Congress seeks debt result, Obama goes to public (AP)

WASHINGTON ? Congress is working on dual tracks and racing against the clock to raise the nation's debt ceiling while President Barack Obama appeals directly to the public in hopes of influencing a deficit-reduction deal that failed to materialize during talks he led at the White House.

But as a critical Aug. 2 deadline approached, the chances that Obama would get $4 trillion or even $2 trillion in deficit reduction on terms he preferred were quickly fading as Congress moved to take control of the debate.

House Republicans prepared to hold a vote next week to allow an increase in the debt ceiling through 2012 as long as Congress approves a balanced-budget constitutional amendment, a highly unlikely outcome.

In the Senate, the Republican and Democratic leaders worked on a bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit-reduction in the proposal to satisfy House Republicans.

The government said Friday it was using its last stopgap measure to avoid exceeding the current $14.3 trillion debt limit. Administration officials, economists and the financial markets have warned that missing the Aug. 2 deadline and precipitating a government default would send convulsions through an already weakened economy.

In a news conference Friday, the president argued that he had the public on his side in calling for a large deficit-reduction package that included spending cuts and increased tax revenues. But Republicans have flatly rejected any proposal from Obama that contains additional revenue from closing tax loopholes, restricting the value of deductions for the rich or ending oil and gas subsidies.

"This is not a matter of the American people knowing what the right thing to do is," Obama said. "It's a matter of Congress doing the right thing and reflecting the will of the American people."

Obama had held five straight days of meetings with congressional leaders at the White House, but none of the three options he proposed ? deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years ? were unlocking enough support to increase the debt ceiling by the $2.4 trillion Obama wants to make it last beyond the 2012 elections.

Essentially declaring those discussions over, Senate Republican leader Mitch McConnell said Friday: ""Now the debate will move from a room in the White House to the House and Senate floors."

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Associated Press Special Correspondent David Espo contributed to this report.

Source: http://us.rd.yahoo.com/dailynews/rss/politics/*http%3A//news.yahoo.com/s/ap/20110716/ap_on_bi_ge/us_debt_showdown

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