Congress is eating its peas without Barack Obama. 
 
 As world markets began reacting to the growing possibility of a previously unthinkable U.S. governmental default, Obama was barely visible for much of the weekend, a jarring shift from three weeks of press conferences, White House negotiating sessions and public warnings to “irresponsible” Republicans. 
 
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 But on Capitol Hill, House and Senate leaders groped for a way out of the debt ceiling crisis, struggling to make the tough choices that Obama famously compared to eating the vegetable his daughters disdain. 
 
 The partisan estrangement wasn’t Obama’s choice - House Speaker John Boehner pulled out of talks on Friday over Obama’s insistence that he swallow an additional $400 billion in revenue hikes — and Obama spoke to the speaker by phone Saturday night and on Sunday, aides say. 
 
 But being on the sidelines isn’t exactly an unfamiliar – or undesirable — position for a president who views himself as a legislative closer with a penchant for asserting himself late in the game, at the moment of maximum leverage. 
 
 This time, however, he’s forced to rely on mercurial Senate Majority Leader Harry Reid (D-Nev.) as his proxy. 
 
 It’s a real roll of the dice: Even by Obama standards it’s dangerously late for him to be out of direct negotiations with a GOP opposition that doesn’t trust, like or respect him – and no one in the White House is quite sure how it will turn out. 
 
 “Speaker Boehner…walked away twice from a deal with the president which would have finally begun a serious attempt to cut spending,” a frustrated White House chief of staff Bill Daley told NBC’s “Meet the Press” on Sunday, two days after Boehner cut off negotiations with Obama. 
 
 “This is not the way we run a government that’s divided. But we should prove to the American people it’s not dysfunctional,” he added. 
 
 Yet even Daley didn’t sound entirely distraught that Boehner and Reid were the ones stuck with the heavy lifting eight days before fiscal Doomsday. 
 
 “This is the responsibility of Congress,” Daley added. “In the end, the Congress must pass this. It is their responsibility to extend the debt ceiling. So my sense is that in the end they will act.” 
 
 From Obama’s perspective, Congress has always delivered for him, albeit chaotically and on its own terms. 
 
 With robust House and Senate Democratic majorities in 2009 and 2010, Obama was able to close on comprehensive health care and stimulus bills by giving congressional leaders a lot of latitude, insisting only on broad goals. His first pass at bipartisan negotiations with the GOP, during tax and budget negotiations in the winter and spring, resulted in major compromises that angered many fellow Democrats who felt he could have driven a hard bargain. 
 
 They still feel that Obama has been too willing to cave. One senior Democratic aide responded “Hell, yes!” when asked if the president made a mistake by ceding the lead administration role on the debt talks to Vice President Joe Biden for most of the spring. ||||| With markets waking, Washington’s debt standoff worsened significantly Sunday amid recriminations and distrust just eight days before the real threat on an unprecedented default. 
 
 Having broken off talks last Friday with the White House, Speaker John Boehner is still trying to achieve much of the same $3 trillion package in a two-stage process tied to raising the debt ceiling in increments of $900 billion first and then about $1.6 trillion next year. 
 
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 But on the eve of a Monday Republican conference, Boehner’s would-be Senate partner, Majority Leader Harry Reid, was called to the White House on Sunday and then came out swinging, accusing the speaker of taking a “my-way-or-the-highway approach” that could never be acceptable to the Senate nor to President Barack Obama. 
 
 “Tonight, talks broke down,” Reid (D-Nev.) said. “Speaker Boehner’s plan, no matter how he tries to dress it up, is simply a short-term plan, and is, therefore, a non-starter in the Senate and with the president.” 
 
 Reid said he had begun drafting his own $2.7 trillion deficit reduction plan and urged Boehner to join him. But Republicans reacted angrily, saying Reid had been working with them Sunday afternoon up to the White House meeting and the sudden change-of-heart was dictated by Obama, jilted by Boehner but a major force in the whole struggle. 
 
 “Sen. Reid took the bipartisan plan to the White House and the president said no,” said a Republican aide familiar with the talks. A second leadership aide put it more bluntly, saying the speaker had 218 votes in the House for his proposal, while Reid and Obama don’t yet have 60 votes for any alternative in the Senate. 
 
 Indeed, since breaking off talks with the White House, Boehner has kept open lines to Obama, and the two men talked Sunday. But at this stage, the Boehner-Reid working relationship may be even more crucial, and in a conference call with Republicans on Sunday, Boehner had seemed to give a nod to Reid by emphasizing that any legislative strategy has to pass the Senate as well. 
 
 “We’ve seen this coming all year long. But here’s the challenge: To stop [Obama], we need a vehicle that can pass in both houses,” Boehner said. 
 
