Obama huddles with leaders to avoid U.S. default

President Barack Obama met separately at the White House with Democratic and Republican leaders, pressing again for a debt reduction deal - congressional agreement to a "grand bargain" that slashes spending and increases tax revenues while averting a catastrophic and unprecedented government default.

The resumption of White House talks Wednesday underlined the urgency of an agreement on raising the U.S. debt limit by Aug. 2. American obligations could go unpaid as the Treasury Department exhausts its ability to borrow money. The cap currently stands at $14.3 trillion. Past Congresses - regardless of which party was in control - routinely approved increased borrowing as a matter of course.

This time, however, the Republican-controlled House of Representatives is under the powerful sway of 87 new members elected with tea party backing. The newcomers are pledged to reducing the size of government and preventing tax increases, if not lowering assessments. So far House Republicans have refused to even consider proposals by Obama that would slice trillions of dollars from U.S. spending over the coming decade while bolstering revenue through an overhaul of the American tax code.

WH: Short-term debt deal OK if needed
Video: Obama holds small, partisan debt meetings
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Obama has taken heart in recent days as the bipartisan Gang of Six senators, three from each party, have resurrected a deal that would slash almost $4 trillion from the deficit, including an immediate 10-year, $500 billion down payment 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. It would also raise revenue by at least $1.2 trillion over a decade by eliminating part or all of many cherished income tax deductions while lowering tax rates across the board.

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, given the time needed to craft, debate, pass and work out possible differences in legislation.

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 and Mitch McConnell.

Obama is trying to seize on momentum from the Gang of Six proposal that came back into play on Tuesday.

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

He met separately with House Speaker John Boehner and his deputy, Majority Leader Eric Cantor.

By keeping the parties apart, Obama underscored the need to get a bottom line from both his own party and the leaders of the Republican-run House.

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.