WASHINGTON - Amid new warnings and fresh signs of strain, President Obama and congressional leaders are entering a perilous debt-limit endgame. The president, declaring "enough is enough," is demanding that budget negotiators find common ground by week's end even as the Senate's top Republican gained followers for his own last-ditch scheme to avoid a government default.
The continuing impasse was unsettling Wall Street, which up to now had performed as if an increase in the debt ceiling was not in doubt. And the looming Aug. 2 cutoff for action was creating new tensions between the president and Republican leaders.
Moody's Investors Service said Wednesday it will, noting there is a small but rising risk that the government will default on its debt. If Moody's were to lower the ratings, the consequences would ripple through the economy, pushing up rates for mortgages, car loans and other debts. A Chinese rating agency, Dagong Global Credit Rating Co., also warned of a possible downgrade.
Federal Reserve Chairman Ben Bernanke, addressing lawmakers, warned Wednesday that not increasing the nation's debt ceiling and allowing the nation default on its debt would send "shock waves through the entire financial system."
And in the cauldron of the White House Cabinet Room, Obama and top lawmakers bargained for nearly two hours Wednesday on spending cuts. Obama curtly ended the session when House Majority Leader Eric Cantor, R-Va., urged Obama to accept a short, monthslong increase in debt instead of one that would last through next year's presidential election.
"Enough is enough. ... I'll see you all tomorrow," Obama said, rising from the negotiating table and leaving the room, according to several officials familiar with the session.
CBS News senior White House correspondent Bill Plante reports President Obama later warned Republicans he was willing to risk his presidency to stick by his insistence for a long-term agreement.
"I've reached my limit. This may bring my presidency down, but I will not yield on this," said Mr. Obama, according to a Republican source.
The United States hit its current $14.3 trillion debt ceiling in May and the Obama administration says the government will default on its obligations if the debt limit is not increased by Aug. 2. For a new debt ceiling to last to the end of 2012 would require raising it by about $2.4 trillion.
Republicans, in control of the House of Representatives in part because of the support of tea party activists, say they will not vote to raise the limit if Obama doesn't agree to at least an equal amount of deficit reductions over 10 years.
"Our problem is, we made a big deal about this for three months," Sen. Lindsey Graham of South Carolina told The New York Times, illustrating the difficult position in which senior Republicans find themselves.
"How many Republicans have been on TV saying, 'I am not going to raise the debt limit,'" Graham told the newspaper, including himself among the GOP members dealing with the seemingly no-win situation. "We have no one to blame but ourselves."
"Let's stop the posturing and positioning, stop catering to the political base and let's start compromising," Mr. Obama told the lawmakers at the White House, according to people who were in the room.
Obama and the top eight House and Senate leaders met for the fourth time in as many days Wednesday, and, despite the tense ending, agreed to meet again Thursday. Cantor, speaking to reporters after the meeting broke up, said the White House had been lowering the amount of spending cuts it would put on the table, offering less than $1.4 trillion over 10 years, mostly in domestic and defense spending outside of the major benefits programs like Medicare, Medicaid and Social Security.
The White House argued that the total was closer to $1.7 trillion over 10 years when counting about $240 billion in reduced interest payments from the lowered debt.
Bloomberg news reports that Mr. Obama may ask senior leaders from both parties to join him for continued discussions over the weekend at the Camp David presidential retreat in Maryland, but the White House had not confirmed those plans.