President Obama sat down with Senate leaders Monday to try and reach a compromise on reducing government spending.

The White House insists on increasing taxes as a part of any deficit reduction plan. Republicans say that's not an option.

"It's time Washington take the hit -- not the taxpayers," Senate Minority Leader Mitch McConnell, R-Ky., said.

Without deficit cuts, Republicans say they won't vote to increase the nation's borrowing power.

Still, the White House is confident a deal will be reached.

"Compromise and an agreement will depend on each side being willing to accept some tough choices," White House spokesman Jay Carney said.

The current debt ceiling of $14.3 trillion would likely have to be increased by $2.4 trillion to last through the end of next year.

Only five weeks remain before the U.S. has to raise the credit limit to avoid a potential default on Aug. 2.

Failure to raise the ceiling "would do serious damage," said Mark Zandi, chief economist at Moody's Analytics, whose views are frequently cited by the Obama administration.

"It will unhinge the already very fragile collective psyche," he said.

"The president needs to take a chance himself, and do something that shows he's willing to give up something that's very large to move this forward," he added.