President Barack Obama said Friday he has not given up hope for a broad deficit reduction deal, urging Republicans to accept a fiscal stability package that includes higher taxes on the wealthy and reforms to politically popular entitlement programs such as Medicare and Social Security.
Such a measure would be part of plan to avert a potential economic meltdown by raising the nation's current $14.3 trillion federal debt ceiling.
The president also stressed he has not ruled out less ambitious plans focused more narrowly on a debt ceiling increase.
Let's "set politics aside" and "do some tough stuff," Obama told reporters at a White House news conference. But "if Washington operates as usual and can't get anything done, let's at least avert Armageddon."
Tense negotiations between top Democrats and Republicans, reflecting core ideological principles on taxes and the size of government, have become a race against the clock. Administration officials have warned that a failure to raise the debt ceiling by August 2 could trigger a partial default.
If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
The seriousness of the situation was reinforced Thursday when a major credit rating agency, Standard and Poor's, said it was placing the United States' sovereign rating on "CreditWatch with negative implications."
Moody's Investors Services -- another major rating agency -- said Wednesday it would put the sterling bond rating of the United States on review for possible downgrade.
Obama warned this week he could not guarantee that older Americans will receive their Social Security checks next month if a deal is not reached. GOP leaders accused the president of resorting to scare tactics.
Talks over the last five days, however, have failed to produce a concrete deal. Obama has suggested that a sixth meeting could be held this weekend if sufficient progress isn't made, according to a Republican aide familiar with the latest negotiations.
The president told congressional leaders Thursday he expected them to consult with their respective caucuses and find agreement over the next 24 to 36 hours on how to proceed.
House Republicans have shown no sign of accepting higher taxes on the rich as part of a so-called "balanced" approach to debt reduction. GOP leaders, who consider tax hikes detrimental to the economic recovery, blasted the president Friday morning for failing to produce what they consider to be a legitimate spending cut plan.
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