Under the plan, the nation's debt limit would rise in two steps by about $2.4 trillion and spending would be cut by a slightly larger amount, these officials said. The first stage - about $1 trillion - would take place immediately and the second later in the year.
Congress would be required to vote on a balanced budget amendment to the Constitution, but none of the debt limit increase would be contingent on its approval.
One official said the two sides had settled on general concepts, but added there were numerous details to be worked out, and no assurance of a final agreement.
Still, word of significant progress after weeks of stalemate offered the strongest indication yet that an economy-crippling default might be averted.
The officials who described the talks did so on condition of anonymity, citing their sensitive nature.
Without legislation in place by next Tuesday, administration officials say the Treasury will run out of funds to pay all the nation's bills. They say a subsequent default could prove catastrophic for the U.S. economy and send shockwaves around the world.
The president is seeking legislation to raise the government's $14.3 trillion debt limit by about $2.4 trillion, enough to tide the Treasury over until after the 2012 elections. Over many weeks, he has agreed to Republican demands that deficits be cut - without a requirement for tax increases - in exchange for additional U.S. borrowing authority.
But Obama has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect, saying that would invite a recurrence of the current crisis in the heat of next year's election campaigns.
First word of an effort to reach a compromise came at mid-afternoon froim Senate Republican Leader Mitch McConnell and House Speaker John Boehner - Obama's principal Republican antagonist in a contentious new era of divided government.
Senate Majority Leader Harry Reid heatedly denied it on the Senate floor a short while later, but several hours later said events had changed.
"There are many elements to be finalized...there is still a distance to go," he said, adding that Majority Leader Harry Reid cautioned in dramatic late-night remarks on the Senate floor.
"I'm glad to see this move toward cooperation and compromise," he added.
He said he was optimistic any agreement would not include a short-term extension of the nation's debt limit - a point on which Obama has insisted.
Officials familiar with the discussions said that while the first-step increase in borrowing authority and cuts in spending would happen at once, the next step would be somewhat more complicated.
The additional increase in borrowing authority would depend on creation of a special committee of lawmakers charged with recommending spending cuts of a slightly larger size. If the panel failed to act, or its proposals were rejected in Congress, automatic spending cuts would take effect to slice spending by slightly more than the second installment additional borrowing authority.
But Obama has threatened to veto any legislation that would require a second vote in Congress for any additional borrowing authority to take effect, saying that would invite a recurrence of the current crisis in the heat of next year's election campaigns.
First word of an effort to reach a compromise came at mid-afternoon froim Senate Republican Leader Mitch McConnell and House Speaker John Boehner - Obama's principal Republican antagonist in a contentious new era of divided government.
Senate Majority Leader Harry Reid heatedly denied it on the Senate floor a short while later, but several hours later said events had changed.
"There are many elements to be finalized...there is still a distance to go," he said, adding that Majority Leader Harry Reid cautioned in dramatic late-night remarks on the Senate floor.
"I'm glad to see this move toward cooperation and compromise," he added.
He said he was optimistic any agreement would not include a short-term extension of the nation's debt limit - a point on which Obama has insisted.
Officials familiar with the discussions said that while the first-step increase in borrowing authority and cuts in spending would happen at once, the next step would be somewhat more complicated.
The additional increase in borrowing authority would depend on creation of a special committee of lawmakers charged with recommending spending cuts of a slightly larger size. If the panel failed to act, or its proposals were rejected in Congress, automatic spending cuts would take effect to slice spending by slightly more than the second installment additional borrowing authority.
