Debt ceiling: Why Sunday could be make-or-break day for 'grand bargain'

The White House and congressional leaders are looking to a new round of talks on Sunday to signal whether a grand bargain on raising the debt ceiling will come quickly – or at all.

The sense of urgency surrounding the Sunday talks is driven not only by an economic deadline, but increasingly by a political one, as well. The government is on track to run out of money by Aug. 2, and in order to meet that deadline, congressional leaders will need weeks to sell a comprehensive deal – which will likely include painful spending cuts or tax increases – to their respective parties.

“If we are going to have an agreement, we’d have it by Sunday,” said Sen. Lamar Alexander (R) of Tennessee after a briefing with House Speaker John Boehner and Senate minority leader Mitch McConnell on Thursday’s White House debt talks.

In a shift, President Obama this week played down rumors that the White House would have to settle for a short-term deal to avoid default on Aug. 2. Instead, he said there is a historic opportunity to restore confidence that the US can stem the tide of red ink and get its fiscal house in order.

So far, negotiators have avoided leaking specifics on the debt talks and are critical of news reports that claim, for example, that Social Security cuts are now on the table. But the White House and House and Senate leaders confirm that the talks are aiming at significant cuts – at least $4 trillion over a 10- to 12-year period – and are nearing endgame.

The push for a significant deal could give negotiators a boost in selling sacrifices to their respective party caucuses, White House press secretary Jay Carney told reporters after Thursday’s White House meeting.

“You would not want to give on an issue that is hard for you as a Republican or Democrat if the reward is not significant,” he said. “And the reward here, for both parties, is the opportunity to significantly reduce the deficit, send the message that we're getting our fiscal house in order, and providing, therefore, the confidence in the American economy that will help us grow faster and create jobs faster.”

But the president says the price for a deal of that scope is a “balanced approach” to deficit reduction that includes painful cuts in discretionary spending (including defense spending), cuts in entitlement spending, and ending certain tax breaks. GOP leaders say that tax increases are off the table, Democrats are resisting entitlement cuts.

House minority leader Nancy Pelosi (D) of California told reporters after the meeting that she offers the White House “full cooperation” on a “grand bargain” on debt, but not at the expense of Medicare or Social Security.

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