Testing US debt talks set to enter third day

The 3:45 pm (1935 GMT) discussions at the White House came after Obama Monday scolded Republicans and pressed them as well as reluctant fellow Democrats to accept a compromise rich in political pain for all involved.

"I'm prepared to take on significant heat from my party to get something done. And I expect the other side should be willing to do the same thing if they mean what they say, that this is important," the president said.

Obama said a final deal should include cuts in popular social safety net programs like Medicare health benefits for the elderly and disabled and Social Security payments to retirees, "balanced" by tax hikes on the rich and wealthy corporations -- a step Republicans have flatly rejected for months.

"I do not see a path to a deal if they don't budge, period," said Obama, who needs to get any agreement drafted as legislation and passed by the Democratic-held Senate and Republican-led House of Representatives.

The president said he would continue to push for "the largest possible deal" to put the country on firmer financial footing.

And he upped the pressure saying: "Now is the time to deal with these issues. If not now, when?"

But Republican House Speaker John Boehner, holding his own press conference just before the negotiations resumed, rebuffed Obama's overtures and refused to shift on tax increases that he warned would "destroy jobs."

Boehner also charged Democrats were "just not serious enough" about deep changes to cherished social safety net programs like Medicare health insurance for the elderly and disabled as well as Social Security retirement payments.

But "I understand that this is going to take sacrifice and it's going to take political capital on both sides, and I'm certainly willing to take my fair share of it," he told reporters.

Boehner faces pressure from the archconservative "Tea Party" movement that helped Republicans sweep to control of the House of Representatives in 2010 elections shaped by stubbornly high unemployment and anger at Obama's policies.

Democrats, meanwhile, have vowed to oppose Medicare and Social Security cuts.

And the president, whose 2012 reelection bid will hinge on voter perceptions of how he has handled the jobs-poor US economy, has portrayed himself as seeking a reasonable middle ground for the good of the country.

Democratic officials and Republican aides later sketched out details from Monday's 90-minute session that left little doubt of the yawning chasm between the two sides and increasingly frayed partisan patience.

"I said at the White House meeting today that Dems (Democrats) won't vote for a package without revenues," the number-two House Democrat, Steny Hoyer, said on Twitter.

And a Republican aide familiar with the meeting described a curt exchange between Boehner and Obama when the speaker insisted that social safety net cuts "aren't easy for us to vote for either" and the president shot back that they were at the core of the House Republican budget approved earlier this year.

"Excuse us for trying to lead," Boehner countered, the aide said.

Discussion had focused on the work of a group led by Vice President Joe Biden, as Boehner pressed for spending cuts to start at once rather than being concentrated in future years.

Obama, who wants an agreement by July 22 to give lawmakers time to approve it by an August 2 deadline, has vowed to hold daily talks to break the impasse.

The talks were part of a final push to reach a deal to raise the congressionally determined limit on US borrowing, now set at $14.29 trillion, in the face of a budget deficit expected to hit $1.6 trillion this year.

The US hit the ceiling on May 16 but has since used spending and accounting adjustments, as well as higher-than-expected tax receipts, to continue operating without impact on government obligations.

But by August 2, the government will have to begin withholding payments to bond holders, civil servants, retirees or government contractors.

Economists warn that if the United States defaults, it could lose its ability to borrow, souring fraught financial relations with creditors like China and sending the already sour global economy into a tailspin.