Obama Confident Debt Deal Can be Struck

WASHINGTON (Reuters) – President Barack Obama is confident Democrats and Republicans can cut a “significant deal” to trim the U.S. deficit and increase its borrowing limit to avoid a damaging default, the White House said on Monday.

Despite the White House’s optimism, both Republicans and Democrats showed little willingness to compromise after deficit reduction talks led by Vice President Joe Biden collapsed suddenly on Thursday.

With polls showing Americans deeply worried about the sputtering economy, both sides are talking tough in an ideological battle over how best to cut a U.S. deficit that is projected to be $1.4 trillion this year.

Republicans say the solution lies in trillions of dollars in spending cuts, while Obama’s fellow Democrats say the deficit cannot be meaningfully reduced without increasing tax revenues, something their opponents reject.

Obama, under pressure to forge a budget deal that would pave the way for the $14.3 trillion U.S. debt ceiling to be raised by an August 2 deadline, met with Republican and Democratic Senate leaders to talk about the way forward.

“The president told me that everyone in the room believes a significant deal remains possible,” White House spokesman Jay Carney told reporters after Obama’s discussion with Democratic Senate leader Harry Reid.

Obama later sat down with Senate Republican leader Mitch McConnell but neither side would say how the talks went.