Precariously short of time, congressional leaders struggled in urgent, weekend-long talks to avert an unprecedented government default, desperate to show enough progress to head off a plunge in stock prices when Asian markets open ahead of the U.S. workweek.
President Barack Obama met Saturday with Republican and Democratic leaders— but only briefly — the day after House Speaker John Boehner abruptly broke offhis own once-promising compromise talks with the White House. Staff members kept up detailed efforts.
The goal now is to produce at least a framework agreement to raise the nation's debt limit by Monday, congressional officials said. Even that would allow scarcely enough time for the House and Senate to clear legislation in time for Obama's signature by the Aug. 2 deadline, a week from Tuesday.
House Speaker John Boehner told rank-and-file Republicans in a conference call after Saturday's meeting that he hoped to be able to announce a "viable framework for progress" by 4 p.m. EDT on Sunday, before the stock markets open in Japan and elsewhere in Asia, according to two participants. He was meeting Saturday evening with House Democratic leader Nancy Pelosi, Senate Majority leader Harry Reid and Senate Republican leader Mitch McConnell.
Lawmakers fear a big drop in investor confidence in U.S. stocks and bonds could start in Asia and sweep toward Europe and the Americas, causing U.S. stock values to plunge on Monday.
Barring action by Aug. 2, the Treasury will run out of the money needed to pay all its bills, triggering a possible default that could seriously damage the domestic economy and send damaging waves across the globe. Obama has warned repeatedly of the possibility of a spike in interest rates that could affect Americans' mortgages, credit cards and other forms of personal debt.
In talks through the afternoon, congressional aides were looking at an immediate debt limit increase of about $1 trillion, one official said, with slightly higher spending cuts to be locked into place simultaneously. Another $1.4 trillion in additional borrowing authority would be needed to satisfy Obama's demand that any deal extend into 2013, and it appeared the two sides had not yet agreed how to bridge their differences.
"We seek an extension of the debt ceiling through at least the end of 2012. We will not send a message of uncertainty to the world," Reid said in a statement issued in late afternoon.
"The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending," Senate Republican leader Mitch McConnell said in a written statement not long after he, Boehner and Democratic leaders met with Obama at the White House.
Obama appeared grim-faced as he convened the meeting around the big table in the White House Cabinet Room. He was flanked by Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev. Vice President Joe Biden, McConnell and House Democratic leader Nancy Pelosi also attended. Aides were not present when reporters were allowed in briefly, suggesting the discussion was general rather than an exchange of detailed policy proposals.
Afterward, White House press secretary Jay Carney issued a stern statement: "Congress should refrain from playing reckless political games with our economy. Instead, it should be responsible and do its job, avoiding default and cutting the deficit."
Sixteen blocks away at the Capitol, congressional aides said the White House would not have a presence at the bargaining table with House and Senate leaders.
Under normal procedures, Boehner would need to have legislation on the House floor by Wednesday to allow enough time for a measure to reach Obama's desk in time to meet the debt-limit deadline.
Negotiators were working against two avowedly non-negotiable demands — Obama's insistence on a plan that assures no rerun of the current crisis until 2013 at the earliest, and Boehner's requirement that spending cuts over 10 years must exceed the size of any increase in borrowing authority — without any rise in taxes.
To comply with both edicts, under most estimates, legislation would have to cut more than $2.4 trillion across the next decade, since that is the amount of additional borrowing authority the Treasury is expected to require to pay the nation's bills.
Also complicating the talks were divisions within each party.
Liberal Democrats are generally opposed to cuts in Medicare and Social Security, while Obama hopes to use the negotiations to appeal to voters who want big cuts in federal deficits.
Tea party-backed Republicans, dozens of whom are in the House, adamantly oppose any higher taxes, while Obama has made more revenue the price of admission to the talks.
It was unclear how much Reid, Pelosi, Boehner and McConnell would rely on the results of earlier talks, those that Vice President Joe Biden held with lawmakers for several weeks in the Capitol and negotiations Obama had with leaders in a group and with Boehner.
Judging from accounts provided by officials in both parties, Obama had previously agreed to significant changes in benefit programs, including raising the raise of eligibility for Medicare from 65 to 67 for future recipients, and also slowing the projected rise in Social Security cost of living benefits. His concessions triggered a revolt earlier in the week by Senate Democrats, who feared he was giving away too much without getting enough additional government revenue in return.
For his part, Boehner had been ready to agree to an overhaul of the tax code that would result in a net increase of revenue to the government of $800 billion over a decade.
There also had been a general agreement to cut $1 trillion or more from hundreds of government programs ranging from the Park Service to foreign aid and agriculture, and to chalk up another $1 trillion in savings by assuming the end of the wars in Iraq and Afghanistan.
There was another possible element of a deal on the shelf — legislation that McConnell and Reid have developed that would let Obama raise the debt limit by $2.4 trillion in three installments over the next year or so without prior approval by Congress. Instead, he would be required to recommend spending cuts assured of coming to a vote in Congress.
Additionally, that proposal envisions establishment of a special congressional committee to recommend cuts in benefit programs such as Medicare and Social Security and possibly draft a tax reform bill as well.