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A smaller deal preferred by some Republicans, which would slash spending in the near term by $2 trillion to $2.5 trillion without tax increases or major changes in entitlement programs, has the potential to disrupt the economy, he said.

“A bigger plan that includes entitlement and tax reform is clearly a better outcome for the U.S. fiscal picture,” he said. “We have been concerned that any smaller agreement would not tackle either entitlement or revenue issues and instead focus far more on near-term spending cuts, causing an economic drag.”

But the president’s proposal of an ambitious program at the eleventh hour - a month before the Treasury runs out of borrowing authority Aug. 2 - also poses considerable risks because it will be opposed by major factions in both parties in Congress, Mr. Rajadhyaksha said.

If Congress rejects any deal worked out between the White House and congressional leaders, little time would be left to negotiate an alternative plan. That increases the likelihood that the Treasury will either default on its bond payments in August or will be forced to impose immediate, draconian cuts in government payments such as Social Security and veterans benefits, further hurting economic growth, he said.

Whether Congress will go along with what the president envisions is a major question. Republicans remain vehemently opposed to any tax increase, and congressional Democrats are opposed to cuts in big-ticket entitlement programs such as Medicare and Social Security.

Many Republicans contend that deep spending cuts would give businesses the confidence to hire without fear that their tax burdens will increase.

Michael Pento, an economist at Euro Pacific Capital, said Republicans know that deep spending cuts will thwart growth and that is part of their game plan.

“Republicans have very little incentive to agree on a deal that includes tax hikes,” he said. “In fact, the Republicans want to force a severe dose of austerity upon the American economy, which could be a double win for the GOP. They may simultaneously balance the budget without increasing revenue and engender a recession that will force the current party out of the White House.”