Image: Jim Jordan
J. Scott Applewhite  /  AP
Rep. Jim Jordan, R-Ohio, the Republican Study Committee chairman, far left, leaves the Capitol with fellow House GOP members after passage of the conservative deficit reduction plan Tuesday, July 19, 2011.
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updated 7/20/2011 4:44:21 PM ET 2011-07-20T20:44:21

Running out of time, President Barack Obama called Democratic and Republican leaders back to the White House on Wednesday for separate, bottom-line negotiations on how to prevent a disastrous government default — and perhaps cut staggering federal deficits as well.

The talks center on a single but complex question: What will it take to muster enough votes from both parties to muscle legislation through the House and Senate and raise the national debt limit by the Aug. 2 deadline. Obama was meeting first at the White House with the top four Democrats in the House and Senate, then with House Speaker John Boehner and his deputy, Eric Cantor.

Awaiting health care details from 'Gang of Six'

Intensity was rising as the country lurched toward an unprecedented default. Congressional leaders say they want to prevent that, but they are far from agreed on how.

The government will exhaust its ability to borrow money and pay its bills come Aug. 2, and economists say that could sink the country back into recession. All sides are also pushing competing plans to cut the nation's deficit in tandem with the politically unpopular step of raising the debt limit, although deep divisions remain over tax hikes and entitlement cuts that could be part of the attack on future deficits.

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In a sign of the closing window for action, the White House said for the first time that Obama would accept a short-term extension of the debt limit, but only if a broader deal was already in place and required more time — perhaps a few days — to get through Congress. Obama had previously threatened to veto any stopgap measure.

"There is still time to do something significant if all parties are willing to compromise," Obama spokesman Jay Carney urged.

Realistically, Congress probably must come to terms with the White House on a deal this week.

The Obama administration and Congress are also working on a backup plan to increase the debt limit if no big plan can be reached. It would allow Obama to raise the ceiling on his own unless overridden by Congress. Yet many House Republicans loathe that idea and have pledged to vote against it, raising doubts about how tenable even the fallback choice is.

That plan is the result of work by the Democratic and Republican leaders of the Senate, Harry Reid of Nevada and Mitch McConnell of Kentucky.

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Obama is trying to seize on momentum from a proposal from a bipartisan "Gang of Six" senators that would cut the deficit by almost $4 trillion but lacks many specifics.

Obama met for less than an hour with Reid; Dick Durbin of Illinois, the No. 2 Democrat in the Senate and a member of the Gang of Six; House Democratic leader Nancy Pelosi of California and Rep. Steny Hoyer of Maryland, the No. 2 Democrat in the House.

The separate nature of Obama's negotiations Wednesday underscored his need to get a bottom line from both his own party and the leaders of the Republican-run House.

He keeps pushing for a mixed approach of higher taxes on the wealthy and spending cuts that would be spread across the government.

His challenge with fellow Democrats is to persuade them to accept changes to the popular entitlement programs of Medicare and Social Security. House Minority Leader Nancy Pelosi has said simply, "We do not support cuts in benefits for Social Security and Medicare."

With Republicans, Obama is slamming into opposition from conservatives who refuse to consider tax increases.

"We need to meet, talk, consult and narrow down in fairly short order what train we're riding into the station," Carney said ahead of the meetings.

The plan by the Gang of Six is probably far too complicated and contentious to win passage before the Aug. 2 deadline. But the plan's authors hope it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

Even among Democrats, Rep. Chris Van Hollen, senior Democrat on the House Budget Committee, said lawmakers had too few details about the Gang of Six plan.

Pelosi, the top Democrat in the House, reacted positively Wednesday to the new plan, saying it "has some good principles in it."

However, Republican Rep. Howard "Buck" McKeon of California, chairman of the Armed Services Committee, blasted the plan in a missive to his panel members, saying it would cut the Pentagon much too deeply and would unfairly curb military health and retirement benefits.

First Thoughts: Washington’s budget disconnect

On the Senate floor Wednesday morning, Democratic leader Reid said he was confident Obama and congressional negotiators could avoid a government default, but he also said the Senate still needed to hear from the House.

"We have a plan to go forward over here so I await word from the speaker," said the Nevada lawmaker. He was referring to the plan he's working on with GOP leader McConnell to give Obama new powers to obtain an increase in the borrowing cap unless overridden by Congress.

In the House, majority Republicans won a 234-190 vote Tuesday on a "cut, cap and balance" plan conditioning any increase in the government's borrowing authority on congressional passage of a balanced budget constitutional amendment and a fresh wave of spending cuts. That reflected the strength of tea party forces elected in last year's midterm election. GOP conservatives reveled in their victory, but it was temporary. That plan faces a White House veto threat and is a dead letter in the Senate anyway.

The Gang of Six plan, meanwhile, promises almost $4 trillion in deficit cuts, including an immediate 10-year, $500 billion down payment that would come as Congress sets caps on the agency budgets it passes each year. It also requires an additional $500 billion in cost curbs on federal health care programs, cuts to federal employee pensions, curbs in the growth of military health care and retirement costs and modest cuts to farm subsidies.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Debt drama

  1. Closed captioning of: Debt drama

    >>> now we turn to washington. this drama over the federal budget , the rapidly approaching debt ceiling deadline t arrives, whether we like it or not, august 2nd . there were more meetings on it today. kristen has the latest from the white house . good evening.

    >> reporter: hi, there. president obama is meeting with republican leaders and earlier today he met with democrats from both chambers. the first meeting was productive. one of the main things that they are discussing right now is a plan put forth by the gang of six. that's that bipartisan group of senators meeting on and off for the past several months. under their plan, the federal deficit would be reduced by $4 trillion over the next decade, changes to social security , medicare, as well as a trillion dollars in new tax revenue . here's what jay carney had to say earlier today.

    >> there is still time to do something significant if all parties are willing to compromise because the parameters are well known, especially to the participants in the negotiations that the president oversaw last week.

    >> reporter: and while that plan does have some bipartisan support, some house republicans continue to insist they won't support a plan that has any new taxes and negotiators are working on a backup plan. brian?

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