GOP isn't sold on Romney, seeking other options (AP)

WASHINGTON – If polls show one thing with certainty, it's that Republicans aren't sold on Mitt Romney and they've been looking for other presidential candidates.

At least eight other Republicans have seen their standings soar in GOP primary surveys since the beginning of the year.

Sarah Palin, Chris Christie, Mike Huckabee and Rudy Giuliani didn't run. Nor did Donald Trump. And among those who actually got in the race, Michele Bachmann, Rick Perry, and now, Herman Cain all have sat near_ or at — the top of national polls, at least briefly.

The indecisiveness is a reflection on Romney, who hasn't been able to lock up the GOP's support even though he's essentially been running for president since losing his 2008 bid.

Many Republicans know him. They just don't love him.

A recent Associated Press-GfK poll found that 64 percent of conservative Republicans viewed Romney favorably but only 20 percent had deeply positive opinions about him.

"The GOP is in a rebellious and ultraconservative mood," said Andrew Kohut, president of the Pew Research Center. "And," he added, "Mitt Romney is not rebellious."

Or, for that matter, ultraconservative.

Consider that in a Tuesday debate, Romney defended the 2008-2009 Wall Street bailout that irks the tea party and declared that he could work with "good" Democrats. He also gave one of his most spirited defenses of his health care initiative when he was Massachusetts governor, legislation that President Barack Obama has called a partial blueprint for his own national overhaul.

While those positions may make him appealing to a wider swath of Americans in next fall's election, they greatly disturb conservatives who dominate the GOP primary electorate.

And that helps explain why some Republicans have been itching for someone else.

Generally, Republicans say that Romney has more experience and a better chance to beat Obama next fall than anyone else in the field. But those on the party's right flank doubt whether he — more so than other candidates — shares their values.

Conservatives in the potential Republican electorate were deeply divided on that question in a CBS News/New York Times poll early this month. Only 12 percent chose Romney, while nearly half picked Cain (20 percent), Bachmann (18 percent) or Perry (11 percent).

Such divisions have been the most defining factor of the race so far.

It's not just Romney who has failed to solidify his support with the Republican primary electorate. None of the other candidates who have risen in polls has been able to, either.

Until now, Republicans have been bouncing from candidate to candidate — and even some noncandidates — in search of the perfect nominee.

But with the GOP field set and no more people flirting with bids, it's entirely possible that Republicans will rally behind one candidate — perhaps even Romney — between now and January when the first votes are cast.

Indeed, a host of Republicans — 76 percent in a recent CBS-New York Times poll — said it was too early to say who they would support when voting begins in January. Just 19 percent said they had firmly chosen a candidate.

The volatile race is taking place in a dramatically different Republican Party than the one that nominated John McCain — and for much of the 2008 race strongly favored the thrice-married Giuliani.

The GOP fell out of public favor following McCain's loss to Obama. It then rebounded with the growth of the tea party movement, which helped Republicans win control of the House and boost its ranks in the Senate last year.

Today's Republican Party is more conservative.

"The most visible shift in the political landscape since ... 2005 is the emergence of a single bloc of across-the-board conservatives," the Pew Center said earlier this year.

And those conservatives — at least at this point — seem reluctant to continue a trend that's been the hallmark of Republican presidential primaries in recent decades.

The Republican Party usually has chosen a nominee who has been the perceived next in line.

Ronald Reagan lost once before winning the 1980 nomination. George H.W. Bush got beat that year, became Reagan's vice president and won the GOP nod in 1988. Bob Dole lost twice before becoming the party favorite in 1996. And McCain made a strong run at the nomination in 2000 before clinching it eight years later.

This year, it's Romney who is making his second bid.

And, if history is a guide, he's the most likely to end up winning the nomination — even if the all-over-the-map polls don't show it.

