Debt ceiling talks aim at $3tn in cuts

WASHINGTON (CNN) -- President Obama is continuing to pursue the most "significant deficit reduction package possible," his spokesman said Thursday, the latest indication officials are keeping a variety of options open while trying to hammer out an agreement to raise the nation's debt ceiling and avoid an unprecedented default.

The president and Vice President Biden met Thursday afternoon with Democratic leaders from the House and Senate.

Meanwhile, sources indicated the negotiations were focusing on a deal to cut $3 trillion in deficits over the next 10 years that would be accompanied by a debt ceiling increase.

According to the congressional aides, who spoke on condition of not being identified, the possible deal remains in limbo over a disagreement on whether to extend Bush-era tax cuts for families earning more than $250,000 a year. Nothing has been agreed to yet, they noted.

The possible deal would include spending cuts expected to total $1 trillion or more agreed to in earlier negotiations led by Biden, the sources said. It also would reform entitlement programs by changing the eligibility age for Medicare over time, and using a more restrictive inflation index for Social Security benefits, according to the sources.

On taxes, it would permanently extend the Bush tax cuts for families earning less than $250,000 while allowing the cuts to expire at the end of 2012 for those with income above that, the aides said. At the same time, the deal would include a commitment to reform the tax code next year, which is expected to lower all tax rates and eliminate loopholes and subsidies, the sources said.

However, House Speaker John Boehner wants the deal to make all of the Bush tax cuts permanent while keeping the commitment to tax reform, the sources said. Republicans oppose any tax hikes, and their resistance has been a major obstacle to any deal in the negotiations so far.

Some sources said the deal would work in two stages, with spending cuts and a debt ceiling increase occurring right away while entitlement reforms and tax reforms would occur later.

Earlier, White House Press Secretary Jay Carney denied a report by the New York Times that Obama and Boehner were close to reaching a deal.

"There is no deal. We are not close to a deal," Carney told reporters. "There is no progress to report."

A spokesman for Boehner's office echoed Carney, denying any reportable progress. House Majority Leader Eric Cantor told reporters he was "unaware of any deal that has been struck."

The highly contentious negotiations -- reflecting the core ideological beliefs of both parties -- have now become a race against the clock. If Congress fails to raise the $14.3 trillion limit by Aug. 2, Americans could face rising interest rates, a declining dollar and increasingly jittery financial markets, among other problems. 

First Published: July 21, 2011: 1:42 PM ET

Quoting : CNN

North and South Korea to hold talks

A North Korean soldier (L) faces down a South Korean soldier in the demilitarized zone on April 24.NEW: North and South Korea held a "productive" meeting, South Korea saidSouth Korea has been seeking to resume talks on the North's nuclear program in recent monthsThe meeting took place on the sidelines of regional security talks, South Korean officials say

Seoul, South Korea (CNN) -- The chief nuclear envoys of North and South Korea held a "productive" meeting Friday and agreed to try to resume six-party talks as soon as possible, the South Korean Foreign Ministry said.

Wi Sung-lac, the chief negotiator for the South in six-party talks on ending North Korea's nuclear program, met with the North's Ri Yong-ho on the sidelines of the regional forum of the Association of Southeast Asian Nations in Bali, Indonesia.

The two-hour session was the first such direct meeting on nuclear issues between the two nations since six-party talks broke down in 2008, when North Korea pulled out of the multi-nation nuclear disarmament initiative.

Representatives of the other nations involved in the six-party talks -- the two Koreas, the United States, China, Japan and Russia -- are also in Bali.

Relations between North and South Korea have been more difficult since the sinking of a South Korean warship Cheonan 15 months ago and the shelling of South Korea's Yeongpyong Island last November.

South Korea acknowledged last month having held a secret meeting with its neighbour in May, which it said was aimed at persuading it to apologize for those attacks, in which 50 South Koreans died. North Korea denies sinking the warship.

The North Korean National Defence Commission said the South had asked for a series of summits at the secret meeting.

Until now, the North has refused to discuss its nuclear program one-on-one with South Korea, as Pyongyang has sought to use its nuclear weapons program as leverage in developing relations with Washington, according to the South Korean news agency Yonhap.

U.S. Secretary of State Hillary Clinton is expected to meet with representatives from South Korea and Japan while in Indonesia for the summit.

CNN's Jiyeon Lee contributed to this report

Quoting : CNN.com