind of like, you know, somebody kidnaps your kid and you say ok, i want to pay the ransom but i'll give you more than that if you will give up something as well. that's kind of what he did. he opened up this whole debate where, you know, you could see it in his speech tonight where he says if we stay on the current path, our growing debt will cost us jobs and do serious damage to the economy. that's just not true at all. the problem with the economy right now is a problem with demand. there's not enough spending out there and of course businesses don't want to increase investment when there isn't enough spending because we have high unemployment and because we have, of course, the origin was an $8 trillion housing bubble that burst and caused the recession and we had a weak recovery.

so the republicans have changed the narrative, they've managed to shift the whole debate. ♪ >> international news at bbc.com/news. >> funding was made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. ♪ ♪

>> union bank has put its global strength to work for a wide range of companies. what can we do for you? >> bbc world news was presented by kcet, los angeles.