___

Agiesta is deputy polling director for The Associated Press. Follow her at http://twitter.com/JennAgiesta

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Poker-faced Bernanke buys more time for Fed options (Reuters)

JACKSON HOLE, Wyoming (Reuters) – Like a skilled poker player, Federal Reserve Chairman Ben Bernanke kept some cards close to his vest when facing fellow central bankers in cowboy country.

In doing so, he may have bought himself time to play the strongest hand possible when he is ready.

Bernanke's speech on Friday at an annual Fed conference here came at a time of alarm about a fading U.S. economic recovery and concern about the health of Europe's banks.

Many were looking for a clear signal the central bank is ready to step in with further monetary policy stimulus after Bernanke led the Fed into taking massive stimulus measures over the last few years.

He acknowledged slower-than-hoped-for growth in the world's largest economy and warned that high long-term unemployment could leave lasting scars.

Although he said the Fed would consider what more it could do to boost growth -- comments that helped push up U.S. share prices -- he stopped short of outlining new moves, unlike his Jackson Hole speech last year that was seen as opening the door to a second round of massive bond buying.

"Not much detail," was the curt analysis of Bernanke's speech by a prominent analyst at the exclusive retreat, which brings together an international elite of policymakers, economic thinkers and well-connected financial gurus.

CAREFUL GOING

The Fed is caught between a flagging recovery and persistently high unemployment on one side, and political pressures against more monetary easing on the other. It has already pushed interest rates close to zero and bought $2.3 trillion in bonds to try to lower longer-term borrowing costs.

The Fed is also split internally about what to do next, adding to the challenge faced by Bernanke.

Participants at the conference gave the chairman -- who looked relaxed in faded jeans and a polo shirt -- high marks for deftly maneuvering the fine line between offering hope of monetary relief without overcommitting the central bank.

"The Fed is going to continue to tread slowly," said Barry Eichengreen, an economics professor at the University of California at Berkeley.

The most tantalizing tidbit Bernanke provided was that the Fed's next policy meeting will run for two days instead of one on September 20-21.

A two-day meeting will allow Fed staff to present studies of possible courses of action and will let each of the 17 members of the policy-setting Federal Open Market Committee air views on policy and where the economy is heading.

The expansion of the meeting underscores the degree to which Bernanke is worried about high unemployment, weak manufacturing data, stock market volatility and strains at European banks.

It also suggests he may see a need to line up support for more action at the Fed, where three policymakers dissented against an early-August decision to let financial markets know the central bank expects to hold interest rates at ultra-low levels through the middle of 2013.

The opportunity for a fuller discussion suggests Bernanke is inclined to loosen monetary policy further but wants more data, such as the August jobs report due on Friday, to buttress his case.

One idea that is clearly on the agenda is more bond buying matched by a draining of bank reserves to keep the size of the Fed's already bloated balance sheet in check.

This could help pressure longer-term interest rates lower without fueling fears in financial markets the Fed's massive balance sheet might eventually fuel inflation.

HEARTS AND MINDS

By emphasizing the process rather than tools, Bernanke may have been seeking to smooth over the rift exposed by the three who cast "no" votes at the central bank's last policy meeting.

Attendees at the conference here said the risk of future dissents would not deter Bernanke from acting, but that the Fed chairman would seek as much support as possible.

"Anything the Fed does will be more effective in terms of calming the markets and restoring confidence if they are unanimous when they do it," Eichengreen, a panelist at one of the conference sessions, told Reuters Insider.

Detailed analysis by Fed staff economists on the possible benefits of further balance sheet measures may also help a core group of Fed policymakers close to Bernanke, that includes Vice Chair Janet Yellen and New York Fed President William Dudley, overcome skepticism about the effectiveness of new moves.

"They're done and they know it. They've got nothing left," scoffed an analyst attending the conference.

Despite the doubts, discussions on the sidelines of the event made clear some at the Fed believe there is evidence an effort to further flatten longer-term interest rates could help the economy.

One U.S. monetary policy insider was heartened by the recommendation by International Monetary Fund chief Christine Lagarde at the conference that central bankers dive back into unconventional measures to provide additional monetary help.

