President Barack Obama and Republican lawmakers, seemingly trapped in inflexible bargaining positions, remain far apart on a deal to avert a first-ever default on the country's financial obligations.
Congressional leaders were asked to return to the White House for more talks Tuesday afternoon after a 90-minute Monday session produced no progress other than to identify the size of the gap between Republicans and Obama.
An Aug. 2 deadline looms for Congress to raise the country's debt limit. Republicans are insisting on major budget cuts to reduce the swollen deficit. Obama and his fellow Democrats are also offering budget cuts but in tandem with tax increases that the Republicans say they won't support.
Both Democratic and Republican leaders agree the U.S. shouldn't be allowed to default on its obligations, which could skyrocket interest rates, send stock markets plunging and shatter faith in the world's No. 1 economy.
The showdown comes as Obama and lawmakers head into next year's presidential and congressional elections.
In unusually blunt and combative language, the Senate's top Republican said White House offers to cut long-term spending amount to "smoke and mirrors" and directly challenged Obama's leadership in debt limit negotiations.
Senate Republican leader Mitch McConnell charged Tuesday that Democrats and the Obama administration were relying on budget gimmicks to give the "appearance of serious belt-tightening."
"After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable," McConnell said.
Obama has been pushing for $4 trillion in a 10-year deficit reduction proposal. But House Speaker John Boehner, after seeking to forge a deal of that magnitude, told the president that a smaller, $2 trillion to $2.4 trillion deal was more realistic. A deal is essential to win Republican votes to increase the nation's debt ceiling by Aug. 2, or risk a government default.
After another round of talks Monday, neither side showed any give that might generate hopes for a speedy agreement on the $2 trillion-plus in budget cuts.
Instead, Republicans again took a firm stand against revenue increases, while Obama and his Democratic allies insisted that they be part of any equation that cuts benefit programs for the elderly.
"I do not see a path to a deal if they don't budge, period," Obama said at a news conference Monday.
At the same time, the president turned up the pressure by announcing he won't sign any short-term debt limit increases.
Obama's declaration seemed aimed at pressuring lawmakers to continue to strive for the largest deficit reduction plan possible, even though hopes for a deal mixing a complete overhaul of the tax code with cuts to benefits programs fizzled over the weekend.
At issue is the government's ability to borrow more to pay existing debt obligations and to run certain day-to-day operations. The U.S. blew past the existing $14.3 trillion borrowing limit on May 16. The Treasury Department has used accounting footwork to keep accounts in the black, but says the government could begin defaulting on its obligations if the debt ceiling isn't increased by Aug. 2.
Despite lingering hopes for a larger deal, the goal of the talks is to produce spending cuts of at least $2.4 trillion or so over the coming decade. Such cuts would not do enough to address deficits that threaten the economy, but they would represent a downpayment on further reductions that would be imposed after next year's elections.
The group of negotiators includes Obama and other top administration officials and a bipartisan group of the eight top leaders of Congress.
With the Aug. 2 deadline approaching, 42 percent of Americans say they see a greater risk to the economy from not raising the debt limit, according to a Washington Post-Pew Research Center poll conducted last week. That's up 7 points from late May. However, there are still 47 percent of Americans who say they are more concerned about the consequences of raising the debt ceiling.
The business community is also upping the pressure on lawmakers, warning that a failure to increase the nation's borrowing limit could have an immediate impact on the economy recovery.
"An unprecedented default on the nation's bills would have dire consequences for our economy, our markets, and Main Street Americans," said Thomas Donohue, president of the U.S. Chamber of Commerce.