 “I do think there is a path,” Boehner said, still holding out hope of filing a bill Monday for House floor action Wednesday, “but it’s gonna require us to stand together as a team. It’s gonna require some of you to make some sacrifices. If we stand together as a team, our leverage is maximized and they have to deal with us. If we’re divided, our leverage gets minimized.” 
 
 Reid and House Minority Leader Nancy Pelosi (D-Calif.) met for an hour Sunday evening with the president at the White House, and the Nevada Democrat must walk a fine line between working with Boehner and keeping faith with the president and Pelosi in the mounting crisis. ||||| House Speaker John Boehner and Senate Majority Leader Harry Reid attacked each other’s plans for Congress to lift the U.S. $14.3 trillion debt ceiling and avert default before an Aug. 2 deadline. 
 
 President Barack Obama plans to address the nation from the White House at 9 p.m. Washington time on the partisan standoff, with Boehner responding in a separate appearance. 
 
 Boehner’s two-step plan would raise the U.S. borrowing limit by up to $1 trillion, with larger spending cuts, and require a new vote on more reductions before an additional $1.6 trillion debt-limit increase next year. It could be voted on in the House within two days. Obama and Senate Democrats oppose a short-term extension, which could lead to another debt standoff next year. 
 
 By contrast, Reid’s proposal would cut $2.7 trillion in spending and give Obama the full $2.4 trillion in additional borrowing authority he seeks, enough to get through the 2012 elections. 
 
 The high-stakes standoff is already starting to rattle investors. Reid, a Nevada Democrat, said he hopes Republicans “will still know a good deal when they see it.” 
 
 Asked whether his plan can get the 60 votes needed to overcome a filibuster by opponents, Reid said, “I would hope so.” In the House, some Republicans are balking at Boehner’s plan. 
 
 $1.2 Trillion in Cuts 
 
 The 10-year plan introduced by Reid includes $1.2 trillion in cuts to defense and non-defense discretionary spending -- programs whose budgets are set in Congress’s appropriations process. 
 
 The plan would include $1 trillion in savings from winding down the wars in Iraq and Afghanistan. It would include $100 billion in mandatory program savings, including $30 billion in Fannie Mae and Freddie Mac changes, $40 billion in savings from eliminating waste and fraud, $15 billion from spectrum auction sales and telephone universal service changes and $10 billion to $15 billion in cuts in agriculture subsidies. 
 
 Interest savings from cutting projected spending would produce $400 billion. The proposal would create a bipartisan committee of 12 members to recommend future savings, with a guaranteed vote in Congress. The committee would produce recommendations to be voted on by Congress this year. 
 
 ‘Responsible Compromise’ 
 
 White House press secretary Jay Carney called Reid’s plan “a responsible compromise.” 
 
 If Republicans “refuse this offer, it simply means they want to default,” said Senator Chuck Schumer, a New York Democrat. 
 
 Boehner’s plan would require $1.2 trillion in spending cuts in the first phase and up to $1.8 trillion in the second step. A committee would be created to identify cuts, and Congress would be required to vote by the end of this year on a constitutional amendment requiring a balanced budget. 
 
 Reid called Boehner’s plan a “non-starter” because the two-step process for approving debt-limit increases wouldn’t give financial markets the assurances they need. Republicans are more interested in “trying to embarrass the president” than doing what is right for the country, Reid said. 
 
 Boehner met with House Republicans and told a news conference afterward that Reid’s plan is “full of gimmicks.” 
 
 Under Boehner’s proposal, Congress could face a replay of the debt-ceiling drama early next year. The measure would tie the second installment of borrowing authority to enactment of a deficit-cutting package to cut up to $1.8 trillion from the deficit. If the debt-reduction plan stalled in Congress, Obama would face another debt deadline in February or March. 
 
 Across-the-Board Cuts 
 
 The $1.2 trillion in spending cuts over the next decade would be achieved through statutory caps on discretionary spending. If the caps were exceeded, there would be across-the- board cuts. 
 
 House Republican leaders sought to persuade their members to pass what Boehner called a “less than perfect” plan. 
 
 “It does ensure that spending cuts will be greater than the hikes in the debt limit,” Boehner said. 
 
 Representative Tom Cole of Oklahoma said fellow Republicans should back Boehner’s plan to strengthen the speaker’s hand at the negotiating table. 
 
 We would “be undercutting ourselves not to give him the votes he needs to be effective in the negotiation,” Cole said. The number of Republicans who would oppose any type of debt- limit increase had shrunk “pretty dramatically” since earlier this year, he said. 
 
 ‘Received Very Well’ 
 
 Freshman Representative Allen West, a Florida Republican, said Boehner’s plan was “received very well” at a meeting with lawmakers and that he planned to vote for it. 
 
