Obama on debt-ceiling crisis: ‘We are running out of time’

President Obama said Friday that he hasn’t surrendered hope for a large-scale deal to raise the federal debt ceiling and slice the budget deficit even as the clock continues to wind down toward a potentially catastrophic federal default.

The White House has been pushing for an agreement by the end of next week in order for it to be enacted by Congress before the Aug. 2 deadline set by the Treasury Department to increase the nation’s debt cushion in order to meet its current obligations.

“We are obviously running out of time,” Obama said at a news conference at the White House briefing room.

The White House has insisted that any deal include some mechanism for raising more revenue in order to significantly pay down the deficit, but congressional Republicans have balked at the prospect of tweaking the tax code for deficit reduction. That remains the largest stumbling block in negotiations.

The GOP would instead prefer deep spending cuts past the $2.4 trillion amount by which the administration seeks to raise the debt ceiling. The House hopes to pass a plan next week that includes the cuts, along with a provision for a balanced-budget amendment.

The president reiterated that failure to raise the $14.3-trillion debt ceiling could carry severe consequences for the American public, including an increase in interest rates, which he likened to a “tax increase on everybody.”

“This is not some abstract issue,” Obama said. “Congress has run up the credit card. We now have an obligation to pay our bills.”

Obama has asked congressional leaders on both sides to determine in the next day or so what kind of plan can pass the Democratic Senate and the Republican-held House in order to forge a path ahead. No talks between the sides are expected Friday.

The president suggested that he was open to a more modest deal that at least makes some effort—a “down payment,” he termed it—to attack the deficit. And he said that he was holding out hope for some sort of progress on entitlement programs, suggesting that he could support means-testing for Medicare recipients that could result in higher-earning recipients paying a greater share of the cost of benefits.

“If we can’t do the biggest deal possible, let’s still be ambitious,” he said. “We could still send a signal that we are serious about this problem.”

But he made it clear that he wouldn’t accept a plan that would only feature spending cuts that match the debt-ceiling increase.

“If you are trying to get to $2.4 trillion without any revenue, you are effectively gutting a whole bunch of domestic spending that is going to be too burdensome,” he said.

The White House has identified spending cuts that amount to just over $1 trillion—and Obama wants to package those cuts with revenue-generators.

The president said he is open to new approaches from Republicans.

“If they show me a serious plan, I’m ready to move,” Obama said. He downplayed the idea that negotiations this week had grown contentious—and he said that the American public wasn’t interested in blow-by-blow accounts of the talks.

“American people are not interested in the reality TV aspects of who said what and if somebody’s feelings got hurt,” he said.

The president expressed lukewarm feelings for a procedural end-around suggested by Senate Minority Leader Mitch McConnell (R-Ky.) this week that would allow the administration to secure a debt-ceiling hike while giving Republicans the opportunity to vote against the increase. Conservatives abhor the idea, because it would do little to ensure that significant spending cuts would be a part of the measure, but some congressional leaders are seeing it as a possible way out of the quagmire in which both Democrats and Republicans have found themselves.

He called the plan the “least attractive” option.

“We have enough time to do a big deal,” the president said.