Obama lauds deficit reduction plan

President Barack Obama and a startling number of Republican senators lauded a bipartisan deficit-reduction plan put forward Tuesday that would include $1 trillion in higher taxes, raising hopes of a last-minute compromise to repair the nation's finances while averting a historic government default.

Wall Street saluted as well.

Obama said he hoped congressional leaders would "start talking turkey" as soon as today along the lines of the Senate bipartisan "Gang of Six" proposal.

Last night, however, the House -- defying a veto threat -- voted to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states.

The 234-190 vote marked the power of deeply conservative first-term Republicans. But it has little chance in the Senate: It stood in contrast to rising support at the White House and in the Senate for a stab at bipartisanship to solve the looming debt crisis.

At the White House Tuesday, the president warned that financial markets could soon begin to post worrisome losses unless gridlock is broken and the nation's $14.3 trillion debt limit raised.

Treasury officials say that without an increase in U.S. borrowing authority by Aug. 2, the government will not be able to pay all its bills, and default could result with severe consequences for the economy.

In the House Tuesday, the focus stayed on spending cuts.

"Our bloated and obese federal budget needs a healthy and balanced diet, one that trims the fat of overspending and grows the muscle of our nation's economy," said Rep. Reid Ribble of Wisconsin.

Democrats said the measure, with its combination of cuts and spending limits, would inflict damage on millions who rely on Social Security, Medicare and other programs.

"The Republicans are trying to repeal the second half of the 20th century," said Rep. Sander Levin (D-Mich.).

House Speaker John Boehner (R-Ohio) told reporters before debate began on the bill that it also was "responsible to look at what Plan B would look like."

The Senate "Gang of Six" includes three Democrats, Kent Conrad of North Dakota, Mark Warner of Virginia and Dick Durbin of Illinois. The three Republicans, all conservatives, are Mike Crapo of Idaho, Tom Coburn of Oklahoma and Saxby Chambliss of Georgia, who has a particularly close relationship with Boehner.