 Some Republicans said the measure wouldn’t cut 2012 spending enough. Others said the debt limit should be raised only if Congress passes a balanced-budget constitutional amendment and sends it to the states for ratification. 
 
 “There is a significant number that have real problems with this bill,” said Ohio Representative Jim Jordan, chairman of the fiscally conservative Republican Study Committee. 
 
 “I want a solution, not a deal,” said Utah Republican Jason Chaffetz. “I am as ‘no’ can you can possibly be” without congressional passage of a balanced-budget amendment. 
 
 Texas Republican Mike Conaway said he would push for a vote on a balanced-budget amendment later this week. 
 
 Gang of Six 
 
 Democratic Senator Mark Warner, who helped write a bipartisan “Gang of Six” $3.7 trillion deficit-cutting plan, said he is concerned Boehner’s plan falls short and won’t satisfy credit rating agencies, such as Standard & Poor’s. 
 
 Warner of Virginia said in an interview on Bloomberg Television that Standard & Poor’s said “if we simply kind of lurch along with these short-term debt extensions, that could lead to a downgrade.” 
 
 Senator Jon Kyl of Arizona, the No. 2 Republican leader, said leaders in both parties recognize it isn’t ideal for both chambers to move rival bills that may not have enough support to pass. 
 
 “If we can reach an agreement before there is a vote, that would be a good thing,” Kyl said after a meeting of Senate Republicans. “I don’t know that we can. But then again, both proposals might be modified a little bit or you could get bipartisan agreement.” 
 
 U.S. stocks fell. The Standard & Poor’s 500 Index fell 0.6 percent to 1,337.43 at 4 p.m. in New York, after losing as much as 1 percent. 
 
 Treasury Yields 
 
 Treasury two-week yields reached a two-week high after Mohamed A. El-Erian, whose Pacific Investment Management Co. runs the world’s biggest bond fund, said the U.S. may lose its AAA debt rating even if lawmakers reach a plan to avoid a default. 
 
 The cost of insuring U.S. debt rose, sending credit-default swaps on Treasuries up three basis points to 56.15, approaching the highest in 17 months, according to CMA Analytics. 
 
 Two-year Treasury yields increased two basis points to 0.42 percent and 10-year yields added four points to 3.01 percent. It is still below the 10-year average of 4.06 percent. 
 
 El-Erian said in an interview today on Bloomberg Television that it will be a “big, big mess” if the U.S. defaults, spurring a sell-off in equities, the U.S. dollar and commodities excluding gold. El-Erian is the Newport Beach, California-based chief executive officer and co-chief investment officer at Pimco. 
 
 ‘No Other Country’ 
 
 “Remember there is no other country that can step in to replace the U.S.,” he said. “The U.S. is the supplier of the reserve currency. The U.S. is the provider of a financial system that intermediates other people’s savings and investments. The U.S. is a AAA. The question is whether the U.S. can maintain a AAA.” 
 
 This year’s vote would be the 101st time since 1940 that the debt limit has been changed. Congress last raised the federal debt limit by $1.9 trillion in February 2010. The then Democratic-controlled House approved the increase by a vote of 233-187. The Democratic-run Senate approved the increase in January 2010 by a vote of 60-39. 
 
 To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Laura Litvan in Washington at llitvan@bloomberg.net 
 
 To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net ||||| President Obama could endorse such a plan, even though it would fall far short of the ambitious goal of deficit reduction and entitlement changes that he says are necessary to shore up the nation’s finances. 
 
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 At the White House on Sunday evening, Mr. Obama spent about an hour meeting in the Oval Office to try to hash out details of the Democratic proposal with Mr. Reid and the House Democratic leader, Nancy Pelosi. The two emerged from the meeting with nothing to say to the throngs of reporters who had been encamped there for the third consecutive weekend, awaiting an agreement on the debt ceiling. 
 
 But administration and Congressional officials said that during the meeting, Mr. Obama and the Democratic leaders had resolved to hold firm against any short-term agreement that did not raise the debt ceiling beyond next year’s presidential elections. 
 
 “You see how hard this is right now,” one administration official said Sunday night. “Can you imagine going through this again in six months?” 
 
 That means, officials say, that Mr. Reid’s proposal may gather steam as the only viable alternative that is palatable to the administration. 
 
 The contours of Mr. Boehner’s backup plan were not entirely clear, but it seemed likely to take the form of a two-step process, with about $1 trillion in cuts, an amount the Republicans said was sufficient to clear the way for a debt limit increase through year’s end. That would be followed by future cuts guided by a new legislative commission that would consider a broader range of trims, program overhauls and revenue increases. 
 
 “The preferable path would be a bipartisan plan that involves all the leaders, but it is too early to decide whether that’s possible,” Mr. Boehner said in a “Fox News Sunday” interview. “If that’s not possible, I and my Republican colleagues in the House are prepared to move on our own.” 
 