KUDOS FROM THE CROWD

Bernanke also got high marks for shifting some of the burden for restoring growth to governments and politicians, a theme also emphasized by Lagarde.

While addressing the importance of cutting deficits, politicians should also be sensitive to the fragile recovery and develop a less nerve-wracking process for making budget decisions than the showdown in Congress that brought the United States close to a debt default this summer, he said.

"To me the more interesting part of the chairman's remarks was the shot across the bow of the government saying, 'Don't keep layering expectations on the Federal Reserve guys, you have a job to do,'" Columbia University professor Glenn Hubbard told Reuters Insider.

Bernanke arrived in Wyoming several days early and told attendees he had gone to a rodeo with his family. He jokingly told the conference that seeing that slice of Americana had given him a lot to think about.

He may have decided a little bit of cowboy reticence would suit his Jackson Hole message.

(With additional reporting by Dan Burns and Ann Saphir; Editing by Maureen Bavdek)

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NYSE-Deutsche Boerse to jump to top options spot (Reuters)

CHICAGO (Reuters) – NYSE Euronext and Germany's Deutsche Boerse AG will become the market leader of the ultra-competitive U.S. options trading industry once their merger is complete, data from clearinghouse OCC showed on Monday.

Last month NYSE and Deutsche Boerse shareholders approved the transatlantic merger, which will bring together not only Europe's two biggest derivatives exchanges but also three mid-ranking U.S. options marketplaces.

The exchanges -- Deutsche Boerse's International Securities Exchange and NYSE's Amex and NYSE Arca venues -- together handled 40.3 percent of all U.S. stock- and stock-index options trades last month, according to figures on the OCC website.

Bragging rights for the No. 1 spot have in recent months gone to either CBOE Holdings Inc, which owns the oldest U.S. options exchange, or Nasdaq OMX Group, which operates two venues, PHLX and NOM.

CBOE, which also owns the electronic C2 market, handled 26.2 percent of all options contracts traded in July; Nasdaq handled 25.9 percent.

Traders say they expect NYSE and Deutsche Boerse to lose some of their collective volume once they complete the merger, as market participants spread their business among competitors.

But the large lead the three exchanges have over their nearest rivals suggests they will keep their collective top spot for some time to come, analysts have said.

The merger still needs the approval of regulators, which in Europe may require a review lasting through the end of the year.

Deutsche Boerse is buying NYSE Euronext for about $9 billion.

(Reporting by Ann Saphir; Editing by Lisa Von Ahn)

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Parties assess debt options as time runs short (AP)

By JESSE J. HOLLAND, Associated Press Jesse J. Holland, Associated Press – 37?mins?ago

WASHINGTON – The White House held out hope Sunday that congressional leaders still had time "to get something big done" with President Barack Obama as the deadline for raising the nation's debt ceiling drew nearer without a solution.

"I think that what is encouraging is that the leaders in Congress seem to have all agreed that we can't push to a default," White House budget director Jack Lew said. "So I think that there are many conversations going on in order to make sure that doesn't happen."

The government will exceed the current $14.3 trillion debt ceiling on Aug. 2, after which it will be in default of its obligations. The consequences could be far-reaching, with potentially higher interest rates on mortgages and car loans, a halt in Social Security checks and unsettled world financial markets.

White House and congressional aides are continuing discussions Sunday as Congress moves on two tracks to find a solution for increasing the nation's borrowing authority while reducing long-term deficits. This comes after the failure to get a deal after five straight days of meetings between Obama and congressional leaders at the White House.

"I think there's still time to get something big done," Lew said.

Republicans have rejected any plan that contains tax increases.

Lew said on NBC's "Meet The Press" that the president "made clear he wants the largest deal possible."

"He wants to do the most we can to reduce the deficit," Lew said. "But he also said that if we can't get the most done, then in addition to extending the debt we should do as much as we can."

