For the last few weeks and maybe the last couple of months they have been saying there will NOT be a short term debt extension, that its either raised by Trillions of dollars in the next week or so or it doesnt go through at all and the US defaults (which is not going to happen). So here we are again talking about a short term debt extension, doesn't make any sense, as I said a million times before DO NOT raise the debt ceiling, start cutting right now and let the free markets do what they are suppose to do. Enough of the manipulation! White House Open to Short-Term Debt Extension Reuters | July 20, 2011 | 06:47 PM EDT The White House shifted gears Wednesday, signaling that President Obama could support a short-term increase in the U.S. borrowing limit as long as it is part of a broader deficit reduction deal. Obama's new stance on a short-term fix shows the White House has recognized that time is running out for Congress to act before the United States runs out of money on Aug. 2. It was made possible by the new proposal for long-term deficit reduction from a group of senators known as the "Gang of Six" that has revived hope in Washington that a broad agreement on spending cuts can be reached to both avoid a looming default and alleviate pressure on America's triple-A credit rating. "The chances of getting a bigger deal have certainly increased in the last few hours." said Brian Gardner, an analyst with Keefe, Bruyette & Woods. Obama previously promised to veto a short-term extension of the $14.3 trillion debt limit. But White House spokesman Jay Carney said in a written statement the president would consider an exception if congressional leaders look like they're getting close to a deal for a long-term debt limit extension with deficit reduction. Carney said that could prompt a "very short term extension (like a few days) to allow a bit of extra time for a bill to work its way through the legislative process." The United States will run out of money to pay its bills if Congress does not increase the debt limit by Aug. 2. Failure to act could plunge the United States back into recession and send shockwaves through global financial markets. The Federal Reserve has been actively preparing for the possibility of default, ironing out what to do if the world's biggest economy runs out of cash in two weeks, Philadelphia Federal Reserve Bank President Charles Plosser told Reuters. Plosser said his "gut feeling" was that Obama and Congress would come to an agreement and avert a default. Republicans say they will not support increasing the debt limit without deep spending cuts. Deficit talks have hit an impasse over tax increases, which Republicans still rule out. Obama met with the Democratic congressional leaders at the White House mid-afternoon and held a separate meeting with the Republican leaders of the House in the evening. They will discuss an ambitious deficit reduction plan proposed on Tuesday by the so-called Gang of Six. Obama has latched onto that plan as a way to help end the deadlock, which has threatened the United States' top-notch credit rating. The $3.75 trillion Gang of Six plan calls for an immediate $500 billion in deficit savings and gives Congress six months to come up with more far-reaching reforms. One of its authors, Democratic Senator Kent Conrad, said the initial portion could be used to raise the debt ceiling. That downpayment could presumably be raised to win the support of House Republicans who have given the plan mixed reviews. Lawmakers have been scrambling to find a solution, and there is no single plan. The best option had been one put forward by Senate Republican leader Mitch McConnell and billed as a backup plan, which passes responsibility, authority and potentially blame for raising the debt ceiling to Obama. McConnell's plan would allow Obama to raise U.S. borrowing authority in three separate chunks over the next year. He has been negotiating with Senate Democratic leader Harry Reid to make it palatable to Democrats. The stalemate on debt talks has shaken global markets, and credit rating agencies said even if lawmakers raise the debt limit in time, the top-notch triple-A credit rating will still be under pressure without a broad deficit-reduction plan. Brett Rose, head of U.S. rates strategy for Citigroup, said markets and rating agencies understand that ironing out all the legislative details could take time. "They probably would have to do a short-term thing for a couple of weeks or a month while they get that passed, and that deal would satisfy the ratings agencies," Rose said. "I don't think this is a tactic that the ratings agencies would disapprove of." Investors welcomed the Group of Six plan Tuesday, driving up the price of 30-year Treasury bonds sharply and pushing global stocks higher. But Wednesday, bond prices eased as Wall Street realized the road ahead remains long. An analyst from Fitch said it was encouraging that progress appeared to be being made on a substantial deficit-reduction deal and said the credibility of the bipartisan plan was as important as the overall savings amount.