Obama signals movement on debt fix

U.S. President Barack Obama was meeting Wednesday with senior congressional legislators for budget talks, the White House says.

Obama met firstwith Democratic leaders and with Republicans later.

White House spokesman Jay Carney alsosignalled a position shift by Obama in a bid to resolve theimpasse, less than two weeks before the deadline when the U.S.could default on its debt.

The administration might be willing to accept a short-term increase in the government's $14.3-trillion US borrowing limit if it includes a comprehensive deal to cut the deficit, the White House said. But the extension would just be for a few daysto give legislators time to approve the comprehensive deal, White House spokesman Jay Carney said in a written statement.

At the same time, the leading proposal to resolve thedeadlock received mixed reviews.

House minority leader Nancy Pelosi, the top Democrat in the House of Representatives,gave a mildly positive view of a bipartisan plan emerging in the Senate.

"It has some good principles in it," Pelosi told journalists.

But at the same time, a seniorRepublican, House armed services committee chairman Howard (Buck) McKeon, complained that it would cut defence spending way too much and would unfairly curb military health and retirement benefits.

"This proposal raises serious implications for defence and would not allow us to perform our constitutional responsibility to provide for the safety and security of our country," McKeon wrote in a memo to fellow Republicans on the committee.

The proposal, put together by Senate leaders now known as the "Gang of Six," would cut the deficit by almost $4 trillion over a decade through a mix of spending cuts and new tax revenues.

On Tuesday, Obama and many senators endorsed the plan.

Deadline is Aug. 2

The government has said it will default on Aug. 2 if legislators don't reach a deal to raise the nation's borrowing limit cap.

On Tuesday, the House passed a bill by a vote of 234-190 that would establish a balanced budget constitutional amendment as a condition of any increase in the debt ceiling.

The legislation, dubbed "Cut, Cap and Balance" by supporters, would make an estimated $111 billion in immediate budgetreductions and ensure that totalspending declined in the future in relation to the overall size of the economy.

It also would require both the House of Representatives and Senate to approve a balanced budget amendment to the Constitution and send it to the states for ratification.

But it was unlikely to pass the Democrat-dominated Senate and also faced a White House veto.

Now that the House has blown off steam, Obama said Tuesday that he wants to "start talking turkey" with top congressional leaders like House Speaker John Boehner, Senate majority leader Harry Reid and Senate Republican head Mitch McConnell.

In the Senate, however, many Republicans warmed to the new bipartisan budget plan, revealing a thawing in their attitudes on raising new tax revenues.

The plan by the "Gang of Six" is far too complicated and contentious to advance before an Aug. 2 deadline to avoid a default that Treasury Secretary Timothy Geithner and other experts warn would shake the markets, drive up interest rates and threaten to take the country back into a recession.

But the plan's authors clearly hope it could serve as a template for a "grand bargain" later in the year that could erase perhaps $4 trillion from the deficit over the coming decade.

Speaking on the Senate floor Wednesday morning, Democratic leader Reid said he was confident Obama and congressional negotiators could avoid a government default, but the Senate still needed to hear from the House.

"We have a plan to go forward over here so I await word from the Speaker," he said, referring to a plan he's working on with Senate Republican leader McConnell to give Obama new powers to obtain an increase in the borrowing cap unless overridden by Congress.