House Republicans are preparing to vote this week on allowing an increase in the government's borrowing limit through 2012 as long as Congress approves a balanced-budget constitutional amendment.

Sen. Jim DeMint, R-S.C., called that proof that Republicans are willing to compromise and "hardly a radical idea" but the Senate's No. 2 Democrat, Dick Durbin of Illinois, said that bill doesn't have the needed support in the Senate.

"This notion that we have to change the Constitution to do what we were elected to do is just plain wrong," Durbin said. Both senators spoke on "Meet the Press."

Lew, appearing on CNN's "State of the Union," also did not like the idea.

"What these ideas do is say let's kick the can down the road so that others will deal with it," he said. "The challenge is for Washington now to do the job the American people sent us here to do."

DeMint said the United States is on course for a financial disaster and that lawmakers have "to draw a line in the sand now because a day of reckoning is going to come."

"And the longer we put it off the bigger the problems are going to be for our country," DeMint said.

However, if it comes down to it, White House officials who say Congress won't let the United States default are "probably right on that," DeMint said.

Senators are working on a bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit reduction in the proposal in hopes of satisfying House Republicans.

"Lines of communication remain open with all parties," said Brendan Buck, a spokesman for House Speaker John Boehner.

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U.S. mulls options on debt deal (Reuters)

WASHINGTON (Reuters) – White House budget director Jack Lew said on Sunday there was still time to clinch a major deficit reduction deal and he was confident that congressional leaders know a U.S. debt default is not an option.

With time running short, President Barack Obama and lawmakers were struggling for ways to lift the debt ceiling and reduce the deficit as an August 2 deadline to prevent a default draws dangerously close.

"I think it's not insignificant that all the leaders understand it would be irresponsible to get to August 2 and not extend the ability of the United States to pay its obligations," Lew said on CNN's "State of the Union" program.

Lew, appearing on the Sunday morning talk shows to push Obama's case for a sweeping deficit reduction deal along with the debt ceiling increase, told NBC's "Meet the Press" program: "There's still time to get something big done. The president has made it clear he wants to do something substantial."

Obama's call for a $4 trillion deficit reduction deal snagged when Republicans in Congress rejected his demand that tax increases on the wealthy be part of the plan.

Congress must raise the $14.3 trillion limit on U.S. borrowing by August 2 or the government will run out of money to pay its bills, causing turmoil in global financial markets and potentially forcing the United States into another recession.

Lew told CNN there has been "activity and progress" in talks among Senate leaders "to make sure that at a minimum Congress has a way to take action and avoid default on the U.S. debt" through a plan offered by Senate Republican leader Mitch McConnell that would clear the way for Democrats to raise the debt ceiling without Republican help.

CREDIT RATING

After meeting congressional leaders on Thursday at the White House, Obama had said he wanted to hear from them by the weekend about a way forward in the stalled debt talks, but Saturday passed without an announcement of a new White House meeting.

Republicans demanded a deficit-cutting deal in order to support raising the debt limit, but they disagree with Democrats on how to do it. The White House wants some tax increases on wealthier Americans to be part of a package but Republicans reject that.

Prospects for a quick deal appear slim. Officials said Obama, Vice President Joe Biden and other staff discussed "various options" with lawmakers and other staff on Saturday but no significant progress was reported.

McConnell's backup plan, which has been cautiously embraced by Senate Democratic Leader Harry Reid, may be the solution all sides can accept if a big deal cannot be reached.

The plan could include about $1.5 trillion in spending cuts and set up a panel to find further savings. The Senate could vote on it late next week, but it remains unpopular with House Republicans.

State governors, fearing the effects of the debt talks on their own credit ratings, pressured Washington to get a deal.

"This is a dangerous and equally ridiculous situation that's playing itself out," Connecticut Governor Dannel Malloy, a Democrat, told Reuters at a National Governors Association meeting in Salt Lake City. "It takes one sentence to solve this problem -- and that's to lift the debt ceiling.

