MICHELE NORRIS, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
President Obama plans a news conference tomorrow, when he'll make his case once again to cut the federal budget deficit. Many lawmakers see cutting the deficit as a precondition to raising the government's debt ceiling. But five straight days of White House talks have yet to produce a workable plan.
NPR's Scott Horsley begins our coverage.
SCOTT HORSLEY: Spending all this time together hasn't built any goodwill between Republicans and Democrats. Yesterday's meeting ended with a testy exchange between the president and the House Republican leader, after which Mr. Obama walked out of the Cabinet Room.
Today's session was describe as cordial. White House spokesman Jay Carney says the atmospherics have not posed a problem.
Mr. JAY CARNEY (White House Press Secretary): Everybody in that room is a grownup. We can all survive some of the theater that takes place out in the public arena.
HORSLEY: So far, this political drama is getting rotten reviews from the financial world.
Wall Street banker Jaime Diamond asked today why lawmakers would gamble with the government's debt ceiling and run the risk of a, quote, "catastrophic outcome."
The bond rating agency Moody's warned that a government default can no longer be ruled out. To protect its stable credit rating, Moody's says it's not enough to just raise the debt limit. The federal government also needs a credible plan to reduce its long-term deficit.
Federal Reserve Chairman Ben Bernanke made the same point on Capitol Hill this week, but Bernanke also warned against cutting too much federal spending too quickly.
Mr. BEN BERNANKE (Chairman, Federal Reserve): We do need to take some care that we don't excessive restriction in the short term hamper what is already a very slow recovery. Of course, it'd be a very bad thing from the point of view of the unemployed, but it also would be a problem from the point of view of the federal budget, because if you slow economic growth, you affect tax collections as well.
HORSLEY: Taxes were a key focus of today's talks. The president says any deficit-cutting plan should include increased tax revenue, beginning in 2013.
So far, congressional Republicans have rejected that idea, but a new Gallup poll shows most Americans agree higher taxes should be part of the equation, along with spending cuts.
Frank Newport of Gallup says even among Republican voters only about a quarter rule out tax hikes altogether.
Mr. FRANK NEWPORT (Editor-In-Chief, Gallup Poll): Rank-and-file Republicans across the country, it seems, do recognize that there are going to have to be at least some tax increases, perhaps minimal, as part of the mix.
HORSLEY: At the same time, many voters are reluctant to raise the debt ceiling. Some argue the government needs to stop spending or manage its budget better. Fed Chairman Bernanke says it's a little late to be arguing that.
Mr. BERNANKE: The analogy about balancing your checkbook, getting your finances in order, is wrong. The right analogy for not raising the debt limit is going out and having a spending spree on your credit card and then refusing to pay the bill. That's what not raising the debt limit is.
HORSLEY: White House spokesman Carney notes the four Republican negotiators in these talks have already voted to raise the debt ceiling 25 times between them. Carney says the administration has identified at least one and a half trillion dollars in government spending that could be cut over the next decade. He says if the GOP will give on taxes, an even bigger deal to cut the deficit is possible.
Mr. CARNEY: That agreement is right here within reach, just have to reach for it and grasp it and be willing to compromise to do it. And you know what, that requires thinking about the broad American public and not the narrow constituencies within your own party.
HORSLEY: But speaking on the floor of the Senate today, Republican leader Mitch McConnell sounded no closer to a handshake deal with the president.
Senator MITCH McCONNELL (Republican, Kentucky; Senate Minority Leader): If he and the Democratic Senate would rather borrow and spend us into oblivion, they can certainly do that. But don't expect any more cover from Republicans on it than you got on health care. None.
HORSLEY: McConnell has offered a backup plan in case no deal is reached that would allow Mr. Obama to raise the debt ceiling on his own. The plan is designed to keep Republican fingerprints off the unpopular measure. The administration says if there's no progress otherwise, it will turn to that kind of backup.
Scott Horsley, NPR News, the White House. Transcript provided by NPR, Copyright NPR.
