WASHINGTON — Congressional leaders on Sunday showed no signs of emerging from their corners to resolve the next step in the financial crisis, with Democrats still talking about higher taxes on the wealthy and the Senate's top Republican suggesting that a crippling default on U.S. loans was possible unless there were significant cuts in government spending.

"It's a shame we have to use whatever leverage we have in Congress to get the president to deal with the biggest problem confronting our future, and that's our excessive spending," said Sen. Mitch McConnell, R-Ky.

Last week's deal to avert the combination of end-of-year tax increases and spending cuts known as the "fiscal cliff" held income tax rates steady for 99 percent of Americans but left some other major pieces of business unresolved.

By late February or early March, the Treasury Department will run out of options to cover the nation's debts and could begin defaulting on government loans unless Congress raises the legal borrowing limit, or debt ceiling. Economists warn that a default could trigger a global recession.

Also looming are deep automatic spending cuts expected to take effect at the beginning of March that could further erase fragile gains in the U.S. economy. Then on March 27, the temporary measure that funds government activities expires, and congressional approval will be needed to keep the government running. It's one more chance to fight over spending

Lawmakers said debt talks will consume Congress in the coming weeks, likely delaying any consideration of an expected White House proposal on gun restrictions in the wake of the Connecticut school shooting.

Republicans say they are willing to raise the debt ceiling but insist any increase must be paired with significant savings from Medicare, Medicaid and other government benefit programs. President Barack Obama has said he's willing to consider spending cuts separately but won't bargain over the government's borrowing authority.

"One thing I will not compromise over is whether or not Congress should pay the tab for a bill they've already racked up," Obama said in his weekly radio and Internet address.

Democrats said further tax increases for the wealthiest Americans were still possible as Congress looks to close the gap between revenues and expenditures. Democrats point out that Obama has already agreed to significant spending cuts, and that the latest deal only gets the nation to about half of the revenue it needs to resolve the red ink.

"Trust me, there are plenty of things within that tax code – these loopholes where people can park their money in some island offshore and not pay taxes. These are things that need to be closed. We can do that and use the money to reduce the deficit," said Illinois Sen. Dick Durbin, the second-ranking Senate Democrat.

House Democratic leader Nancy Pelosi of California said she, too, wants to put "everything on the table from the standpoint of closing loopholes."

But McConnell bluntly declared that the "tax issue is over" after last week's agreement.

"We don't have this problem because we tax too little; we have it because we spend too much," McConnell said.

Making the rounds on the Sunday talk shows, McConnell was asked repeatedly whether Republicans were prepared to see the nation default on its spending obligations. McConnell said that wouldn't be necessary, so long as Obama agrees to the spending cuts.

But at one point, when asked by NBC's David Gregory whether the GOP strategy will be to hold the debt ceiling "ransom" in exchange for spending cuts, McConnell said it was a "shame we have to use whatever leverage we have" to get the president's attention.

"None of us like using situations like the sequester (automatic across-the-board spending cuts) or the debt ceiling or the operation of government to try to engage the president to deal with this," McConnell said.

Sen. Lindsay Graham, R-S.C., didn't dismiss the idea of allowing a partial shutdown of government until an agreement can be reached. Texas Sen. John Cornyn and other Republicans have floated the idea of a shutdown as a way of winning deeper spending cuts.

"I believe we need to raise the debt ceiling, but if we don't raise it without a plan to get out of debt, all of us should be fired," Graham said.

Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, said the Republican strategy amounted to: "Give us what we want ... or we're going to tank the United States economy."

Pelosi said she believes the president has enough authority under the 14th Amendment to raise the debt ceiling without Congress' blessing. But the White House has said previously that it does not believe that the amendment – which says the "validity" of public debt shouldn't be questioned – gives the president that power.

McConnell spoke on NBC's "Meet the Press," ABC "This Week" and CBS "Face the Nation." Pelosi was on CBS. Durbin and Graham appeared on CNN's "State of the Union" and Van Hollen was interviewed on "Fox News Sunday."

