Now even troops are warned they may not be paid with no solution to debt crisis in sight

Soldiers told their salaries are lower priority than interest payments to foreign bond-holders

Renewed bi-partisan talks run late into the night at White House as leaders make desperate last-minute stab at compromise

Reports of 'significant progress'

Senate Majority Leader Harry Reid postpones closure vote on his bill until 1pm on Sunday

American soldiers in Afghanistan have been warned they may not be paid after President Obama failed in an 11th-hour attempt to reach a settlement over the U.S. deficit.
In a crisis that has potentially devastating consequences for the world economy, the U.S. will run out of money to pay its bills next Wednesday unless squabbling Washington legislators raise the country's $14.3 trillion (£8.7tn) debt ceiling.
Troops fighting in Afghanistan have been told that the Obama administration is expected to make their salaries a lower priority than interest payments to foreign bond-holders.

Defeated: U.S. Senate Majority Leader Harry Reid on Saturday after the House rejected a Democratic proposal to raise the nation's debt ceiling

More than $1.2 trillion of America's vast debt is owned by China and another $328bn is owned by UK private investors and pension funds.
The Obama administration is expected to continue to pay them next month, along with pensioners.

Other social programmes, including medical care for the poor and help for the country's unemployed, also will be fully funded, according to insiders.
But that will leave no money to pay federal employees, including troops.
America's top military official, Admiral Mike Mullen, delivered the stunning news to soldiers at a meeting at Kandahar air base in southern Afghanistan.
Asked if they will be paid if Mr Obama is unable to resolve the deadlock, he said: 'I honestly can't answer that question.

'I have confidence that at some point in time, whatever compensation you are owed, you will be given.'
Troops will be ordered to continue to work, the admiral said. Economists say the U.S. could be plunged into recession if the Republican-controlled House and the Democratic Senate cannot agree on legislation.
After weeks of intense partisanship, talks went late into the night at the White House on Saturday as leaders made a desperate, last-minute stab at compromise to avoid a government default.
Some reports suggested 'significant progress' was being made.
'There is very little time,' declared President Barack Obama.
Mr Obama met with top Democrats at the White House and spoke by phone with Senate Republican leader Mitch McConnell.

Tension: Even if the U.S. continues to make interest payments to creditors, it will unnerve the markets, said city analysts

Q&A: WHY OBAMA'S CRISIS AFFECTS YOU

Q: When will the U.S. officially run out of money?
A: Wednesday.
Q: Why is it broke?
A: The U.S. government has reached its maximum debt level of $14.3 trillion.
Q: Why doesn't it raise the debt ceiling?
A: Because Tea Party militants have vetoed it.
Q: Why?
A: Because they want big spending cuts and refuse to back tax rises.
Q: What is the official Republican position?
A: Lift the debt limit in return for $1 trillion spending cuts.
Q: What is President Obama's position?
A: A bigger rise in the debt ceiling to avoid another crisis before the U.S. elections next year.
Q: What if the U.S. defaults?
A: It could suffer the humiliation of losing its triple A credit rating.
Q. What is a triple A rating?
A. The highest rate of credit worthiness a government can achieve.
Q. What happens if the U.S. loses it?
A. The government could have to pay more to borrow money.
Q: How will that affect ordinary Americans?
A: More firms will go bust, interest rates on credit cards and home loans will rise.

'He needs to indicate what he will sign, and we are in those discussions,' McConnell said of the President.
He added he had also spoken with Vice President Joe Biden, who played a prominent role in earlier attempts to break the gridlock that has pushed the country to the verge of an unprecedented default.

 

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A day after the Republican-controlled House of Representatives passed a bill to cut the deficit and raise the ceiling on government borrowing, the debt saga shifted to the Democratic-led Senate where lawmakers scrambled for a deal.
Senate Democrats pushed ahead with their own plan, but sought to attract bipartisan support by adding some elements of a proposal offered by Senate Republican leader Mitch McConnell.
But Senate Republicans appeared to have the votes to block that bill and the House quickly crushed the Democrats' proposal before the Senate acted on it, rejecting the measure 246 to 173 in a fast-tracked vote set by the Republican leadership.
Senate Majority Leader Harry Reid postponed a closure vote on his debt plan, originally expected to happen at 1am on Sunday to 1pm.
'There are many elements to be finalized.  Many elements to be finalised. There is still a distance to go before any arrangement can be completed.
'But I believe we should give everyone as much room as possible to do their work,' he said.
'No one believes this will really happen,' a City financial expert told The Mail on Sunday, 'so no one has thought through the consequences.
Even if the U.S. continues to make interest payments to creditors, it will unnerve markets and probably lead to a lowering of its credit rating.
'That means the value of U.S. bonds held by banks will fall and they will have to raise more capital in order to meet their required asset levels and that in turn could force up interest rates, causing a recession.'
Senate Democrats killed a bill passed by the Republican-controlled House late on Friday.
Democrats opposed it as 'extremist' while Right-wingers said it did not go far enough.
And all 43 Republicans in the Senate have signed a letter, saying they will not vote for a rival Democrat plan to raise the debt limit.
Mr Obama pleaded for compromise, saying: 'There is very little time.' As the warring continued, Mr Obama was described by The New York Times, as 'largely a bystander'.

Read more: http://www.dailymail.co.uk/news/article-2020651/US-debt-ceiling-crisis-American-troops-Afghanistan-paid.html#ixzz1TlVhhUcw