The House of Representatives has approved the GOP's 'Cut, Cap and Balance' plan with a vote of 234 to 190.
The bill imposes caps on federal spending as a percentage of GDP. It also allows for an increase in the debt ceiling by $2.4 trillion in exchange for both the Senate and House approving a balanced budget amendment.
House Speaker John Boehner played a muted role in public during the day, but later applauded the passage of the plan.
“House Republicans are the only ones to put forward and pass a real plan that will create a better environment for private-sector job growth by stopping Washington from spending money it doesn’t have and preventing tax hikes on families and small businesses," he said in a statement. "The White House hasn’t said what it will cut."
But nine Republicans voted no on the plan, including Rep. Michele Bachmann, R-Minn. and Rep. Ron Paul, R-Texas. Five Democrats sided with Republicans.
“I have never voted to raise the federal debt limit, and I have no doubt that we face financial collapse and ruin if we continue to grow our debt," Paul said in a statement. "We need to make major spending cuts now, in this budget, and we can no longer afford to allow more deficit spending based on promises of future cuts."
The plan is under a veto threat by Obama amid predictions that it won't make it through the Senate.
Meanwhile, President Obama on Tuesday urged lawmakers to pick a "clear direction" within the next couple days on how to raise the debt ceiling and cut deficits, praising a bipartisan group of senators for putting a renewed budget plan on the table while criticizing House Republicans for pushing a separate proposal he said will not pass.
"We don't have any more time to engage in symbolic gestures. We don't have any more time to posture," Obama said.
According to the White House, Obama plans to once again summon congressional leaders for a meeting on the way forward. Speaking to reporters briefly Tuesday afternoon, the president warned that lawmakers are now "in the eleventh hour" and need to start "talking turkey" about crafting actual legislation that has a chance at passing.
He seemed to urge lawmakers to use the so-called "Gang of Six" plan as a new starting point for a "broader agreement," claiming it overlapped with his general goals for a deficit-reduction deal.
That plan seeks to extract nearly $4 trillion in deficit reduction over the next decade through a combination of tax increases and spending cuts. A group of 50 senators gathered Tuesday for more than an hour to hear from the reunited so-called "Gang of Six" -- a group of three Republicans and three Democrats which led discussions before breaking apart in the spring.
Their deficit-reduction plan has already won the support of the Senate's No. 3 Republican, Sen. Lamar Alexander of Tennessee, and cautious optimism from one of the Obama administration's toughest critics, Sen. Tom Coburn, R-Okla.
Senate Democratic Leader Harry Reid called the balanced-budget proposal "the stupidest constitutional amendment I've ever seen."
Republicans fiercely defend the cut, cap and balance proposal, noting that they've done more than Obama in putting a plan on the table.
"The president continues to say that he wants to do big things. We do as well. We put forward our big plan and vision in our budget," House Republican Leader Eric Cantor said. "But we implore the president -- let's do big things, let's go ahead and get our fiscal house in order. But let's do so without imposing higher taxes on the small business people that we need so desperately to start hiring again."
Fox News' Chad Pergram contributed to this report.