BY ANDREW TAYLOR
AND JIM KUHNHENN
The Associated Press
WASHINGTON -- With a crucial deadline approaching, President Barack Obama said he and congressional leaders worked through a "very constructive" debt-crisis session yesterday but acknowledged the parties were still far apart on deficit reduction proposals. He said he would reconvene the negotiators Sunday.
Yesterday's meeting came amid signals that the White House was willing to reduce costs for major benefit programs, including Social Security and Medicare, while Republicans indicated they might consider steps to raise revenue.
"People were frank," Obama said, just moments after adjourning the 1 1/2-hour meeting with the eight lawmakers who make up the bipartisan leadership of Congress.
Obama said that the ultimate agreement will not satisfy partisans on either side, but he said the deal would require both Republican and Democratic votes to pass Congress.
"Everyone acknowledged that pain will be involved politically on all sides," he said.
Obama met with the leaders of both parties around a table in the White House Cabinet Room as they struggled to frame a deal on raising the government's debt limit less than four weeks before a possible first-ever default on U.S. financial obligations.
The Obama administration says the government needs to raise the $14.3 trillion debt limit by Aug. 2.
Obama said every congressional leader at the meeting agreed that an accord needed to be reached before then.
Discussions on trimming the costs of entitlement programs had centered on Medicare, the health care program for older Americans. Now the White House is revisiting a proposal to change the inflation measurement used to calculate Social Security cost-of-living adjustments, which would reduce annual increases for recipients, officials said.
The White House has also said the president is aiming to cut the deficit closer to $4 trillion over 10 years -- an ambitious number that would nearly double the roughly $2 trillion that had been at the center of negotiations.
One official familiar with the negotiations said that an option under discussion would allow Republicans to make a commitment to overhaul and simplify the tax system, an effort that would lower individual and corporate tax rates while closing loopholes, ending some deductions and limiting other tax subsidies.
Those changes could generate tax revenue and were a central element of a deficit reduction plan proposed by a bipartisan commission early this year.
Some Republicans argue that a simplified tax system would increase economic activity and that in itself would increase federal tax revenue.