MARY LOUISE KELLY, host:
It's MORNING EDITION from NPR News. Good morning, I'm Mary Louise Kelly.
STEVE INSKEEP, host:
And I'm Steve Inskeep.
We do not know where talks to raise the federal debt ceiling will go from here. Over the weekend, Republicans and Democrats seemed to be moving closer to an agreement. Now they seem farther apart.
KELLY: Let's review the basics. Without the authority to borrow more, the U.S. risks defaulting on its obligations. Republicans demanded major action on the federal deficit before they agreed.
INSKEEP: Next, President Obama said he was willing to make a major deal. And then, over the weekend, Republicans said they were not, and they urged the president to aim lower.
NPR's Ari Shapiro reports from the White House.
ARI SHAPIRO: Call it the Grand Bargain, The Big Deal, Papa Bear. Whatever name you give it, the $4 trillion agreement that looked promising last week seems like a long shot this week.
Just 48 hours ago, the outlook was much sunnier. When President Obama left the White House for Camp David on Saturday, he had this optimistic message for the American people in his weekly address.
President BARACK OBAMA: Right now we have an extraordinary - and an extraordinarily rare - opportunity to move forward in a way that makes sure our government lives within its means, that puts our economy on a sounder footing for the future, and that still invests in the things we need to prosper in the years to come.
SHAPIRO: He said: I'm hopeful that we will rise to the moment. By the end of the day, that hope had waned.
House Speaker John Boehner called from Ohio to tell President Obama that the ambitious deal both men thought possible cannot get through the House, because the bargain would include tax increases that Republicans won't sign on to.
The large plan called for cutting $4 trillion from the debt over a decade. It could have included an overhaul of the tax code and changes to entitlement programs such as Social Security, Medicare and Medicaid. But in the statement that Boehner released Saturday night, he said: The White House will not pursue a bigger debt reduction agreement without tax hikes. I believe the best approach may be to focus on producing a smaller measure, he said.
White House Communications Director Dan Pfeiffer followed with a statement of his own: We cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts. We need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well, said Pfeiffer.
The next morning, White House Chief of Staff Bill Daley told ABC's "This Week" that the president is not giving up on the larger package.
Mr. BILL DALEY (White House Chief of Staff): A number around $4 trillion is the number that will make a serious dent on our deficit.
SHAPIRO: But Senate Minority Leader Mitch McConnell of Kentucky told "Fox News Sunday" that the big deal is off the table.
Senator MITCH MCCONNELL (Republican, Kentucky): Well, I think it is because everything they've told me and the speaker is that to get a big package would require big tax increases.
SHAPIRO: The standoff means the deal might more likely be in the two to three trillion dollar range, without the fundamental restructuring of government programs that could have been part of a larger plan. But the smaller deal won't be easy to pass either, and time is running out.
On NBC's "Meet the Press," Treasury Secretary Tim Geithner warned of disastrous consequences if Congress does not vote to raise the debt ceiling before August 2nd.
Secretary TIMOTHY GEITHNER (Department of Treasury): The credit rating agencies around the world have said that if Congress doesn't act by the 2nd, they will downgrade our credit, first time in history. And if that happens, you're going to see catastrophic damage across the American economy and across the global economy. It's not something that - failure is not an option.
(Soundbite of a helicopter)
SHAPIRO: A few hours later, Marine One carried President Obama home from Camp David. And by 6:00 p.m., he was sitting around the cabinet table with congressional leaders from both parties.
(Soundbite of overlapping voices)
SHAPIRO: Can you work it out in 10 days, a reporter asked. The president replied: We need to.
An hour and 15 minutes later, the meeting ended. Lawmakers left the White House without speaking to reporters.
A spokesman for Senator McConnell said after the meeting: It's baffling that the president and his party continue to insist on massive tax hikes in the middle of a jobs crisis, while refusing to take significant action on spending reductions at a time of record deficits.
A Democratic official familiar with the meeting says the president urged Republicans not to give up on the $4 trillion deal. He argued that a smaller agreement might not be any easier politically.
This morning the president will hold a news conference to talk about the status of the negotiations. And the parties will be back at the table continuing the talks today.
Ari Shapiro, NPR News, the White House.