White House: Short-term debt deal OK if needed to finalize big deal

As the Aug. 2 deadline fast approaches for the U.S. government, Whit Johnson reports on the ongoing debate between Republicans and Democrats on how to reduce the nation's deficit.

Dems, GOP battle for debt reducing deal

The White House said today President Obama will do whatever it takes -- including enacting a short-term debt ceiling extension -- to reach a deal to raise the ceiling and reduce the deficit. The president would only sign a short-term extension, however, in the event that Congress needed extra time to finalize a long-term deal.

Mr. Obama has repeatedly said he would not accept a short-term solution, but lawmakers only have until Aug. 2 to reach a deal. At that point, the administration has warned, the United States would risk defaulting on its loans if the debt ceiling -- the legal limit the U.S. is allowed to borrow -- isn't increased. As part of a deal to raise the debt ceiling, lawmakers have agreed to craft a plan to significantly reduce the federal deficit.

"The president does not support a short-term extension of the debt limit, period," White House Press Secretary Jay Carney said today. "The only exception to that is in the event that both sides reach a deal on a long-term extension of the debt limit plus significant deficit reduction, and we needed a very short-term extension (like a few days) to allow a bit of extra time for a bill to work its way through the legislative process."

After weeks of intense partisan debate, a group of senators (known as the "gang of six") has produced a deficit reduction plan that is garnering some bipartisan support and may have the best chance of passing in Congress. However, the plan doesn't include any elements to raise the debt ceiling, and writing a bill that encompasses all aspects of the desired "grand deal" may take too long.

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Carney continued, "We are not wavering on the president's absolute assertion that he won't sign a series of ill-defined... sort of, a toll booth kind of series of provisions that temporarily or in a limited fashion raise the debt ceiling."

Forcing Congress to take repeated votes to raise the debt ceiling would be bad for the market, he said, because it would send the signal that Washington can't handle its fiscal issues.

With that in mind, CBS News White House Correspondent Norah O'Donnell asked Carney today whether Mr. Obama could accept the so-called "gang of six" plan, alongside an agreement for larger deficit reduction.

"If both sides agree to something significant, we will support the measures needed to finalize details," Carney said. "But there is no extension without an agreement on something big -- a firm, committed agreement on something big."

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Mr. Obama is meeting with Democratic leaders from the House and the Senate this afternoon to discuss the ongoing negotiations. After that, he is meeting with House Speaker John Boehner and House Majority Leader Eric Cantor.

With the Aug. 2 deadline looming, the "gang of six" is circulating a letter to their Senate colleagues, asking them to sign on in support of their plan.

At least 33 senators have signed the letter so far, according to Democratic Sen. Mark Begich of Alaska. Begich signed the letter and said in a statement, "It's a relief to see senators from both political parties working together."

The "gang of six" is aiming to get about 40 signatures this afternoon, CBS News Capitol Hill Producer John Nolen reports -- from 20 Democrats and 20 Republicans.

"It is our strong belief that this plan can not only serve as a template for addressing this crisis, but would allow the Congress to work, and reignite our troubled economy by providing the leadership and certainty the American people expect and deserve from us," the letter says.

The "gang of six" plan could be a harder sell in the GOP-led House, which already passed a bill to make raising the debt ceiling contingent on passing a balanced budget amendment.

However, Cantor did not completely reject the plan in a statement yesterday.

"On the positive side, the tax rates identified in the Gang's plan - with a top rate of no more than 29 percent - and the president's endorsement of them are a positive development and an improvement over previous discussions," he said. "That said, I am concerned with the Gang of Six's revenue target."

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