The Senate is resuming work on a debt reduction plan after leaders decided to cancel an extended holiday recess so both parties could continue negotiations.

Some political insiders say Republicans and Democrats are talking but are simply not listening to the other side. Some believe the two sides are being driven farther apart as the deadline draws closer.

Lawmakers have until Aug. 2 to increase the government's power to borrow money. Some say if they fail to raise the debt limit, the U.S. government could default on its obligations.

Fiscally conservative lawmakers are demanding that the government cut debt before voting to raise the ceiling.

So far, Republicans and Democrats are having trouble finding middle ground on a plan. Democrats are demanding tax hikes to go along with budget cuts, but Republicans are holding firm against them.

Sen. John McCain, R-Ariz., summed up the Republican position on CNN Sunday.

"The American people, as the president describes it, administered a shellacking," he said of the Democrats' devastating November election losses."

"They don't want compromise. They want us to balance the budget," he said.

"They want us to stop mortgaging our children and our grandchildren's futures. And they don't think they need their taxes raised, and I don't either," McCain added.