Spending cuts alone will not fix US deficit: Obama

WASHINGTON: US President Barack Obama said Monday the United States cannot reduce its ballooning deficit through spending cuts alone, as he grappled for a debt deal with Republican lawmakers.

"We can't just close our deficit by cutting spending," Obama said, reiterating his earlier opposition to any deal which just focuses on reducing the deficit through cuts with no revenue increases.

He renewed his call for the nation's wealthiest to contribute their "fair share" to the government's coffers.

Pressure is rising on Obama and top lawmakers to avert a ruinous US debt default just days away, as stocks slipped and the IMF warned of a "severe shock" to the world economy.

Obama cancelled a pair of political fundraisers as Democrats and Republicans huddled separately in Congress in a quest for a compromise without which the world's richest nation will run out of cash to pay its bills August 2.

Obama has been trying to hammer out a deal to raise the nation's $14.3 trillion debt ceiling coupled with a plan to rein in its deficit.

Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating normally but can only do so thought August 2.

At that point, US leaders will face an agonizing choice about cutting an estimated 40 cents of every dollar in spending and defaulting either on debt payments or on other obligations like government health or retirement benefits.

Copyright AFP (Agence France-Presse), 2011