Obama, Boehner discussing $3-trillion debt package

President Obama and House Speaker John Boehner are continuing to work on a deal that would allow a debt-ceiling increase, even as both sides denied reports Thursday that an agreement was imminent.

According to a Democratic congressional aide, discussions have centered on a version of the so-called grand bargain the two leaders have sought -- minus a key element, new tax revenues, that has been rejected by Republicans. The White House told congressional Democrats about this proposal during the last 24 hours.

The deal would amount to as much as $3 trillion in spending cuts, and would likely be deeply opposed by rank-and-file Democrats who have insisted that any package that includes cutbacks in Medicare and Social Security must also include new tax revenue.

For both sides, a deal of that sort would also amount to a bet on the next election, because the tax cuts enacted under George W. Bush expire at the end of 2012.

Republicans want to renew those tax cuts, while Obama has promised to allow taxes to go up on higher-income Americans when the current rates expire.

Boehner’s spokesman flatly denied that such a deal was underway.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” said Boehner spokesman Michael Steel.

Arriving for his daily briefing, White House Press Secretary Jay Carney also immediately denied a New York Times report that the sides were closing in on a major deal.

“There is no deal. We are not close to a deal,” he said. Still, he allowed that there was “the potential here for a significant agreement.”

“We are not there, but we remain hopeful that we could get there,” he said.

Boehner has called a Friday morning meeting of the entire GOP conference in the House. He is not expected to unveil a proposal at that time, a GOP aide said.

Other congressional aides, including a spokesman for Rep. Eric Cantor of Virginia, the majority leader, also said they were not familiar with a pending deal.

“Eric is not aware of any deal or that any deal is close,” said Cantor spokesman Brad Dayspring.

Boehner reiterated at his weekly news conference earlier Thursday that House Republicans continue to work with the president to achieve an agreement and avoid default by Aug. 2, when the Treasury Department has said it will run out of money to pay all of the nation’s bills.

“The ball continues to be in the president’s court,” Boehner said.

Also on Thursday, freshmen lawmakers will meet with representatives of Standard & Poor’s, the rating agency that has said it would downgrade U.S. bonds if the nation defaults. The meeting was arranged by freshman Rep. Nan Hayworth (R-N.Y.).

Congressional leaders met behind closed doors Wednesday, among themselves and at the White House, and more talks may occur Thursday, though none have been formally announced.

At a closed-door meeting of Senate Democrats, reports of a cuts-only deal drew outrage. “Many of us were volcanic,” said Sen. Barbara Mikulski (D-Md.).

Senators were not briefed on the proposed deal during the lunch meeting with Jacob Lew, director of the Office of Management and Budget, but news reports trickled in during the session.

Staff writer Michael A. Memoli contributed to this report.