Washington Democrats and Republicans have already generally agreed - though no official deal is in place - that the U.S. debt will grow by trillions of dollars over the next 10 years and that the pace of its growth must slow. 

How the government will cut deficits in the years to come is a matter of debate and Congress is undecided.

The strategy proposed by President Barack Obama so far is to lock in by early June what lawmakers are close to agreement on - the size of cuts - and decide how to do it later.

The Obama administration believes no action on how will be taken in the next few months. Obama does see an opening between Congressional Republicans and Democrats to agree on the size of deficit cuts, which is around $4 trillion over the next 10 to 12 years.

How to cut is a matter of deep differences. Republicans want mostly federal cuts, including healthcare programs. Obama wants less cuts and higher taxes for more affluent taxpayers.

Wall Street Warning

One of Wall Street's largest credit rating agencies gave Washington a warning this week.

Standard & Poor' said Monday that the U.S. government had until 2013 to address its long-term deficits problem. If not, the agency said it would downgrade the United States' pristine AAA credit rating.

The effect of the lower rating would be that the U.S. government and ultimately the taxpayers, would be forced to pay higher interest when the government borrows money when issuing Treasury notes.

May Talks

Proposals from both sides have been publicly rejected ahead of talks in May convened by Obama, who wields veto power over most Congressional deals. 

The debate is about how we reduce our deficit, Obama said on Tuesday. He said that despite fierce disagreements he was optimistic.

The Administration has proposed that Congress agree by June to specific cuts targets. At the same time, the Administration is also proposing at most 2 ½ years of negotiations - until 2014. At that point, Congress would be forced to accept Obama's plan to cut some spending while raising taxes.

The top Republican in the Senate has already said no to that.

Partisan speeches and promises of some future cuts after the President leaves office simply won't suffice, Sen. Mitch McConnell said Tuesday.

In the very short term - over the next few months - Republicans are publicly calling for a deal on reducing deficits that will correspond with an agreement by Congress to raise the legal federal debt ceiling beyond the current $14.3 trillion level.

McConnell said ahead of talks set to start in May that a serious and credible path forward to reduce spending would get Republicans to support raising the debt ceiling.