Democratic and Republican congressional leaders are set to unveil new deficit reduction plans Monday as top officials scramble to bridge a cavernous partisan divide and raise the federal government's debt ceiling before an unprecedented - and potentially devastating - national default.

Senate Majority Leader Harry Reid, D-Nevada, is expected to outline a blueprint calling for roughly $2.7 trillion in spending cuts over the next decade while raising the debt limit by $2.4 trillion - an amount sufficient to fund the government through the 2012 election. Reid's plan would not require any new tax hikes or reforms to politically popular entitlement programs.

House Speaker John Boehner, R-Ohio, is expected to outline a two-stage plan. The first stage calls for approximately $1 trillion in spending cuts while raising the debt ceiling through the end of 2011, according to sources. The second stage would raise the debt limit through 2012, but tie the increase to major tax reforms and entitlement changes outlined by a special commission.

Democrats are vehemently opposed to the idea of holding more than one vote to the raise the debt limit through the 2012 election, arguing that such a requirement is politically unrealistic and could prove to be economically destabilizing. Republicans want to lock in long-term tax and spending changes, and argue that President Barack Obama is trying to avoid politically tough decisions in a presidential election year.

If Congress fails to raise the $14.3 trillion debt limit by August 2, Americans could face rising interest rates and a declining dollar, among other problems. As the cost of borrowing rises, individual mortgages, car loans, and student loans could become significantly more expensive.