The US needs the Democrats and Republicans to urgently agree on legislative change, to raise the country's existing $US14.3 trillion ($NZ16.39 trillion) borrowing cap, so it does not default on interest payments due on August 2.
Craigs broker, Peter McIntyre, said research this week had found there was a 60% chance a comprehensive, multi-year deal would be hammered out, with a 40% chance of a temporary one-month debt ceiling extension, paving the way for a mega deficit reduction plan, leaving no chance for default.
There are four possible plans.
"We continue to believe a deal will be hammered out we will see such a deal by Friday or Saturday, allowing members of Congress just enough time to digest a final deal, but not too much time to find ways of blowing it up," Mr McIntyre said yesterday.
The first plan would be from Republican Speaker John Boehner, involving a $US2 trillion-$US3 trillion dollar deficit reduction, without increasing individual taxes, which would also raise the debt ceiling by $US900 billion, and potentially more, depending on conditions.
The second plan could come from Senate Majority Leader Harry Reid, involving a $US2.4 trillion-$US2.5 trillion debt ceiling raise, just enough to get past the 2012 election, and a $US2.7 trillion-$US2.8 trillion deficit reduction.
"However, this deal has received criticism because it involves many 'phantom cuts', such as US troop drawdowns from the Middle East," Mr McIntyre said.
The third possibility would be a new plan by President Barack Obama but Mr McIntyre saw that as unlikely, since it would complicate the two options at hand.
The fourth possibility is a combined McConnell-Reid deal that would allow Mr Obama to raise the debt limit without congressional approval, as a last resort.
