Behind closed doors at the White House and in the marbled halls of Congress, polarized US leaders on Saturday struggled to come together despite fears that the stalemate could send global markets tumbling, starting with early Monday trade in Asia.
In a late flurry of frustration, Democratic Senate Majority Leader Harry Reid accused Republicans of bringing the world's richest country to "the brink of default" by rejecting a deal that would last through the 2012 US election.
"Anything less than that will fail to provide the certainty that the markets -- and the world -- are looking for, risking an immediate downgrade of America's credit rating," he said at day's end. "Now is the time for cooperation."
Hours earlier, Republican House Speaker John Boehner told members of his majority on a conference call that he hoped for a deal within 24 hours to soothe investor worry, notably in Asia, a participant told AFP.
"We are working, and I'm confident there will be resolution. There has to be," Boehner told the group, promising "real cuts" in spending that help put cash-strapped Washington on a "sustainable" path, the source said.
The speaker said the hard-fought negotiations centered on a two-step process to cut $3-4 trillion in spending over ten years as part of a deal to raise the $14.3 trillion US debt limit by an August 2 deadline, the participant added.
Obama has called for a single increase to last through the 2012 election, when he seeks a second term in a contest defined by his handling of the ailing US economy and shaped by Republican anger at government spending.
Washington hit its debt ceiling on May 16 but has used spending and accounting adjustments, as well as higher-than-expected tax receipts, to pay its bills and continue operating up to the fast-approaching day of reckoning.
Finance and business leaders have warned failure to raise the US debt ceiling by then would send shockwaves through the world economy, while Obama has predicted a default would trigger economic "Armageddon."
With unemployment already stubbornly high at 9.2 per cent, a default could send the US economy tumbling back into recession.
Key leaders including Boehner, Reid, Republican Minority Leader Mitch McConnell and Democratic House Minority Leader Nancy Pelosi held a pair of 50-minute meetings, first at the White House, then in the speaker's office.
In response to Reid's broadside, Boehner spokesman Michael Steel declared "a two-step plan is inevitable" and said Republicans "believe that defaulting on the full faith and credit of the United States is not an option."
Republicans have called for spending cuts over 10 years at least equal to the dollar amount of any debt limit increase while vowing to reject Obama's call for raising taxes on the rich and wealth corporations.
Democrats have pledged to defend cherished social safety net programs funded by the government, which the president has targeted for cuts and said the most well-off Americans must shoulder a greater burden.
Pelosi accused Republicans of looking "to walk away from 98 per cent of the American people to protect the assets of the top two per cent of the wealthiest people in our country."
McConnell said leaders of both parties in Congress were "committed to working on new legislation that will prevent default while substantially reducing Washington spending."
"Over this weekend, Congress will forge a responsible path forward," said Boehner, who shocked Washington with a late Friday decision to quit talks with Obama in favor of negotiations with fellow congressional leaders.
A House leadership aide said Boehner was "aware of the concerns about the Asian markets" in the event polarized Washington fails to reach a compromise, but denied that Boehner had specifically said he expected a deal in 24 hours.
"Congress should refrain from playing reckless political games with our economy. Instead, it should be responsible and do its job, avoiding default and cutting the deficit," Obama spokesman Jay Carney said after the White House talks.
Pelosi told reporters after the White House summit that she "certainly would hope" for a quick deal, saying polarized US politicians must "make every moment count" in the talks.