WASHINGTON — President Obama and congressional leaders of both parties Sunday agreed to a framework for a budget deal that would cut trillions of dollars in federal spending over the next decade and clear the way for an increase in the government's borrowing limit, but they must still convince enough lawmakers to get the deal through Congress before midnight Monday.

With the health of the fragile economy hanging in the balance and financial markets watching closely, the leaders said they would present the compromise to their caucuses Monday morning in hopes of enacting it before a Tuesday deadline to avert default.

Even as the president was speaking from the White House on Sunday night, Speaker John Boehner held a conference call with fellow House Republicans, trying to sell them on the proposal he had signed off on only minutes before.

Because he is likely to lose the most conservative elements of the caucus, Boehner faces the task of framing the pact as friendly enough to Republican principles to win over a significant group of his rank-and-file without alienating the Democrats he will need to push it over the top.

Obama, in a hastily called appearance with reporters late Sunday, said the compromise would "allow us to avoid default and end the crisis that Washington imposed on the rest of America."

"It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months," he said. "And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy."

Just before Obama spoke on television, the two Senate leaders, Harry Reid and Mitch McConnell, took the floor to endorse the pact as well.

The tentative agreement calls for at least $2.4 trillion in spending cuts over 10 years, a new congressional committee to recommend a deficit-reduction proposal by Thanksgiving and a two-step increase in the debt ceiling.

If the deal clears Congress, it will ensure that the size and scope of the federal government and the tension between spending and taxes will remain front and center in the Washington debate headed into the 2012 election.

Markets rise

Markets reacted favorably to the announcement. Asian markets jumped on news of the deal. The Nikkei was up 1.7 percent in early trading; the dollar rose about 1.4 percent against the Japanese yen.

The tense, last-minute negotiations took place against a backdrop of uncertainty, with a looming threat of a costly downgrade of the nation's credit rating and with investors worried about the global economic impact of a possible default. The political stakes were unusually high as well, with leaders in both parties staking out positions that may well be central to their re-election chances in 2012.

Lawmakers and White House officials struggled Sunday to hammer out the fine points of an agreement that must clear a Senate controlled by Democrats as well as the Republican House, with the House providing a particular challenge.

Leaders were anticipating objections from Republicans that the plan did not go far enough, while Democrats were wary that Medicare spending would take a hit.

On his conference call, Boehner portrayed the new agreement as one heavily tilted toward the Republican call for no new revenue, a euphemism for not raising taxes, and he said it met the goal of instituting cuts greater than the amount of the debt-limit increase. In a presentation, he said the pact would prevent a "job-killing default" — a warning to lawmakers that failure to raise the limit could add to the bleak employment picture.

Reid, the Senate Democratic leader, earlier Sunday publicly embraced the compromise that would tie deep spending cuts to a debt-ceiling increase, though his plan to bring it to a vote as early as Sunday was put off, as was a tentative meeting of Senate Democrats to review it.

According to congressional and administration officials, the delay was attributable to efforts by Boehner to limit immediate reductions in the Pentagon budget and better protect it from future cuts to cement votes from defense hawks. He seeks those votes to win approval of the plan in the House.

With the talks appearing to make progress, the Senate blocked Reid's Democratic proposal for a debt-limit increase, with a 50-49 vote falling 10 votes short of the 60 required to limit debate.

Opposition emerges

Not everyone was pleased with the announced deal. "It may be the best we can do," said Sen. Jeff Sessions of Alabama, the senior Republican on the Budget Committee. "But I do not think it's enough."

Obama administration officials were aware of the risk the president was running if he struck a deal congressional Democrats find hard to swallow.

"This deal trades peoples' livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it," said Rep. Raul Grijalva, a Democrat from Arizona.

The Congressional Black Caucus called an "emergency meeting" Monday to discuss the proposal. The group's chairman, Rep. Emanuel Cleaver, D-Mo., called it "a sugarcoated Satan sandwich."

Strong incentive

Under the plan as described by officials briefed on its outline, the debt limit would be increased by $900 billion in the first installment, subject to a congressional vote that Obama would be able to supersede with a veto. To prevent a default, $400 billion would be added immediately.

A second increase of $1.2 trillion to $1.5 trillion would be available subject to a second vote by Congress. At the same time, a new joint congressional committee would be created to find a like amount of cuts.

If the evenly divided committee failed to agree on a plan, Congress would either have to approve a balanced-budget agreement or accept an across-the-board cut in spending in line with the committee's goal, with 50 percent of the savings coming from the Pentagon beginning in 2013. Medicare would also sustain cuts, though the reductions would be capped.

The rationale for picking such favored programs as the Pentagon for Republicans and Medicare for Democrats, respectively, was to provide a strong incentive for the new committee to avoid a deadlock and deliver a deficit-reduction plan that can clear Congress.

According to Democratic officials close to the talks, among the final sticking points that were worked out were efforts to exempt the Medicaid program from the automatic spending reductions and make certain that the Medicare cuts hit health-care providers, not beneficiaries.

Negotiators did agree that any deal would not include language that could lead to a new formula for the annual cost-of-living adjustments for Social Security beneficiaries that could save more than $100 billion in the first 10 years.

While many economists have long said the existing formula overstates inflation, many Democrats oppose any change that would reduce benefits from current law.

Material from Tribune Washington bureau is included.