The White House is insisting that any new plan includes cutting tax loopholes to bring in more revenue. Republicans say they will not approve any more tax increases. Some Senate Republicans are considering a compromise that would keep the cuts in place, but would give the President flexibility to decide which programs and government functions to cut.
Meanwhile, Federal Reserve chairman Ben Bernake appeared before a Senate committee Tuesday and urged Congress to delay the budget cuts. He says the immediate cuts will hurt the economy and fail to deal with long-term national debt. Bernake says cuts do need to happen, not now but over the next decade when the rising costs of health care will make debt payments a real burden. He will be back on Capitol Hill testifying about the issue before a House committee.