 In a conference call with Republican lawmakers that lasted over an hour on Sunday night, Mr. Boehner said he was seeking “a vehicle that can pass in both houses,” according to someone on the call, who added that Mr. Boehner had made an emotional appeal to his fellow Republicans to stick together. “If we’re divided,” he said, “our leverage gets minimized.” 
 
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 One freshman lawmaker on the call described Mr. Boehner as sounding weary and said many Republicans were focused on some version of a balanced budget amendment, which was already passed by the House as part of broader legislation but then rejected by the Senate. 
 
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 For the White House, the Reid proposal represents a Hail Mary pass that is meant to, at the very least, avoid putting the country through a repeat of the debt ceiling negotiations next year, an election year. 
 
 Even if Mr. Boehner loses Tea Party members and other conservative Republicans in Congress, the administration hope is that enough House Democrats would vote for the Senate plan that it would offset the loss of conservative Republican votes. 
 
 The White House remained largely on the sidelines over the weekend as lawmakers set out with their own plans. While the White House remains adamantly opposed to a two-step deal that does not extend the debt ceiling beyond next year’s elections, administration officials expect that the Senate would modify Mr. Boehner’s proposal. 
 
 While a modified plan might fail to gain the support of the more right-leaning and Tea Party-influenced House members, it could win enough Democratic votes to pass if it is blessed by Mr. Reid. However, if Mr. Boehner were to reject Senate modifications and go with a deal that would pass muster with his Republican conference, the Senate would have to offer a rebuttal, as the clock ticks. 
 
 The dueling plans were a departure from the so-called grand bargain that Mr. Obama had been pushing, which would have included trillions of dollars in budget and entitlement cuts over the next 10 years along with the elimination of tax loopholes and possibly the addition of new taxes. 
 
 The impasse has set the tone for the 2012 presidential race, with the debate growing rancorous and the two parties’ visions for the country at odds. 
 
 The enormous deficit challenges have been clearly articulated to voters, as the parties seek unified control of Congress, where the Republicans are the majority in the House and the Democrats in the Senate. Mr. Obama will veto any debt legislation unless it extends the ability of the nation to borrow into 2013, the White House chief of staff, William M. Daley, said on Sunday. 
 
 Mr. Daley, appearing on the NBC News program “Meet the Press,” said that world markets and the American economy would not tolerate continued doubts brought on by periodic fights over the debt ceiling. “The president believes that we must get this uncertainty out of the system,” Mr. Daley said. 
 
 Minutes after Mr. Daley promised a veto, Senator Tom Coburn, Republican of Oklahoma, said on the same program that Mr. Daley’s remarks were “a ridiculous position, because that’s what he’s going to get presented with.” 
 
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 Meanwhile, Treasury Secretary Timothy F. Geithner suggested that there was still hope for a grand bargain. 
 
 “They are talking again,” Mr. Geithner said in an appearance on “This Week” on ABC. “They’ve been in touch throughout this time.” 
 
 Both Mr. Geithner and Mr. Daley said they believed Congress would figure out a way to avoid default. 
 
 “The leaders of Congress have said unequivocally that we will meet our obligations,” Mr. Geithner said. 
 
 Mr. Daley acknowledged, however, that both sides were still at the brink. 
 
 “We are now getting to a point where markets around the world will question whether the political system can come together and compromise for the good of the country,” Mr. Daley said.
– We may very well be at zero hour: John Boehner has privately told Republicans that in order to get a debt ceiling measure signed by President Obama by the Aug. 2 deadline, it must be introduced in the House today. But despite the increasing likeliness of a US default, Politico reports that hope for a bipartisan deal has disintegrated. After meeting with the president and Nancy Pelosi last night, Harry Reid accused Boehner of taking a "my-way-or-the-highway approach," and reiterated the fact that his two-part plan—or any short-term plan—is "a non-starter in the Senate and with the president." Politico also notes that Obama, after three weeks of being highly visible, was on the sidelines during this weekend's developments, a potentially risky move this late in the game. Republicans, however, say Reid had been working with them right up until the change-of-heart-inducing White House meeting: “Sen. Reid took the bipartisan plan to the White House and the president said no,” says one Republican aide. Another adds that while Boehner has the 218 House votes he needs for his proposal, Reid and Obama don't have the 60 they need in the Senate for any alternative. At this point, the New York Times reports, Boehner and Reid are preparing dueling back-up plans; Reid's would include $2.7 trillion in spending cuts, no new taxes, and the full $2.4 trillion debt limit extension, as opposed to Boehner's two-stage extension plan. Bloomberg notes that even if default is avoided, the US could lose its AAA rating.