The President says he wants a "big deal" because he doesn't want to "kick the can down the road".
Mind you, he spent most of the year wanting to do precisely that - calling for a "clean" debt ceiling bill. But be that as it may.
It is also becoming clear that the two sides may have (at this point) mutually defeating points on which they are unwilling to budge. Most specifically, Republicans will not raise taxes and Democrats are refusing to not raise taxes. Both sides, however, agree that they "want to reduce the deficit" (though given that Democrats are calling for additional spending in this deal, I maintain my own opinion on how serious they are about this).
The Secretary of the Treasury, the President, and most of the high-level Democratic Leadership are generally pretty sure that the heavens will split and the antichrist will come forth on August 3. That's a bit of an exaggeration; but not much. Republicans point out that we have enough money to pay for our debt, social security, medicare, the troops, and half of Medicaid; and so it's unlikely to be quite the disaster predicted.... but both agree it's going to be intensely painful; and probably harmful to an anemic and exceedingly weak recovery.
Ergo: more than a few conservatives are proposing that the House go ahead and pass a debt - ceiling increase matched to spending cuts of their choosing. The amount can be large enough to buy us room to negotiate the Big Deal that the President now claims to want (tax reform, entitlement reform, and so on and so forth), but not be so huge as to be Republicans trying to force a one-sided approach to the debt ceiling between now and Nov 2012.
Should Republicans take their advice, and pass (say) a three to five month extension of the debt ceiling tied to spending cuts to match; what should the Administration and Senate Democrats do? The ball will be in their court to either accept the rise, or go into an economic period that they claim would be disastrous for the nation. They would be then forced to make the argument that these upheavals were worth them shooting for political advantage - an argument not slated to go over well with the electorate.