Senate Budget Chairman Kent Conrad said Thursday that it's impossible to enact the "Gang of Six" plan for spending cuts, a tax code overhaul and changes in benefit programs by the Aug. 2 default deadline, so a short-term extension of the debt limit is the most likely solution.
The North Dakota Democrat, part of the so-called "Gang of Six" senators, said doing nothing is not an option.
"We're all going to have to do things we'd prefer in a perfect world not to have to do," he said.
Conrad's comments came after President Obama signaled Wednesday that he could support a short-term increase in the U.S. borrowing limit as long as it is part of a broader deficit reduction deal.
Obama previously promised to veto a short-term extension of the $14.3 trillion debt limit. But White House spokesman Jay Carney said in a written statement the president would consider an exception if congressional leaders look like they're getting close to a deal for a long-term debt limit extension with deficit reduction.
Conrad told MSNBC he believes 40 senators back his group's $3.7 trillion deficit-reduction proposal and a program of tax changes and revisions in the Social Security and Medicare programs.
"Our tax system is completely out of date," Conrad said in a separate interview on CNBC. "It’s anticompetitive, it's antigrowth, it's holding us back, it's hemorrhaging revenue. We can do a lot better than that. It’s going to take time."
In the CNBC interview, Conrad said the plan would cut the deficit by $3.7 trillion in 10 years, of which a $500 billion "downpayment" would come within six months. It would also raise $1 trillion in new revenue, repeal the Alternative Minimum Tax and lower tax rates besides making major changes to entitlements.
He conceded that some proposals are unpopular, but said "we're all going to have to do things we'd prefer in a perfect world not to have to do."
The bipartisan plan would target some of the most cherished tax breaks enjoyed by millions of families—those promoting health insurance, home ownership, charitable giving and retirement savings—in exchange for lowering overall tax rates for everyone.
Many taxpayers would face higher taxes—a total of at least $1.2 trillion over the next decade, and perhaps more.
The plan, released this week, punts on many of the most difficult issues, leaving it to congressional committees to fill in the details later.
But supporters say it provides a framework to simplify the tax code, making it easier for businesses and individuals to comply while eliminating incentives to game the system.
"I think this is an attempt to find a middle ground on taxes that emphasizes keeping rates low and broadening the base as much as possible, and I think that's a very positive aspect of it," said Eugene Steuerle, a former Treasury official who worked on the last tax reform package that passed Congress, in 1986.
—AP and Reuters contributed to this report.