But Republicans, led by Kentucky Sen. Mitch McConnell say any tax increase is off the table.

 

"The whole business of raising taxes, regardless of how you go about it, is something that the Congress is not likely to do," he said on ABC's "This Week" Sunday. "We have a spending problem. We don't have a problem because we tax too little."

 

According to the Washington Post, Republicans may even be willing to consider cuts to defense spending, traditionally viewed as a sacred cow, if it meant no tax hikes.

 

Both sides expected it would eventually come to this - getting the president involved at the last minute to make a deal, reports Plante. That's what happened in April on budget negotiations to avoid a government shutdown. This time, it's the threat of a U.S. government default, which makes the markets and foreign governments very nervous.