A new panel set to prepare debt plan

WASHINGTON - Even as President Obama and congressional leaders focus on a fallback plan to lift the nation's debt ceiling, top Democrats and Republicans have begun to map a new way to craft the same sort of ambitious deficit-cutting plan they abandoned last week.

As part of the deal being discussed to raise the debt ceiling, leaders on Capitol Hill are forming an especially powerful congressional committee that would be charged with drawing up a new "grand bargain," possibly by the end of the year.

As a critical Aug. 2 deadline approached, the chances that Obama would get $4 trillion or even $2 trillion in deficit reduction on terms he preferred were quickly fading as Congress moved to take control of the debate. At a news conference Friday, Obama opened the door to a smaller package of deficit reductions without revenue increases.

On Saturday, he appealed to the public in hopes of influencing a deal that talks have failed to produce so far. "We have to ask everyone to play their part because we are all part of the same country," Obama said, pushing a combination of spending cuts and tax increases that has met stiff resistance from Republicans. "We are all in this together."

In his weekly radio and Internet address, Obama said the wealthiest must "pay their fair share." He invoked budget deals negotiated by Republican President Ronald Reagan and Democratic House Speaker Thomas P. "Tip" O'Neill Jr. - which included a payroll-tax increase - and Democratic President Bill Clinton and Republican Speaker Newt Gingrich.

"You sent us to Washington to do the tough things, the right things," he said. "Not just for some of us, but for all of us."

Obama's communications director, Dan Pfeiffer, said Saturday that the president, Vice President Biden, and White House aides were discussing "various options" with congressional leaders and House and Senate aides.

The White House held out the possibility of arranging a meeting with the leaders on Sunday.

House Republicans prepared to vote this week on allowing an increase in the government's borrowing limit through 2012 as long as Congress approved a balanced-budget constitutional amendment, which is highly unlikely.