US President Barack Obama along with several key members of Congress are looking into striking a deal this week to reduce deficit to pave way for more congressional support to the planned measure to increase the federal debt ceiling.

The White House are expected to work with congressional officials on a plan to add $2.5 trillion to the federal debt ceiling, which was originally pushed by Senate Minority Leader Mitch McConnell (R-KY) designed as a fallback plan to avoid the federal government from getting into default.

Early this week, White House budget director Jack Lew noted that Mr. Obama is still holding out in hopes that a huge deal can be agreed upon that will decrease the deficit and at the same increase the debt ceiling.

Congress realizes that in the absence of such major deal as of the moment, they would need to put their attention on much smaller agreements like raising the debt ceiling otherwise government would not have enough to pay its bills in less than two weeks time. Two major credit ratings agencies – Moody’s and S&P – have already threatened to downgrade the Triple-A rating of the US should an unprecedented default occur.

If Congress does not approve to raise the existing $14.3 trillion debt ceiling, the cap in which Washington is allowed to borrow, by Aug. 2, the US could face spiraling interest rates, a falling dollar, and unstable financial markets.

Treasury Secretary Timothy Geithner and White House officials have sent warnings for weeks that an economic “catastrophe” is in the offing should no action is made on the debt ceiling. The White House has been increasingly turning to biblical rhetoric to emphasize the potential consequences of a US default.

Meanwwhile, Lew revealed that talks between the president and congressional leaders on the deficit and debt ceiling are moving along on multiple directions.

First, he said that the Republicans in the House of Representatives are vying for a package that reduces as a well as places a cap on federal spending based on a balanced-budget scenario – something that Democrats would not support.

Second, both Democrats and Republicans in the Senate are putting a backup plan that would give the president the debt ceiling increase he asked for without the need for a congressional majority to support it – a deal that conservatives and Tea party members will not endorse.

Third, Lew also disclosed that there have been continuing meetings among bipartisan senators to work out some sort of a deal.

This Tuesday, leaders so the so-called “Gang of Six” of bipartisan senators have announced that they have agreed on a major plan to cut the deficit by more than $3.7 trillion over the next 10 years aimed at pushing forward the talks on the deficit that has been stalled by bitter partisanship.

The group includes Sen. Kent Conrad (D-ND), Dick Durbin (D-IL), Mark Warner (D-VA), Saxby Chambliss (R-GA), and Mike Crapo (R-ID). Sen. Tom Coburn, a Republican senator from Oklahoma, removed himself from the group on disagreements over where the negotiations were heading. The members have met with 50 senators on Tuesday to discuss their plan.