This is about to get even sloppier, both plans don’t meet Obama’s demands for new tax revenue plus the GOP’s fails to raise the debt ceiling high enough for the White House. Any predictions?

WASHINGTON (AP) — In a blunt challenge to President Barack Obama, House Republicans drafted legislation Monday to avert a threatened Aug. 2 government default — but along lines the White House has already dismissed. U.S. financial markets shrugged off the uncertainty.

According to a GOP aide familiar with the emerging House bill, it would provide for an immediate $1 trillion increase in the government’s $14.3 trillion debt limit in exchange for $1.2 trillion in cuts in federal spending.

The measure also envisions Congress approving a second round of spending cuts of $1.8 trillion or more in 2012, passage of which would trigger an additional $1.6 trillion in increased borrowing authority.

While the bill marked a retreat from legislation that conservatives muscled through the House last week, the two-step approach runs afoul of Obama’s insistence that lawmakers solve the current crisis in a way that avoids a politically charged rerun next year in the middle of the 2012 election campaign.

Without signed legislation by day’s end on Aug. 2, the Treasury will be unable to pay all its bills, possibly triggering an unprecedented default that officials warn could harm an economy struggling to recover from the worst recession in decades.

That deadline has set off an epic clash between the two parties, each side maneuvering for public approval and political leverage in advance of next year’s elections with the White House and control of Congress at stake.