President Obama on Tuesday called on Congress to “do something big” to reduce the federal budget deficit, spurned talk of a short-term deal with Republicans to raise the debt limit and invited leaders to come Thursday to the White House to revive negotiations.

Mr. Obama said he wants to have a deal done within two weeks in order to leave some breathing room ahead of the looming Aug. 2 deadline, when the Treasury Department says the government will run up against the $14.29 trillion debt ceiling and would be forced to suspend some payments.

Some in Congress have proposed a short-term increase to give all sides more time to work out a solution, while others have said tax increases or cuts to entitlements can’t be options. Mr. Obama, though, rejected both stances...