Hope for a compromise over the Israeli housing settlements in East Jerusalem plummeted Tuesday after President Barack Obama and Israeli Prime Minister Benjamin Netanyahu exchanged harsh words. Obama said during his trip to Indonesia that Israel's plan for 1,000 housing units in a contested part of East Jerusalem "is never helpful when it comes to peace negotiations" and added "each of these incremental steps can end up breaking trust." Netanyahu's office responded with a statement saying in part, "Jerusalem is not a settlement; Jerusalem is the capital of Israel." Damage control then started: Secretary of State Hillary Clinton plans to meet Netanyahu in New York on Thursday, and she will meet with two of Egypt's top officials Wednesday in Washington to come up with ways to salvage the peace process. Analysts said Netanyahu, who is currently in the U.S., has taken a new tone with Obama after the Democrats' midterm election defeat.