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Obama Optimistic about 'Big Deal' to Raise Debt Limit, Cut Deficit

Official White House Photo by Pete Souza(WASHINGTON) -- President Obama said Friday he's still optimistic that a "big deal" between Republicans and Democrats can be reached to increase the country's debt limit while reducing the deficit with a package of tax increases and "modest modifications" to entitlement programs.

"I am still pushing for us to achieve a big deal," Obama told reporters at the White House, while leaders of both parties huddled with their caucuses on Capitol Hill to mull over a path to a deal.

"We are obviously running out of time," Obama said, adding, "If they show me a serious plan, I'm ready to move, even if it requires some tough decisions on my part. Hopefully over the next couple of days we'll see this logjam broken."

Obama's comments came during his second during his second news conference this week on the deficit reduction negotiations, which have been held at the White House for each of the past five days. The parties have spent roughly eight hours together to try to reach a deal, so far to no avail.

While no negotiations will take place Friday, Obama said he instructed both sides to make a decision within the 24 hours on whether to proceed toward a deficit reduction deal linked to a ceiling increase, or whether to resign towards what officials have called the "fallback option" that would simply avoid default.

"We have an opportunity to do something big," he said, "if we're willing to seize the moment."

Negotiators on both sides are reportedly weighing three options for how to proceed to raise the debt ceiling before an Aug. 2 deadline set by the administration.

The so-called "big deal," which Obama favors, would reduce the deficit by $4 trillion over 10 years with cuts to entitlement programs and tax increases. But, this option has seemed to lose traction with both sides at impasse over taxes, and Democrats opposed to entitlement benefits cuts.

A middle-ground deal would trim somewhere between $1.5 and $1.7 trillion in government spending, but impose no entitlement cuts or tax elements. One roadblock with that plan is that Republicans demand that spending cuts at least match the amount of the increase of the debt ceiling, which the president says needs to be $2.4 trillion or so to get to 2013.

The fail-safe option -- conceived by Senate Minority Leader Mitch McConnell, R-Ky. -- would allow the debt ceiling to be raised by the president, with Congress voting disapprovingly three times before the 2012 election. McConnell and Senate Majority Leader Harry Reid are talking about creating an independent deficit commission that would recommend cuts to be voted on in Congress. "It's not the preferred option that we have," White House spokesman Jay Carney said Thursday.

McConnell's plan does, however, provides a light at the end of the tunnel as the Aug. 2 default deadline quickly approaches and financial leaders warn of dire consequences.

Federal Reserve Chairman Ben Bernanke said this week not raising the ceiling would be disastrous. And leading U.S. credit rating agencies have warned the country's bond rating is up for review and possible downgrade. Standard & Poor's warned that there is a 50 percent chance it will downgrade the government's credit rating within three months because of the impasse.

Copyright 2011 ABC News Radio

ABC News Radio