Republicans proposed the new plan on Monday, saying that it will break the deadlock and avert a devastating government default, CNN reported.

“Now we find ourselves days before the August 2nd deadline, and we put today a new plan on the table. And it’s a plan that — we believe — will address some of the political concerns of the Senate Democrats, but most importantly the economic concerns of our country,” Republican Congresswoman Cathy McMorris Rodgers said, adding, “We cannot continue to borrow and spend out of control.”

The Republicans say the plan is based on the principles of the cut, cap and balance bill, which was earlier rejected by the Democratic-led Senate.

The bill would cut fiscal year 2012 spending by $111 billion, cap future spending at 18 percent of GDP, and propose a balanced budget amendment to the Constitution.

If an agreement is not reached by the deadline, the federal government will default on its huge debt.

The US hit its borrowing limit of $14.3 trillion on May 16, up from $10.6 trillion when Obama took office in 2009.

The Democrats and the Republicans have been holding talks on how to curb the massive debt, but they have been unable to reach an agreement

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