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    The U.S. incarcerates its citizens at a rate roughly <a href="http://www.parade.com/news/2009/03/why-we-must-fix-our-prisons.html" target="_hplink">five times higher than the global average</a>. We have about 5 percent of the world's population, but 25 percent of its prisoners, according to The Economist,. This status quo costs our local, state and federal governments a combined $68 billion a year -- all of which becomes a federal problem during recessions, when states look to Washington for fiscal relief. Over the standard 10-year budget window used in Congress, that's a $680 billion hit to the deficit. Solving longstanding prison problems -- releasing elderly convicts unlikely to commit crimes, offering treatment or counseling as an alternative to prison for non-violent offenders, slightly shortening the sentences of well-behaved inmates, and substituting probation for more jail-time -- would do wonders for government spending.

  • End Of The Drug War

    The federal government spends more than <a href="http://www.cbsnews.com/8301-18563_162-20072096.html" target="_hplink">$15 billion a year</a> investigating and prosecuting the War on Drugs. That's $150 billion in Washington budget-speak, and it doesn't include the far higher costs of incarcerating millions of people for doing drugs. This money isn't getting the government the results it wants. As drug war budgets balloon, drug use escalates. Ending the Drug War offers the government two separate budget boons. In addition to saving all the money spending investigating, prosecuting and incarcerating drug offenders, Uncle Sam could actually regulate and tax drugs like marijuana, generating new revenue. Studies by pot legalization advocates indicate that fully legalizing weed in California would yield <a href="http://canorml.org/background/CA_legalization2.html" target="_hplink">up to $18 billion annually</a> for that state's government alone. For the feds, the benefits are even sweeter.

  • Let Medicare Negotiate With Big Pharma

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  • Offshore Tax Havens

    The U.S. Treasury Department estimates that it loses about <a href="http://www.ctj.org/pdf/stopact.pdf" target="_hplink">$100 billion a year</a> in revenue due to offshore tax haven abuses. Sen. Carl Levin (D-Mich.) has been pushing legislation for years to rein in this absurd tax maneuvering, but corporate lobbying on Capitol Hill has prevented the bill from becoming law.

  • Deprivatize Government Contract Work

    In recent years, the federal government has privatized an enormous portion of public projects to government contractors. Over the past decade, the federal government's staffing has held steady, while the number of federal contractors has <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">increased by millions</a>. This outsourcing has resulted in much higher costs for the government than would be incurred by simply doing the work in-house. On average, contractors are paid <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">nearly double</a> what a comparable federal employee would receive for the same job, according to the Project On Government Oversight.

  • Print More Money

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  • Print Less Money

    The government prints a <em>lot</em> of $1 bills. But it turns out that minting $1 coins is much, much cheaper. Over the course of 30 years, the government could save $4.4 billion by switching from dollar bills to dollar coins. Here's looking at you, <a href="http://www.usmint.gov/mint_programs/nativeamerican/" target="_hplink">Sacagawea</a>.

  • Immigration: Less Detention, More Ankle Bracelets

    The government spends <a href="http://newamericamedia.org/2012/04/ice-slow-to-embrace-alternatives-to-immigrant-detention.php" target="_hplink"> $122 per person, per day</a> detaining immigrants who are considered safe and unlikely to commit crimes. The government has plenty of other options available to monitor such people, at a cost of as little as $15 per person. For the first 205 years of America's existence, there was no federal system for detaining immigrants. The process began in 1981.

  • Financial Speculation Tax

    Wall Street loves to gamble. In good times, financial speculation is the source of tremendous profits in America's banking system, but when the bets go bad, the government picks up the tab, as evidenced by the epic bank bailouts of 2008 and 2009. Unfortunately, this speculation is difficult to define in legalistic terminology and even more difficult to police. One solution? By taxing every financial trade at the ultra-low rate of 0.25 percent, the U.S. government can impose a modest incentive against gambling for the sheer sake of gambling. If there's an immediate cost to placing a bet, a lot of traders will choose not to bet. What's more, this tax could raise about <a href="http://www.ips-dc.org/media/why_a_financial_transaction_tax" target="_hplink">$150 billion a year</a> for the federal government.

  • Carbon Tax

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