President Obama made an urgent appeal for Congress to end the stalemate over raising the nation's debt limit.
"We can't allow the American people to become collateral damage to Washington's political warfare."
In a televised address he laid out the consequences for the country if lawmakers don't find compromise.
"Defaulting on our obligations is a reckless and irresponsible outcome to this debate."
He's gotten behind Senate Majority leader Harry Reid's proposal. It would cut $2.7 trillion in spending, raise the debt ceiling through 2012 and leave social security and Medicare untouched.
House Speaker John Boehner is pushing a competing plan. It calls for more than a trillion in spending cuts and raises the borrowing limit through this year. Next year lawmakers would have to find more cuts and vote on another debt limit increase.
"The sad truth is that the president wanted a blank check six months ago, and he wants a blank check today," said Rep. Boehner. "That is just not going to happen."
But the President says he'll veto any plan that would need to be reconsidered before next year's elections, saying a short-term solution could jeopardize the nation's credit.
"We know what we have to do to reduce our deficits; there's no point in putting the economy at risk by kicking the can further down the road."
Republicans and democrats both want to hold votes on their proposals this week, but neither may have enough support to get their plan passed.
Economists say the risk of a credit default is low, but not meeting the August 2 deadline could dramatically halt the nation's economic recovery.