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Obama Cites Progress In Deficit Talks

At issue is the need to raise?government's so-called debt limit to avoid a default on its obligations to bondholders and Social Security beneficiaries.

WASHINGTON (AP) -- President Barack Obama says back-channel talks with congressional leaders last weekend have produced new progress in advance of a White House session Thursday on deficit reduction.

The president is siding with House Speaker John Boehner in insisting that negotiators resist the temptation to "kick the can down the road" and settle for a makeshift, short-term solution to stave off a first-ever U.S. default next month.

At issue is the need to raise the government's so-called debt limit to avoid a default on its obligations to bondholders and Social Security beneficiaries. Republicans want deficit cuts in the range of at least $2.4 trillion over 10 years to offset the amount of new government borrowing needed simply to avoid another vote before 2013.

Obama met with Boehner on Sunday, the first session since Republicans last month abandoned negotiations being led by Vice President Joe Biden.

The Biden talks had produced a series of tentative understandings on potential spending cuts totaling at least $1.6 trillion under administration math and $2 trillion or more under GOP math. But negotiators say a true agreement on those cuts -- to day-to-day agency operating budgets, defense, federal pensions and farm subsidies, among other things -- would require further sacrifice in the political priorities of Democrats and Republicans alike.

The administration says that if the government's borrowing authority is not increased by Aug. 2, the U.S. will face its first default ever, potentially throwing financial markets into turmoil.

Obama isn't calling for increases in tax rates. On Tuesday, the president urged Republicans to agree to eliminate "certain tax breaks and deductions for the wealthiest of Americans." The White House is pressing for the repeal of tax breaks enjoyed by the oil and natural gas industry and limits on deductions claimed by people in the 35 percent tax bracket.

On Tuesday, Boehner attacked the latter proposal as an assault on small businesses but was subdued on questions like oil and gas subsidies or a much-publicized tax provision that gives favorable treatment to companies that buy corporate jets.

"We're not dealing just with talking points about corporate jets or other 'loopholes,'" Boehner, R-Ohio, said. "The legislation the president has asked for, which would increase taxes on small businesses and destroy more American jobs, cannot pass the House, as I have stated repeatedly."

In his remarks Tuesday, Obama said he strongly opposes a stopgap, short-term debt-limit increase, as suggested by some lawmakers.

"We've made progress, and I believe that greater progress is within sight, but I don't want to fool anybody. We still have to work through some real differences," the president said.

Obama's tone was less partisan than at a news conference last week, as were the responses from Capitol Hill Republicans.

"I'm pleased the president stated today that we need to address the big, long-term challenges facing our country," Boehner said in a statement.

Obama said Republican and Democratic leaders from the House and Senate were invited to meet on the issue Thursday at the White House. That would bring the top eight lawmakers together with Obama, Biden and top administration financial officials.

"It's my hope that everybody's going to leave their ultimatums at the door, that we'll all leave our political rhetoric at the door," Obama said.

In the Senate on Tuesday, Majority Leader Harry Reid, D-Nev., postponed a test vote on a Libya resolution amid increasing opposition from Republican lawmakers who insisted they should be working on financial security, not national security. Several Republican senators had indicated they would oppose using the week to debate the Libya measure.

Reid replaced the Libya measure with a nonbinding resolution calling on millionaires to pay a bigger share of the sacrifices needed to wrestle the deficit under control -- hardly a move that would eclipse any progress made at the White House.