"It would be an embarrassment for the United States of America to default on its obligations," said Virginia Governor Bob McDonnell, a Republican.

Experts say it would be much more than an embarrassment.

Ratings agencies Moody's and Standard & Poor's have signaled they may cut the gold-plated U.S. credit rating if the borrowing limit is not raised and deficit-reduction measures are not laid out.

(Additional reporting by Edith Honan in Salt Lake City and Vicki Allen in Washington; Editing by Eric Beech)

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Eurozone mulls Greek options, fears spread to Italy (Reuters)

BRUSSELS (Reuters) – EU finance officials will discuss a range of options for Greece's intractable debt crisis on Monday, galvanized by the growing threat of contagion to Italy, the euro zone's third-largest economy.

A senior European Union source told Reuters the Eurogroup of 17 euro zone finance ministers meeting later would discuss the possibility of buying back Greek debt or the private sector swapping holdings for longer-dated maturities.

If so, it suggests a French plan that would have involved private sector creditors rolling over around 70 percent of their Greek debt into 30-year bonds and other AAA-rated securities is losing favor and other options are back under the microscope.

Germany, the Netherlands, Austria and Finland are determined that banks, insurers and other private holders of Greek government bonds should bear a chunk of the costs of a second Greek bailout, which is expected to total 110 billion euros.

But after weeks of negotiations with bankers, there has been next to no progress on agreeing a formula acceptable to all sides.

As the French plan has faltered, Berlin has revived a proposal to swap Greek bonds for longer-dated debt that would extend maturities by seven years. Proposals to buy back Greek bonds and retire them have also been floated.

"We need to find a way to have some guidelines today on the private sector involvement and the solution for Greece," Belgian Finance Minister Didier Reynders told reporters. "That's the real issue today, I'm sure."

The senior EU source said the Eurogroup would task technical groups with working on the two options -- bond buybacks and a debt rollover.

"There is a strong possibility that a new Eurogroup meeting will be called at the end of July, to sign off on the solutions," the source said.

Both those schemes would likely be regarded by ratings agencies as a default, or at best a selective default, which could have profound repercussions for global financial markets.

The European Central Bank insists it will not accept anything that is termed a default, a position Germany also holds even if some policymakers may be edging closer to effectively condoning a default to achieve a write-down in the value of Greek debt to make its debt mountain more sustainable.

"We do pursue a voluntary basis but it has to be substantial private sector involvement. That's our commitment and also our parliament that demands it," Dutch Finance Minister Jan Kees De Jager said.

In a buy-back, the bloc's European Financial Stability Facility (EFSF) bailout fund might buy Greek bonds from the market, or lend Greece money to do so. Officials say that would require changes to the EFSF's rules which would need the backing of national parliaments -- a further potential obstacle.

ITALY FOCUSING MINDS

Policymakers have been seized with a new sense of urgency after Italy came under market attack last week, fearing any further delay in putting together a second Greek package could poison investor confidence in weak economies around the region.

After talking by phone to Italy's Silvio Berlusconi, German Chancellor Angela Merkel said Rome needed to demonstrate it was undertaking the budget reforms needed to restore confidence and she was confident that it would do so.

Herman Van Rompuy, the president of the European Council, met ECB President Jean-Claude Trichet and Jean-Claude Juncker, the chairman of the Eurogroup, for talks in Brussels ahead of the euro zone finance ministers' gathering.

Van Rompuy's spokesman described the meeting, which European Commission President Jose Manuel Barroso and EU economic and monetary affairs commissioner Olli Rehn also attended, as a "coordination, not a crisis meeting."

He said Italy was not on the agenda but senior EU sources said it would be impossible not to discuss it following a large sell-off in bonds and stocks that the Italian media have dubbed "black Friday."

The cost of insuring Italian debt against default jumped to a record high on Monday, the 10-year yield spread over German debt widened to a euro-era high of 268 basis points and bond yields neared the 5.5-5.7 percent area which bankers say will start putting heavy pressure on Italy's finances.

