House GOP signals flexibility in deficit talks

The administration says that if the government's borrowing authority is not increased by Aug. 2, the U.S. will face its first default ever, potentially throwing financial markets into turmoil.

Obama isn't calling for increases in tax rates. On Tuesday, the president urged Republicans to agree to eliminate "certain tax breaks and deductions for the wealthiest of Americans." The White House is pressing for the repeal of tax breaks enjoyed by the oil and natural gas industry and limits on deductions claimed by people in the 35 percent tax bracket.

On Tuesday, Boehner attacked the latter proposal as an assault on small businesses but was subdued on questions like oil and gas subsidies or a much-publicized tax provision that gives favorable treatment to companies that buy corporate jets.

"We're not dealing just with talking points about corporate jets or other 'loopholes,'" Boehner, R-Ohio, said. "The legislation the president has asked for, which would increase taxes on small businesses and destroy more American jobs, cannot pass the House, as I have stated repeatedly."

In his remarks Tuesday, Obama said he strongly opposes a stopgap, short-term debt-limit increase, as suggested by some lawmakers.

"We've made progress, and I believe that greater progress is within sight, but I don't want to fool anybody. We still have to work through some real differences," the president said.

Obama's tone was less partisan than at a news conference last week, as were the responses from Capitol Hill Republicans.

"I'm pleased the president stated today that we need to address the big, long-term challenges facing our country," Boehner said in a statement.

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Associated Press writer Jim Kuhnhenn contributed to this report.