President Obama Tuesday indicated his support for a new deficit-reduction plan that is gaining momentum in the U.S. Senate, calling it a very significant step and one that is broadly consistent with the significant reduction he seeks in the nation's budget deficit.

The plan, if approved, would avert a possible U.S. Government default on its debt; the federal government runs out of money and borrowing authority on August 2.

The proposal by the Gang of Six senators reduces discretionary spending and address health-care spending and entitlements, in addition to raising revenue, The Washington Post reported. In total, the group has reached an agreement to trim more than $4 trillion off the deficit over the coming decade.

We're in the same playing field, Obama said Tuesday from the White House.

After failing to reach an accord -- and apparently disbanding last week -- the group says it's nearing an agreement on a proposal, which could offer an alternate strategy for pushing an increase in the debt limit through Congress before the Aug. 2 deadline.

We've gone from a Gang of Six to a mob of 50, said Sen. Joe Manchin, D-W.Va., as he emerged from the meeting. The proposal, he said, shows great promise.

I will support it. It is a fair compromise, added Sen. Kay Bailey Hutchison, R-Tex. This is a way forward where we can do the work that we have come here to do.

Must Read: Who Are the Gang of Six?

According to a copy of a summary of the Gang of Six plan, it would impose $500 billion in deficit cuts, cut security and non-security spending over 10 years with spending caps, make the Medicare and Medicaid healthcare programs operate more efficiently and abolish the Alternative Minimum Tax.

The tax reform outline would set up three income tax rates: a bottom rate of 8-12 percent; a middle rate of 14-22 percent and a top rate of 23-29 percent to replace the current system that has a bottom rate of 10 percent, with five additional rates topping out at 35 percent, The Associated Press reported. It would also reduce, but not eliminate, tax breaks on mortgage interest, higher-cost health plans, charitable deductions, retirement saving and tax credits for families and children.

The development arrives as lawmakers and the Obama administration continue to spar over the creation of a debt-reduction that a hostile Congress would agree to, allowing the rise of the legal limit on government borrowing. If Congress consents to a plan to raise the $14.3 trillion debt limit by Aug. 2, Treasure officials have warned the government will begin to default on its obligations.

Political/Public Policy Analysis: If you're an American and/or an investor, keep your figures crossed. The Gang of Six plan is a significant step forward -- one the markets will like due to its large $4.0 trillion-plus deficit reduction -- but the meaure still faces Senate and House scrutiny.

That said, on word of the potential breakthrough, we're lowering the risk barometer, on a scale of 0 to 100 percent, of the likelihood of a U.S. Government default, to 25 percent heading into Wednesday, 10 percentage points lower than it was on Tuesday at mid-day .