While a bipartisan deal on the debt limit and deficit reduction remains elusive and Asian stock markets near their open, leaders of the House and Senate have begun to prepare legislation that may or may not be agreeable to the other chamber.

On the House side, Speaker John Boehner (R-OH) informed members of his conference that he would pursue a two-step proposal that is expected to first cut spending and increase the debt limit by $1 trillion and second start a congressional process to achieve additional savings before the debt limit would be allowed to increase again in 2012. Boehner also insisted that his “last offer” to the White House was still on the table, which has been reported to include major spending cuts and up to $800 billion in new tax revenues. The House could start to move a package as early as Monday, July 25, with votes occurring as soon as Wednesday, July 27.

On the Senate side, Majority Leader Harry Reid (D-NV) indicated he would put forward a plan to cut spending and increase the debt limit by $2.5 trillion without any tax increases. Leadership aides have said the proposal is aimed at satisfying Republican demands for dollar-for-dollar cuts and no net overall increase in taxes.

Meanwhile, Administration officials sought to calm the markets with interviews by White House Chief of Staff William Daley and Treasury Secretary Timothy Geithner signaling that a solution will be achieved and Congress will not allow a default.