Obama, lawmakers seek to salvage debt deal

WASHINGTON (Reuters) - President Barack Obama and top congressional lawmakers on Saturday attempted to salvage a deal to stave off a catastrophic debt default after a collapse in deficit talks left both sides angry and frustrated.

Obama, a Democrat, called House of Representatives Speaker John Boehner and other congressional leaders to a meeting at 11 a.m. EDT at the White House on how the debt ceiling can be raised by August 2.

"They are going to have to explain to me how it is that we are going to avoid default," a visibly angry Obama said on Friday after Boehner, the top Republican in Washington, informed Obama he was breaking off talks.

A senior Senate aide, speaking before the White House meeting, said the goal will be to work out a deal this weekend and have legislation ready to introduce on Monday.

With the Treasury set to run out of money to pay all of its bills on August 2, Obama feared the window may have closed for a "grand bargain" of spending cuts and tax increases in exchange for Congress raising the $14.3 trillion debt ceiling.

The battle in Washington is over spending cuts and taxes. Obama says he has agreed to deep spending cuts that make his own Democrats uneasy but that Republicans must allow some taxes to rise, a prospect they have rejected.

Summoned to the White House were Boehner, Senate Republican leader Mitch McConnell, Senate Democratic leader Harry Reid and Nancy Pelosi, the top Democrat in the House.

Boehner planned to reiterate to Obama that "we must have cuts greater than the debt limit increase," a Boehner aide said.

"We will be working throughout the weekend with leaders in the House and Senate to find a serious solution," the aide said.

Financial markets are growing more edgy and U.S. banks and businesses are making contingency plans for the possibility of a debt default that would drive up interest rates, sink the dollar and ripple through economies around the world.More...