Ahead of new debt talks, Boehner nixes grand plan

President Barack Obama and congressional leaders were regrouping after House Republicans abandoned efforts for a deficit reduction package of $4 trillion over 10 years. The potential deal had unnerved lawmakers in both parties.

House Speaker John Boehner announced late Saturday that he was now looking for a deal about half that size and said that chances for a bigger agreement succumbed to the White House's insistence on substantial new tax revenue.

Administration officials said Obama would press for a bigger bargain one last time at a White House negotiating session Sunday evening.

Little known line in Constitution to prevent Default?

The White House could resort to an little-known line in the USconstitution to prevent a ruinous default if Democrats and Republicans do not agree to raise the debt ceiling by August 2, experts say.

The 143-year-old clause, written to address still-potent divisions after the bloody Civil War, has been dredged up by legal scholars as well as the US Treasury secretary to suggest how a debt debacle might be avoided.

But resorting to it could spark a constitutional crisis over just who -- the Congress or the White House -- controls the power of the federal purse, analysts say.

The US government reached its debt limit of $14.29 trillion in May and since then the Treasury has used special measures to allow the government to keep paying its bills.

But unless the limit is raised by August 2, the Treasury says, growing spending and debt service commitments will force a default, which would have disastrous ripple effects throughout the global financial system.

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