Nations Watch US Debt Debate

Another closed-door Capitol Hill meeting today as a bipartisan group of lawmakers and Vice President Biden try to hammer out a deal on the nation's debt limit. The Obama administration wants to raise it $2.4 trillion, but Republicans want matching spending cuts.

After the meeting, House Majority Leader and Virginia Republican Congressman Eric Cantor said, "There isn't a credible plan to manage down the debt and deficit in this country. That is what we are trying to produce here."

But the White House maintains that raising the debt ceiling "must happen."

White House Press Secretary Jay Carney told reporters, "This is not a matter of spending, this is a matter of the United States meeting its obligations, not defaulting on its obligations."

Obligations including money the U.S. owes to individuals and countries who have bought U.S. debt in the form of government-issued bonds.

Economic policy analyst Brian Gardner says the U.S. hasn't defaulted previously, and he doesn't think it will happen this time.

"The markets and the global economy look at it with a fair amount of cynicism, and suppose that the U.S. will fix its problems and raise the debt ceiling," Gardner said. "It's not a problem yet."

Around the globe, other nations are keeping an eye on the debate in Washington.

An official with India's central bank told Reuters, "How can the U.S. be allowed to default? We don't think this is a possibility because this could then create huge panic globally."

In China, Hong Lei, a spokesman for China's Foreign Ministry, urged the U.S. to "protect the stability of international financial markets." And Li Daokui, an advisor to China's central bank, warned that if the U.S. defaults, it could undermine the U.S. dollar.

But Gardner is skeptical. "You can't say there's going to be a problem with the dollar -- a problem for the dollar compared to what? And when you look around the rest of the world, there aren't a lot of great safe havens right now."

Moody's, the credit rating agency, said the U.S. may be in danger of losing its AAA credit rating. Gardner said this was more of a warning, a "shot across the bow," than a prediction.