Boehner said he is ready to make a deal on raising the debt ceiling but he and fellow Republicans warned of dire consequences to the U.S. economy if the debt limit is not linked to spending cuts and deficit reduction.

"I'm ready to cut the deal today. You know, we don't have to wait until the 11th hour," Boehner said on CBS's "Face the Nation."

He questioned whether Obama was serious about deficit reduction. "He's talking about it. But I'm not seeing real action yet," Boehner said.

The Treasury Department is expected to hit its $14.3 trillion borrowing limit Monday

, making it unable to access bond markets again.

Republican leaders say they will not approve a further increase in borrowing authority without steps to keep debt under control.

The Treasury Department says it can stave off default until Aug. 2 by drawing on other sources of money to pay its bills.

The department's leeway to manage the debt ceiling issue for another few months has created a sense in Washington that any deal is far off.

In remarks recorded last week and broadcast by CBS News Sunday, Obama repeated his stance that Republicans should not link the debt ceiling decision to spending cuts as part of deficit-reducing measures.

"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system," Obama said at a CBS News town-hall meeting.

"We could have a worse recession than we already had, a worse financial crisis than we already had."

Top Republicans emphasized that increasing the debt limit must go hand-in-hand with spending cuts.

"The whole reason we're running into the debt limit so soon is because of the spending spree that has occurred over the last two years," Republican House Budget Committee Chairman Paul Ryan said on CNN's "State of the Union."

The White House and congressional Republicans are locked in a debate over the deficit and the debt ceiling.

Vice President Joe Biden is leading talks between the White House and lawmakers on how to reduce the massive U.S. budget deficits and raise the credit limit.

He told reporters Thursday that progress was being made but it was too early to be optimistic about a deal.

"We need to impress the markets, impress foreign countries that we're going to get our act together, and astonish the American people that the adults are in charge in Washington and are actually going to deal with this issue," Senate Republican Leader Mitch McConnell said on CNN's "State of the Union."

A report from the think tank Third Way to be released Monday outlined the potential consequences should lawmakers and the White House fail to reach a deal on the debt ceiling.

It said a debt default could plunge the United States back into recession, with some 640,000 U.S. jobs vanishing, stocks falling and lending activity stalling.

Estimates are that it will take until August for the US to actually default on its debt obligations, the concern in the short term is how Wall Street sees the situation and how that will be reflected in the bond market and in mortgage interest rates.


Here are opinions from few market experts:

Michael Barr/Fmr. Asst. Treasury Secretary for Financial Institutions

"If the US continues to bump up against the debt limit but Treasury uses "extraordinary measures" to keep the US from exceeding the limit, then the damage is likely to be modest and short-term. I would expect rates to rise, temporarily, by up to low single-digit basis points.

It is a bit hard to forecast exactly what the effect will be. Prior experience suggests low single digit bps, but there are a number of factors in play today that were not present in previous debt ceiling crises: fragile economy, fragile housing finance sector, fragile home prices and sales, F/F in conservatorship, no securitization to speak of, higher debt to GDP ratio, turmoil in Europe (exacerbated by DSK's arrest), extremely high levels of US dollar reserves already in China, extremely low Treasury rates.

Long term, if we actually default, it is simply devastating, and permanent."

Peter Boockvar/Miller Tabak:

"I think the market has spoken and the almost 50 bps drop in the 10 year note yield since mid April is clear evidence that the debt ceiling debate has had zero impact on market psychology. Everyone assumes that a deal of some sort will occur and the market impact will be nothing. More impactful in the direction of lower yields has been concerns with growth and a flight to safety due to renewed concerns with Europe."

Glenn Kelman, CEO Redfin

"We see people being very sensitive to the cost of money; they're very concerned about the debt crisis, they're very concerned about all these rumors that the US could have a money supply problem, so we think that interest rates are the real X factor to watch."

Treasury Secretary Timothy Geithner made it clear what would happen should the U.S. ultimately default:

"Because Treasurys represent the benchmark borrowing rate for all other sectors, default would raise all borrowing costs. Interest rates for state and local government, corporate and consumer borrowing, including home mortgage interest, would all rise sharply. Equity prices and home values would decline, reducing retirement savings and hurting the economic security of all Americans, leading to reductions in spending and investment, which would cause job losses and business failures on a significant scale."

( Source: Reuters )