The top Democrats from the House and Senate met with President Obama at the White House this evening, as House Speaker John Boehner told his Republican members it is time to make "some sacrifices" to avert a debt crisis.
The late-day activity came as financial markets started opening around the world and reacting to the breakdown of negotiations and missed deadlines.
Boehner, R-Ohio, had promised to unveil his "new measure" to avoid a debt crisis this afternoon in an effort to calm the Asian financial markets. He did not. But the outlines suggest there is still work to do.
The speaker would increase the debt ceiling by a trillion dollars and cut spending by a trillion dollars. That is a short-term fix that would allow the country to borrow money and pay its bills through January.
During that period Boehner's plan calls for the appointment of a 12-member Congressional Commission to come up with an additional $3 trillion in cuts and revenue increases through tax reform.
What is unclear is whether Congress would be forced to vote to raise the debt ceiling again.
"We can't adopt an approach that leaves the threat of default hanging over the country for another six months or so," Treasury Secretary Tim Geithner said today on ABC's "This Week."
"That would be deeply irresponsible to do, and we do not think that's an acceptable burden to put on the American economy," he said.
The president has threatened a veto of any bill that does not extend the debt ceiling beyond the 2012 elections.
The United States will run out of borrowing authority on Aug. 2, and members of Congress know they must start moving legislation now to pass a debt ceiling extension in time and avoid the possibility of defaulting on bonds.
While Boehner works his plan, Senate Majority Leader Harry Reid is working on another short-term solution that would probably give the president the ability to raise the debt limit.
Reid and House Minority Leader Nancy Pelosi met with Obama for just over an hour this evening behind closed doors, but the White House had little to say about what went on in the talks.
"In the meeting the president received an update on the state of negotiations on the Hill from Leader Pelosi and Leader Reid, and the leaders and the president reiterated our opposition to a short-term debt limit increase," a White House official said.
Even this morning the administration was still saying it was interested in a 'big deal" to raise the debt ceiling and cut the national debt. Talks between the president and Boehner on the so-called "grand bargain" broke down Friday when the speaker said Obama "moved the goal posts" by demanding additional tax revenues.
But even after dueling news conferences and flashes of anger, the treasury secretary said talks have continued.
"Absolutely. They've been in touch throughout this period of time," Geithner said.
Boehner had said he planned to reveal his plan to send a message to calm financial markets.
"The markets may panic on Monday simply because the speaker has set a deadline," University of Maryland Professor Peter Morici told ABC News. "In the near term the value of stocks will fall. It's like any stock market panic. However, this is something that can be answered. The Federal reserve can buy bonds and this could calm markets."
Morici and most other economists expect a deal and say the United States will not default on its loans. But that doesn't mean the financial markets won't punish Washington for failing to make a deal. And a drop in the markets could affect every American's retirement or savings account.