The sell-off has increased fears that Italy, with the highest sovereign debt ratio relative to GDP in the euro zone after Greece, could be next to get dragged into crisis. If that came to pass, the euro zone's existing rescue mechanism, the EFSF, would have insufficient funds to help.

Austria's Finance Minister Markia Fekter said ministers wanted to quiz Italy about how it was handling the situation.

"We have a Eurogroup meeting today and tomorrow Ecofin. We will (discuss) the IMF decisions and we will also have questions for the Italian minister there," she told reporters.

The market pressure is due in part to Italy's high sovereign debt and sluggish economy, but also due to concern that Prime Minister Silvio Berlusconi may be trying to push out his long-time finance minister, Giulio Tremonti, who has promoted deep spending cuts to control the budget deficit.

"We can't go on for many more days like Friday," a senior ECB official told Reuters. "We're very worried about Italy."

German newspaper Die Welt quoted an unnamed ECB source as saying the EFSF may have to be doubled in size to 1.5 trillion euros if it is to be capable of coming to the aid of Italy.

(Additional reporting by John O'Donnell in Brussels, Silvia Westall in Vienna, Stephen Brown in Berlin and Milan/Rome bureaus, writing/editing by Mike Peacock)

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Exclusive: Treasury secretly weighs options to avert default (Reuters)

WASHINGTON (Reuters) – A small team of Treasury officials is discussing options to stave off default if Congress fails to raise the country's borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday.

Senior officials, including Treasury Secretary Timothy Geithner, have repeatedly said there are no contingency plans if lawmakers do not give the U.S. government the authority to borrow more money.

But behind the scenes, top Treasury officials have been exploring ways to prevent a financial meltdown that would be triggered if the government were unable to pay its bills on time, sources told Reuters.

Treasury has studied the following issues:

- Whether the administration can delay payments to try to manage cash flows after August 2

- If the U.S. Constitution allows President Barack Obama to ignore Congress and the government to continue to issue debt

- Whether a 1985 finding by a government watchdog gives the government legal authority to prioritize payments.

The Treasury team has also spoken to the Federal Reserve about how the central bank -- specifically the New York Federal Reserve Bank -- would operate as Treasury's broker in the markets if a deal to raise the United States' $14.3 trillion borrowing cap is not reached on time.

The U.S. government currently borrows about $125 billion each month. The Obama administration wants Congress to raise the limit by more than $2 trillion to meet the country's borrowing needs through the 2012 presidential election.

The contingency discussions, which have remained a closely guarded secret throughout weeks of negotiations with Congress over the debt ceiling, are being led by Mary Miller, Assistant Secretary for Financial Markets, who is effectively custodian of the country's public debt.

Miller's team has debated whether Obama could ignore Congress and order continued borrowing -- by relying on the 14th Amendment of the U.S. Constitution -- if it fails to raise the borrowing cap.

The fourth section of the 14th Amendment states the United States' public debt "shall not be questioned." Some argue the clause means the government cannot renege on its debts.

Obama dismissed talk of invoking the amendment on Wednesday. "I don't think we should even get to the constitutional issue," he said. "Congress has a responsibility to make sure we pay our bills. We've always paid them in the past."

HINT OF PLAN B COULD HURT TALKS

The White House declined to comment on the discussions at Treasury, but administration officials sought to tamp down talk of relying on the 14th Amendment.

There has been growing speculation in Washington in recent days that the administration could use the amendment to ignore the congressionally imposed limit on the amount of money the United States can borrow.

"Despite suggestions to the contrary, the 14th Amendment is not a failsafe that would allow the government to avoid defaulting on its obligations," said White House spokeswoman Amy Brundage.

Miller's team has discussed the Government Accountability Office's 1985 assessment that Treasury has the authority to prioritize payments in the event of a default -- an option Treasury officials have been wary of.

