Updated 3:15 p.m. edt
Even as U.S. financial markets tank, GOP House Speaker John Boehner is steadfastly reversing course and rejecting President Obama's $4 trillion deal that would take a bigger chunk out of the federal debt than any other offer on the table.
"Our disagreements are not personal," Boehner said before heading into another debt negotiation sessions with all the leaders of Congress and Obama."We cannot allow our nation to default on our debt," he admitted.
But Boehner admitted he cannot find enough votes in his party to accept a deal. "The American people will not accept - and the House cannot pass - a bill that raises taxes on job creators," he said.
Meanwhile, insiders tell the Talk Radio New Service that some Republicans look at corporate tax loopholes as corporate welfare, but the prevailing wisdom in the GOP is that wiping those tax breaks out is tantamount to a tax hike.
“Nobody’s fond of loopholes,” a Boehner aide told Talk Radio News Service's Geoff Holtzman.
Apparently House GOP leader Eric Cantor disagrees.
"We don’t believe that we ought to be raising taxes right now on people in this recession and in this economy and they do," said Cantor, who quickly becoming the darling of the Tea Party.
The divide between Boehner and his chief deputy Cantor is surfacing, despite claims from both that it is all kumbaya in their party. Some suspect Cantor has designs on the Speaker's job sooner than later.
The Dow is down about 175 points right now. Some say it is only a taste of what is to come if their is not a compromise.
Updated 12 p.m. edt
President Obama urged Republicans to buck up and make the tough choices needed to cut the $14.3 trillion debt, or admit that they are just playing politics to placate the Tea Party and are not really interested in deficit reduction.
"I do not see a path to the deal if they do not budge," Obama told a news a conference, where he suggested it is time for the GOP to lose the "it's my way or the highway" approach over closing corprater tax loopholes and putting the tax squuze on the middle class.
Obama subtly challenged GOP House Speaker John Boehner to lead his party and take on the cut-frenzied Tea Party -- the way he has taken on the liberals in his party over social security, Medicare and Medicaid.
"We have these high-minded pronouncements about how we've got to get control of the deficit and how we owe it to our children and our grandchildren.Well, let's step up.Let's do it.I'm prepared to do it," Obama said.
"I'm prepared to take on significant heat from my party to get something done.And I expect the other side should be willing to do the same thing, if they mean what they say, that this is important," Obama added.
Obama firmly took off the table the GOP proposal for a short-term deal, saying he "will not sign a 30-day or a 60-day or a 90-day extension" as as an alternative.
"If we think it's hard now, imagine how these guys are going to be thinking six months from now in the middle of election season, when they're all up,"Obama said.
"It's not going to get easier, it's going to get harder.So we might as well do it now; pull off the Band-aid, eat our peas.Now's the time to do it.If not now, when? We keep on talking about this stuff, and, you know," he added.
The President also sought to clear up misinformation on the issue of tax increases.
"I want to be crystal clear.Nobody has talked about increasing taxes now; nobody has talked about increasing taxes next year. What we have talked about is that starting in 2013, that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they're making billions of dollars of profits," Obama explained.
"What we have said is, as part of a broader package we should have revenues, and the best place to get those revenues are from folks like me, who have been extraordinarily fortunate, and that millionaires and billionaires can afford to pay a little bit more, going back to the Bush tax rates," Obama added.
Democrats remain hopeful that the GOP leadership will take a massive $4 trillion White House deal that will cut more deeply into the federal deficit than any other offer on the table.
Asked at last night's 75-minute White House meeting with the bipartsan leaders of the House and Senate whether a deal can be worked out in the next 10 days, President Obama responded,"We need to."
The congressional leaders will be back at the White House today for more talks a few hours after Obama assembles the White House press corps for a late-morning news conference.
"We came into this weekend with the prospect that we could achieve a grand bargain," House Democratic leader Nancy Pelosi said in a statement after last night's meeting. "We are still hopeful for a large bipartisan agreement, which means more stability for our economy, more growth and jobs, and more deficit reduction over a longer period of time."
But rank and file Republicans, led by the Tea Party Caucus, are holding the line against allowing corporate tax loopholes or any tax increases for the rich to be part of a deal to raise the debt ceiling, before financial markets start going haywire when the U.S. starts defaulting on its debts payments.
"If you draw out the entire scenario of default, yes, of course, you have all of that -- interest hikes, stock markets taking a huge hit and real nasty consequences, not just for the United States, but for the entire global economy, because the U.S. is such a big player and matters so much for other countries," International Monetary Fund chief Christine Lagarde told ABC's This Week" program.
But even the threat of hurting the Wall Street fat cats that line mostly GOP pockets (though the Democrats get their share too), or disrupting the volatile global financial markets has not been enough to get the GOP to back off its refusal to tap revenue streams to take a bite out of the deficit.
"We have got to be able to deliver on this promise, that we are going to get more cuts that what we raise in terms of the debt ceiling, and make sure that gets done with no tax increases," House GOP leader Eric Cantor said right before the meeting."
Brad Dayspring, Cantor's spokesman, admitted late last night on Twitter that "tax increases that Dems are insisting upon cannot pass the House." It appeared to confirm Democrats complaints that the GOP leadership was being rolled by its rank and file.
So in an about-face, Republicans are insisting that they want to take a smaller debt reduction framework that cuts around $2.5 trillion that they claim Vice President Biden had offered in his negotiations.
However, Republicans, led by Cantor, walked away from those talks and now seem to be retreating to them in an effort to protect corporate tax loopholes and keep the wealthiest Americans from paying more in taxes.
Democrats scoffed at the pull back, with Senate Democratic Policy spokesman Brian Fallon questioning on Twitter if the Biden deal was so good, "Then why did Cantor quit?"
The proposed cuts in funding come as thousands of government jobs are already being lost, forcing some communities and states to consider raising taxes to pay for basic services.
The taxpayers have watched the federal debt skyrocket under the last two Presidents. The national debt was $5.73 trillion when ex-President George W. Bush took office, but when he left, it was $10.7 trillion, ballooning by $4.97 trillion, according to fact-checking service PolitiFact.
The federal debt now stands at $14.3 trillion under Obama, a result of the Wall Street and auto industry bailouts, a massive stimulus plan, the loss of middle class revenue, and the two wars that cost so much during the Bush administration.