Harry Hamburg, Associated Press
WASHINGTON — With bipartisan talks stalled, House Republicans and Senate Democrats readied rival debt-limit emergency fallback plans in hopes of reassuring world financial markets on Monday the U.S. government will avoid an unprecedented default in barely a week.
House Speaker John Boehner summoned rank-and-file conservative lawmakers in a Sunday-afternoon conference call to be ready for compromise that is "going to require some of you to make some sacrifices."
He said the new legislation, expected to be unveiled as early as Monday morning, would cut federal spending, raise the government's borrowing authority and be able to clear both houses of Congress, according to one official familiar with his remarks on the call.
Officials said that plan was likely to provide for an immediate increase in the debt limit of $1 trillion, while making somewhat larger cuts in federal spending. Additional spending reductions and greater borrowing authority would depend on future action by Congress — a two-step process that Obama has ruled out.
Across the Capitol, Senate Democratic leader Harry Reid worked on an alternative to cut spending by $2.7 trillion and increase the debt limit by $2.4 trillion — enough to satisfy Obama's demand that the current crisis not recur before the 2012 elections.
Reid said the plan "meets Republicans' two main criteria" — spending cuts greater in size than the increase in borrowing authority and no new revenue.
The events unfolded in a crisis atmosphere — in a sweltering city swarming with summertime tourists — a little more than a week before an Aug. 2 deadline for action by Congress to raise the government's $14.3 trillion debt limit.
Without action by that date, the Treasury will be unable to pay all its bills, possibly triggering a default that could have severe consequences for the U.S. economy and the world's, too.
Officials — and many stockholders — were holding their breath to see how the uncertain situation would affect financial markets in the U.S. and around the world as they opened after the weekend of crisis negotiations.
Early results from Asian markets showed no major swings.
Obama spoke with Boehner by phone during the day, then met with Reid and House Democratic leader Nancy Pelosi at the White House.
At the same time, several officials said leadership aides spent Sunday trying to produce a compromise that could quickly clear both houses.
One official, speaking on condition of anonymity, portrayed the Democrats' White House meeting as an unsuccessful attempt to persuade Obama to accept a two-step he has said he won't agree to.
There were numerous suggestions of progress — both Boehner and Reid now support plans without immediate increases in government revenue — but no announced compromise.
Similarly, the precise elements of the rival fallback plans were sketchy.
Boehner's revised measure would fall far short of a House-passed bill that was rejected in the Senate late last week.
It had called for raising the debt limit on condition of $6 trillion in spending cuts and congressional approval of a constitutional balanced budget amendment for state ratification.
Reid's office declined to provide any details of his alternative, except to say it would cut $2.7 trillion in spending over a decade without any tax increases.
Any sum that large would require either cuts to benefit programs that aides said Reid preferred to leave untouched, or savings from the Pentagon, possibly by assuming the end of the wars in Iraq and Afghanistan.
It appeared the White House was largely consigned to a spectator's role.
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