Obama renews push for grand bargain on debt

Washington (CNN) - President Barack Obama said Friday he has not given up hope for a broad deficit reduction deal, urging Republicans to accept a fiscal stability package that includes higher taxes on the wealthy and reforms to politically popular entitlement programs such as Medicare and Social Security.

Such a measure would be part of plan to avert a potential economic meltdown by raising the nation's current $14.3 trillion federal debt ceiling.

The president also stressed he has not ruled out less ambitious plans focused more narrowly on a debt ceiling increase.

Let's "set politics aside" and "do some tough stuff," Obama told reporters at a White House news conference. But "if Washington operates as usual and can't get anything done, let's at least avert Armageddon."

Tense negotiations between top Democrats and Republicans, reflecting core ideological principles on taxes and the size of government, have become a race against the clock. Administration officials have warned that a failure to raise the debt ceiling by August 2 could trigger a partial default.

If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.