Senate leaders hammered away at an intricate but potentially face-saving deal to avoid an unprecedented U.S. government debt default, as President Barack Obama planned to take his case to the American people with his second news conference of the week Friday, according to AP. The United States hit its current $14.3 trillion debt ceiling in May and has been able to juggle the books through the end of July to stay current on its debt payments and obligations to domestic programs, but a standoff between Republicans and Democrats over how to reduce the deficit has stalled any agreement. If an agreement is not reached by Aug. 2, various administration officials have suggested members of the U.S. military might go without pay as would Americans dependent on monthly payments from the federal pension system for retired people. Washington likewise could find itself unable to pay outstanding interest and principle on Treasury bonds, creating financial havoc around the globe. Obama, who had vowed to meet with congressional leaders every day until a debt limit deal was struck, did not schedule a session for Friday and instead asked leaders to gauge the temperament of their caucuses and to report back to him in 24 to 36 hours. White House officials said a meeting could still be scheduled this weekend. But attention was focusing on a separate track under discussion by Senate Republican leader Mitch McConnell and Senate Majority Leader Harry Reid. That plan would give Obama greater authority to raise the debt ceiling while setting procedures in motion that could lead to federal spending cuts. The outline of the plan was winning unusual bipartisan support even as some conservatives voiced misgivings. But pressure for a solution was mounting with dire warnings from Federal Reserve Chairman Ben Bernanke, red flags from credit rating agencies and pressure from the business and financial sectors. The White House publicly pushed for a "grand bargain" that would increase the debt ceiling while reducing the nation's long-term deficits by about $4 trillion, but officials conceded that the McConnell plan had merit as a means of avoiding a potentially disastrous default on the U.S. debt. "It's not the preferred option that we have," White House spokesman Jay Carney said Thursday. But the proposal is no one's preferred option, and that's what might make it the most palatable. Under the plan, which would require approval by the House and Senate, Obama would have the power to order an increase in the debt limit of up to $2.5 trillion over the coming year unless both House and Senate vote by two-thirds margins to deny him. Reid and McConnell were trying to work out ways to guarantee that Congress would also get to vote on sizable deficit reductions. The plan also could be linked to immediate spending cuts already identified by White House and congressional negotiators. Participants and aides described Thursday's White House session as far more cordial than the tense conclusion to Wednesday's meeting, when a curt Obama declared "enough is enough" and dispensed with end-of-meeting niceties. Adding to the urgency, Federal Reserve Chairman Ben Bernanke and JPMorgan Chase CEO Jaime Dimon issued separate warnings that a default could have a devastating effect on an already anemic U.S. economy. Moreover, the credit rating agency Standard & Poor's warned that there is a 50 percent chance it will downgrade the government's credit rating within three months because of the impasse. It followed Moody's Investor Service, which announced Wednesday it is reviewing America's bond rating for a possible downgrade.
