President Obama prepares to make a statement about the debt ceiling negotiations. (Win McNamee / Getty Images )
Reporting from Washington — Buoyed by a new bipartisan proposal to raise the debt ceiling, President Obama continued to press congressional leaders Wednesday for a "grand bargain" that would reduce the federal deficit by nearly $4 trillion over 10 years.
Obama met separately at the White House with Democratic and Republican congressional leaders in an effort to break the impasse before Aug. 2, when the government is expected to run out of money to pay its bills if the ceiling remains at $14.3 trillion. It was not clear if the meetings produced any developments.
Hopes for a sweeping deal on the debt and federal deficits were revived by a proposal offered this week by the so-called Gang of Six senators who have been working all year on budget changes.
The plan would achieve nearly $4 trillion in deficit reduction in the next decade through spending cuts, entitlement reform and an overhaul of the tax code, which includes generating $1.2 trillion in new revenue.
Republican senators' interest in the plan appeared to crack part of the logjam over taxes that has stymied a broader deal. Before now, the GOP had refused to consider more tax revenue as a way of reducing deficits, preferring to rely on steep spending cuts alone — an approach Democrats reject.
But time is limited to achieve such a deal. The Treasury Department has said the government risks default next month, which would cause an economic upheaval and raise U.S. borrowing costs. The proposal from the six senators represents a framework that could take weeks to move through committees and Congress.
Obama has repeatedly said he would reject a debt ceiling increase that falls short of the $2.4 trillion the Treasury needs to pay the government's bills through 2012, arguing that the political environment would grow only more challenging with the coming election cycle.
White House Press Secretary Jay Carney said Wednesday that the president still adhered to that position. But for the first time, Carney seemed to leave the door open to a short-term deal to raise the debt ceiling if it would help achieve "something significant" in the way of a larger agreement.
Obama met late Wednesday with GOP leaders — House Speaker John A. Boehner (R-Ohio) and Rep. Eric Cantor (R-Va.), the majority leader — and separately with congressional Democratic leaders.
During the meeting with Boehner and Cantor, the president reiterated his opposition to a short-term deal that Cantor and some Republicans have pursued. Obama also spelled out the terms under which he would consider a short-term arrangement, according to a Democratic official familiar with the talks who would describe them only on condition of anonymity.
Democratic leaders voiced support for a larger package, as long as it did not "balance the budget on the backs of seniors through cuts to Social Security, Medicare and Medicaid beneficiaries," according to a House aide, who also spoke on condition of anonymity because he was not authorized to comment publicly.
Liberals in the House have complained that the Gang of Six's outline would alter the federal safety net and entitlement programs.
Also on Wednesday, the Senate announced it was taking up the House-passed debt ceiling bill that Obama has said he would veto. That measure would substantially cut spending and cap future outlays.
It would allow the debt ceiling to be increased only after Congress also sends to the states for ratification a constitutional amendment that would require balanced budgets. A Senate vote is expected by Saturday, but the measure is not expected to pass.