The administration's nightmare scenario is that investors panic at the prospect of a default, triggering a crisis that eclipses the 2008 financial meltdown. That could plunge the U.S. economy into another recession, something that could doom Obama's re-election prospects in 2012.

Some conservative Republicans have argued the Treasury can prioritize payments and manage a default. The administration wants to keep lawmakers focused on the August 2 deadline, and even a hint of a "Plan B" could lessen the urgency to strike a deal by then.

"As we have said repeatedly over the past six months, there is no alternative to raising the debt limit," Treasury spokeswoman Colleen Murray said when asked to comment on the Treasury discussions.

"The only way to prevent a default crisis and protect America's credit-worthiness is to enact a timely debt limit increase, which we remain confident Congress will do."

TREASURY OFFICIALS MUM

Obama meets leaders from both parties at the White House on Thursday as he seeks to get an agreement to cut trillions from the U.S. deficit, which Republicans have demanded in exchange for their support to raise the debt limit.

The fear of any loss of momentum in the debt and deficit talks is so great that even in their private conversations with former colleagues and investors, administration officials are refusing to admit to contingency discussions.

"There has to be contingency planning," said one former Obama administration official. "But they won't even tell me that."

That view was echoed by numerous former officials from the Clinton, Bush and Obama administrations.

"You have to have a backup plan. If you are relying on Congress to avoid the possibility of an Armageddon, you can't just bet on that," said Keith Hennessey, who headed the White House National Economic Council during President George W. Bush's administration.

In August, the Treasury will take in roughly $172 billion, but is obligated to make $306 billion in payments -- meaning it cannot pay about 45 percent of its bills without borrowing more money, according to the Bipartisan Policy Center, a Washington think tank.

That would force the administration to make some difficult choices, even though officials believe emergency measures will buy little time and cannot stave off an economic catastrophe.

OPTIONS "PRETTY UGLY"

If Treasury were to decide to delay some payments, one option could be to postpone a disbursement of more than $49 billion to Social Security recipients that is due on August 3.

It would be a politically explosive step but one that could allow the government to temporarily pay bondholders to try to avoid foreign investors dumping U.S. Treasuries and the dollar.

The administration has warned that any missed payments, including those to retirees, veterans and contractors, would be default by another name, and the Treasury team still has concerns that any contingency plan would prove unworkable.

Steve McMillin, a former deputy director of the White House Office of Management and Budget under Bush, said Treasury has options but most of them are "pretty ugly."

If Treasury were to decide to delay payments, it would need to re-program government computers that generate automatic payments as they fall due -- a massive and difficult undertaking. Treasury makes about 3 million payments each day.

From their second floor offices in Treasury, Miller and Fiscal Assistant Secretary Richard Gregg, are the lieutenants Geithner is relying on if the administration's first option of negotiating a deal with Republicans falls apart.

"She's dealing with this day in and day out," said a former Treasury official.

The former official said Treasury aides were "speaking with Congress on a daily basis," giving them the latest updates on receipts and when default could occur.

The source said White House Chief of Staff Bill Daley and other officials regularly ask Miller for information.

"Every day they talk about the debt ceiling. The night before, they get the most recent numbers," the source said.

Michael Barr, a former Treasury official who worked closely with Miller, said he spoke with Miller and Gregg a month ago.

"They were exploring if there were any legal and practical alternatives. It was not obvious to them that the president has the legal authority to pick and choose who gets paid," he said.

Barr added: "It is not obvious that even if they had legal authority, that as a practical matter you can do it."

As recently as June 21, Miller told a group of sovereign debt holders in London that there is no Plan B and assured them that the debt limit would be raised before August 2.

Publicly, Treasury has maintained there is no contingency plan. "Our plan is for Congress to pass the debt limit," Geithner said late in May. "Our fall-back plan is for Congress to pass the debt limit, and our fall-back plan to the fall-back plan is for Congress to pass the debt limit."

(Additional reporting by Rachelle Younglai, Tim Reid, and Caren Bohan Editing by Ross Colvin and Jackie Frank)

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