Obama urges action as debt stalemate continues

Updated at 12:35 p.m. ET

With just days left to reach a deal, negotiations over raising the debt ceiling remain stalemated, but President Obama said Friday morning that he was confident a bipartisan solution is achievable.

"The time for putting party first is over. The time for compromise on behalf of the American people is now," Mr. Obama said. "And I'm confident that we can solve this problem."

Even as he expressed optimism, however, Mr. Obama delivered a stern warning to Congress: "For all the intrigue and all the drama that's taking place on Capitol Hill right now, I'm confident that -- but as I said earlier, we are now running out of time. It's time for everybody to step up and show the leadership the American people expect."

Mr. Obama delivered his remarks from the White House Diplomatic Reception Room -- a setting perhaps chosen to send a message to the House, where diplomacy appeared to be sorely lacking Thursday night. Conservative Republicans on Thursday delivered a stinging rebuke against House Speaker John Boehner, when they refused to support his debt limit plan, which would have increased the U.S. borrowing limit by up to $900 billion while cutting more than $900 billion in spending over the next decade.

Boehner's original plan reduced the deficit significantly with only spending cuts -- no tax increases -- and called for a vote on an amendment to the Constitution to require a balanced federal budget. Even if it had passed in the House, Democratic leaders in the Senate made clear Boehner's bill was too conservative to make it into law. Still, the proposal wasn't good enough for House conservatives, and Boehner didn't even bother putting the bill up for a vote last night.

Even as the stalemate over the debt limit drags on, House Republican leaders sounded optimistic Friday morning they could work through their problems. After meeting with other House GOP leaders this morning, Republican Whip Kevin McCarthy, R-Calif., said, "We've got a plan. It's a great plan."

Following a closed-door meeting with House Republicans, details started to emerge of the new plan. Members say this new version makes the second debt limit increase contingent upon actually sending a balanced budget amendment to the states -- an action that would take a two-thirds vote in Congress.

This modification appears to be winning over some conservatives. Republican Reps. Jeff Flake of Arizona, Phil Gingrey of Georgia and Jeff Landry of Louisiana said Friday morning they had gone from a "no" to a "yes" - and it appeared several other members had also come on board.

Mr. Obama, however, dismissed the Republican plan and said it "has no chance of becoming law." As he has before, Mr. Obama criticized the Boehner plan for only extending the nation's borrowing authority through the end of this year.

"It's a plan that would force us to relive this crisis in just a few short months," he said. "Holding our economy captive to Washington politics once again. In other words, it does not solve the problem."

Meanwhile, Senate Democrats are moving forward with their own plan. Senate Majority Leader Harry Reid said this morning he's finally taking his plan, which would cut around $2 trillion in spending and extend the nation's borrowing authority through 2012, to the Senate floor by the end of the day.

"This is likely our last chance to save this nation from default," Reid said. "The question is - will today's Republicans break away from the shrill voice of the Tea Party and return to the Republican Party of Ronald Reagan."

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Congress has just days left to vote on a plan to raise the $14.3 trillion debt ceiling, the legal limit the U.S. can borrow. By August 2, the Obama administration says, the U.S. will have lost its authority to borrow anymore money and will be "running on fumes."

"We need to reach a compromise by Tuesday so that our country will have the ability to pay its bills on time, as we always have," Mr. Obama said. He emphasized that raising the debt ceiling does not authorize new spending -- it simply ensures that the government can pay for the bills it has already racked up.

The president warned that if an agreement isn't reached, the U.S. could lose its triple-A credit rating. "Not because we didn't have the capacity to pay our bills -- we do," he said. "But because we didn't have a triple-A political system to match our triple-A credit rating."

If the United States' credit rating were downgraded, it would be harder to borrow money, and interest rates would potentially increase across the board. "That's inexcusable," Mr. Obama said. "There are a lot of crises in the world we can't always predict or avoid... This isn't one of those crises."

White House Communications Director Dan Pfeiffer told CBS News White House Correspondent Peter Maer this morning that leaders are waiting for House Republicans to stop the political posturing and agree to a bipartisan deal. "The question isn't how we compromise -- it's if the House is willing," he said.

"I am very pleasantly surprised that they are not twisting and ripping arms off, but I simply cannot raise the debt ceiling if we're not going to change the way we do business," Rep. Jason Chaffetz, R-Utah, said Thursday night.

Still, those looking for a solution remained optimistic.

"I think investors small and large in America should know that despite the fact that we are not there yet, House Republicans' objectives remain the same," Rep. Mike Pence, R-Ind., said Thursday night.

Stephanie Condon

Stephanie Condon is a political reporter for CBSNews.com.

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