ABC News' Jonathan Karl ( @jonkarl ) reports:
Talks between House Speaker John Boehner and President Obama to raise the debt ceiling in conjunction with sweeping spending cuts and tax and entitlement reform have broken down. There will be no "grand bargain" to deal with the debt crisis and raise the debt ceiling.
Boehner's decision to abandon negotiations with President Obama puts an end to a deal that would have cut spending by up to $3.5 trillion over the next 10 years and increased tax revenues by close to a trillion dollars. But the $14.3 trillion debt ceiling must be raised by Aug. 2nd to avoid a government default.
"We have now run out of time," the President declared at a hastily arranged press conference in the White House briefing room.
He said he has summoned Boehner, House Minority Leader Nancy Pelosi, Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid to the White House for an emergency meeting at 11am on Saturday.
"I expect them to have an answer as to how they will get this thing done over the next week," Obama said.
Talks now begin between Boehner and senate leaders on a far less ambitious a Plan B.
Reid and McConnell had been working on such a proposal until this week, when hopes for a "grand bargain" were rekindled.
Boehner sent a letter to his Republican colleagues explaining his decision to pull out of talks for a "grand bargain." Here are some highlights:
"It has become evident that the White House is not serious about ending the spending binge that is destroying jobs and endangering our children's future," he will write, adding, "A deal was never reached, and was never really close.
"The president is emphatic that taxes have to be raised. ... The president is emphatic that we cannot make fundamental changes to our entitlement programs," Boehner will write.
"For these reasons, I have decided to end discussions with the White House and begin conversations with the leaders in the Senate in an effort to find a path forward."
The president was clearly frustrated that the negotiations for a large package of reforms to deal with the debt had broken down. He and Boehner have been engaged in intense negotiations for weeks, and the President said things appeared to be going well until earlier Friday, "when I couldn't get a phone call returned."
"There doesn't seem to be a capacity for them to say yes," Obama complained of Republicans. He said they would not accept spending cuts except those that would drive people off Medcaid rolls in states.
ABC News' Z. Byron Wolf, Mary Bruce, John Parkinson and Sunlen Miller contributed reporting.