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Obama's warning: "We're almost out of time" on debt plan (VIDEO)

The U.S. president on Friday urged Democrats and Republicans to work together to avoid a government default, warning the two sides that they were "almost out of time."

Obama debt friday 7 29 2011Enlarge
U.S. President Barack Obama leaves after speaking on the status of debt ceiling negotiations July 29, 2011 in the Diplomatic Reception Room of the White House in Washington, DC. Obama spoke after Republicans postponed a vote to Friday on their bill to prevent a U.S. debt default, and warned the United States was "almost out of time" to agree a deal to raise the nation's debt ceiling, insisting that a compromise was within reach. (Mandel NganAN/AFP/Getty Images)

President Barack Obama said Friday that Democrats and Republicans needed to work together on a plan to raise the debt ceiling and avoid a government default, and that while the two sides were not far apart they were "almost out of time."

"There are plenty of ways out of this mess," Obama said in a brief statement at the White House.

Warning that the nation was in danger of having its credit rating lowered, leading to higher interest interest rates that amount to tax hikes on most Americans, Obama said a compromise plan was needed that could win approval in both the House and Senate.

House leaders were meeting for closed-door crisis talks early Friday after delaying a vote late Thursday on a plan authored by House Speaker John Boehner, an acknowledgment that it still lacked the republican votes needed for passage, NECN reports.

The delay left the U.S. inching closer to a potentially catastrophic default on federal debt next Tuesday. The White House has warned the government will run out of money to pay all its bills unless a $14.3 trillion borrowing limit is increased by Aug. 2.

Obama said he was ready to work with top Democrats and Republicans through the weekend to get a debt ceiling accord, Reuters reports.

According to USA Today:

The president also indicated he would accept a two-part plan to raise the $14.3 trillion debt ceiling, the second part to include tax reform and changes to the entitlement programs Medicare, Medicaid, and Social Security.

But Obama also said the first step should be big enough to extend the debt ceiling beyond the 2012 election. Otherwise, he said, the country would have to "relive this crisis in just a few short months, holding our economy captive to Washington politics once again."

The debt ceiling bill favored by Boehner would initially raise the nation's borrowing limit by $900 billion and pass discretionary spending cuts of slightly more than that, CNN reports.

However, such a fix would only be temporary and require more action in the near future, necessitating what CNN's Charles Riley calls a "two-step" hike:

That increase in the ceiling would let Treasury to borrow until this winter. But then lawmakers will need to hike the ceiling again in order to make good on America's obligations. And that would require another vote.

The postponement of the Thursday vote was announced shortly after 10:30 p.m., after republican leaders apparently fell short of the 216 votes necessary for passage, The Atlantic reports.

Obama had threatened to veto Boehner's bill, and House Democrats were expressing unity in opposition to it.

In his remarks Friday, Obama confirmed that the Boehner plan did not have enough Democratic support to become law, and noted "that both Senate leaders — Democrat Harry Reid and Republican Mitch McConnell — have proposed ideas that could be the basis for a compromise," USA Today reports.

House Majority Leader Eric Cantor, meanwhile, was non-committal early Friday about bringing Boehner’s debt ceiling package back to the floor, Politico reports. 

“We’re going to go and have conference and we’ll see where members are,” Cantor said, as he walked to his office suite.

Asked how many votes short the party is after a Thursday night that included a series of whipping meetings with top leaders, Cantor said “we’ll see where we are after last night.”

http://www.globalpost.com/dispatch/news/business-tech/debt-crisis/110729/us-debt-ceiling-economic-crisis-obama-john-boehner