debt negotiations

Story highlights

Obama and Hill leaders will continue debt ceiling talks at the White House on Monday

Obama will discuss the talks at a news conference at 11 a.m.

The GOP continues to insist on no tax hikes while Democrats are pushing for a "balanced" approach

The United States must raise its $14.3 trillion debt ceiling by August 2 or risk a default

Washington (CNN) – President Barack Obama is set to host top congressional leaders at the White House Monday, continuing a marathon session of talks aimed at striking a deal to raise the nation’s $14.3 trillion debt ceiling and avert a potentially devastating national default.

Obama will hold a news conference at 11 a.m. – before the meeting – to discuss the state of the negotiations.

Before meeting with Hill leaders Sunday evening, Obama told reporters it’s critical to strike a deal within the next 10 days. Treasury officials have warned that a partial default could be triggered if Congress fails to act by August 2.

Such a failure could lead to skyrocketing interest rates and a plummeting dollar, among other things.

Negotiators are trying to salvage a deal after House Speaker John Boehner, R-Ohio, pulled back Saturday from a proposed “grand bargain” that would have saved up to $4 trillion over the next decade. Republicans are demanding steep spending cuts in exchange for raising the ceiling, but are adamantly opposed to any tax hikes.

Democrats, in turn, are demanding revenue increases to reduce the impact of domestic spending cuts and ensure that the richest Americans shoulder some of the burden of a deal. House and Senate progressives are also balking at the idea of reining in spending on popular entitlement programs such as Medicare, Medicaid, and Social Security.

“We, unfortunately, remain far apart because every time we get close the Republicans move the goal posts further to the right, further and further to the far right,” Rep. Steve Israel, D-New York, said Monday on CNN’s “American Morning.”

“We’re not in this boat because America taxes too little,” said Rep. Tom Price, R-Georgia. “We’re in this boat because America spends too much, Washington spends too much.”

A Democratic congressional aide told CNN that talks over the weekend produced no breakthroughs.

Obama continued pushing for a “grand bargain-style deal that includes revenues, like getting rid of millionaire tax breaks, while Republicans argued it was time to lower sights to a smaller deal that relies on cuts alone,” the aide said.

A senior administration official said the president will not accept a short-term agreement or anything that, in the White House’s view, is not balanced.

An aide to Boehner, meanwhile, said the speaker is now proposing a smaller deal based on roughly $2.4 trillion in cuts identified during a previous round of bipartisan talks spearheaded by Vice President Joe Biden.

Boehner hinted at the GOP’s strategy on Saturday evening, when he issued a statement saying that his party cohorts could not support a major deal as long as Obama and Democrats insist on increasing taxes. He said that any such revenue-raising initiative would prevent the bulk of Republicans from supporting a more ambitious deal, even if it was one that included cutting spending and reforming entitlement programs such as Medicare.

Boehner insisted the talks’ parameters should be scaled back to focus on budget cuts alone.

The White House immediately pushed back, with a senior administration official saying Boehner had initially accepted the need to increase tax rates on wealthy Americans as part of a deal. But then, the official said, Republicans offered a different plan in talks with Obama that began Thursday.

Obama believes “it is time to solve this problem,” White House Chief of Staff Bill Daley said on ABC’s “This Week” program Sunday. Obama’s “call to the (congressional) leaders is to step up and be leaders,” Daley said.

Christine Lagarde, the new head of the International Monetary Fund, warned Sunday that a failure to raise the debt ceiling “would jeopardize the stability” of the global economy. There will be “real nasty consequences,” she told ABC.

Regardless, both Democrats and Republicans on the Sunday talk shows suggested the two sides remain far from an agreement.

“What is really appalling is to see our Republican colleagues essentially providing a form of extortion – if you don’t agree to deficit reduction the way we want it, we’ll put all the jobs at risk, because we will allow the United States to default on its debt,” said Rep. Chris Van Hollen, D-Maryland, on the CNN show “State of the Union.” “That’s irresponsible.”

At the heart of the GOP resistance is a bedrock principle pushed by conservative crusader Grover Norquist against any kind of tax increase. A pledge pushed by Norquist’s group, Americans for Tax Reform, has been signed by more than 230 House members and 40 senators, almost all of them Republicans.