Obama, legislators race for compromise to prevent default

WASHINGTON -- After weeks of intense partisanship, President Barack Obama and congressional leaders made a last-minute stab at compromise Saturday night to avoid a government default threatened for early this week.

"There are many elements to be finalized...there is still a distance to go," Majority Leader Harry Reid cautioned in dramatic late-night remarks on the Senate floor.

Still, his disclosure that "talks are going on at the White House now," coupled with his announcement that progress had been made, offered the strongest indication yet that an economy-crippling default might be averted.

White House officials had no immediate comment.

Nor was there any immediate reaction from Senate Republican leader Mitch McConnell or House Speaker John Boehner, Obama's principal Republican antagonist in a contentious era of divided government.

There were no details immediately available on what the terms might be of any compromise.

Reid said that at the request of White House officials, he was postponing a test vote set for shortly after midnight on his own legislation to raise the debt limit while cutting spending.

Republicans opposed his bill and said they had the votes to block its advance.

Without legislation in place by next Tuesday, administration officials say the Treasury will run out of funds to pay all the nation's bills.

They say a subsequent default could prove catastrophic for the U.S. economy and send shockwaves around the world.

The president is seeking legislation to raise the government's $14.3 trillion debt limit by about $2.4 trillion, enough to tide the Treasury over until after the 2012 elections. Over many weeks, he has agreed to Republican demands that deficits be cut -- without a requirement for tax increases -- in exchange for additional U.S. borrowing authority.

But Obama has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect, saying that would invite a recurrence of the current crisis in the heat of next year's election campaigns.