Negotiators begin effort to salvage debt ceiling deal

Congressional leaders huddled with President Obama at the White House, trying to pick up the pieces of the deficit reduction and debt limit deal that collapsed on Friday.

Obama met with House Speaker John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell and House Democratic leader Nancy Pelosi. Obama called the foursome to the meeting on Friday evening after Boehner abruptly announced he was pulling out of one-on-one talks with the White House.

Boehner’s move seemed to suggest the effort to craft a “grand bargain” to reduce the debt had failed. Lawmakers would now be focused on a less ambitious Plan B deal aimed at persuading Boehner’s Republican colleagues in the House to raise the debt ceiling before the Aug. 2 deadline.

Administration officials say that after that date the government will no longer be able to borrow money to pay its bills – resulting in the first-ever large-scale default in U.S. history.

Boehner said Friday he was confident a default would be avoided.

The Obama-Boehner talks broke down primarily over the fight over how much of the deficit reduction should be achieved through new tax revenue. Republicans had agreed to $800 billion in new revenue over 10 years, but would not concede an additional $400 billion sought by the White House.

With the implosion of the Obama-Boehner talks, the most viable plan on the table remained a deal hatched earlier this month by Reid and McConnell. The proposal would attach spending cuts to a debt limit increase ? although the limit would be increased in phases. McConnell has also said he’d like to structure the proposal to give the authority – and the political fallout -- for raising the limit to the president.

The deal has received a chilly reception from conservatives in the House of Representatives.

As the talks began Saturday, a Boehner spokesman said the speaker will “will reiterate again Saturday that in order for a bill to pass the House, it must include cuts greater than the debt limit increase.”

The president has asked for a roughly $2.4-trillion increase in the debt limit – enough to keep the issue from coming up again before the next election.

Reid spokesman Adam Jentleson said Saturday that remains the Democrats’’ goal.

“Reid is open to a range of ideas as long as they meet the baseline both he and the president have laid down, that we raise the debt limit through 2012,” he said. “That said, we are 10 days away and the framework he negotiated with Sen. McConnell remains the only viable plan that is actually on the table.”

Lawmakers are hoping to hash out a package that can be presented to members Monday.

“We are definitely running out of time,” Jentleson said.