WASHINGTON - President Barack Obama said Friday Congresshas a "unique opportunity to do something big" and stabilize theU.S. economy for decades by cutting deficits at the same time itraises the national debt limit ahead of a critical Aug. 2 deadline.

He warned starkly that failure would mean "effectively a taxincrease for everybody" if the government defaults, sending upinterest rates.

Still, Obama said that "it's hard to do a big package" indeadlocked Washington, acknowledging Republicans are opposed to anynew tax revenue as part of a deficit-cutting deal.

The president spoke at the White House Friday after five daysstraight of meetings with congressional leaders failed to yieldcompromise, and amid increasingly urgent warnings from creditagencies and the financial sector about the risks of failing toraise the government's borrowing limit.

Administration officials and private economists say that if theU.S. fails to raise its borrowing limit and begins to stop payingits bills as a result, the fragile U.S. economy could be cast intoa crisis that would reverberate around the globe.

Democratic and Republican congressional leaders agree on the need to avert thatoutcome, but that hasn't been enough to get Republicans to agree tothe tax hikes on corporations and the wealthy sought by Obama - orto convince Obama and Democrats to sign onto the steep entitlementcuts without new revenue that Republicans favor.

Some Long Island residents say they want politicians to stop playing games and put their personal disputes aside during this crucial time.  Others, including Pete Ekstrom, of Massapequa, say they want the debt ceiling raised but that there has to be balance with cuts.

Failure to reach compromise has focused attention on a fallbackplan under discussion by Senate Republican leader Mitch McConnelland Senate Majority Leader Harry Reid. That plan would give Obamagreater authority to raise the debt ceiling while setting procedures in motion that could lead to federal spending cuts.

There was a short-term government shutdown back in 1995, however, experts say the stakes are much higher this time around because of the struggling economy.