Five rounds of White House talks this week produced no agreement and much partisan bickering.
Barack Obama, the US president, and Congressional leaders are still seeking a deal to lift the US debt ceiling in order to avoid default on its payments.
Obama on Saturday renewed his call for a compromise in solving America’s debt problem, saying it would take a “balanced approach” and “shared sacrifice” for Democrats and Republicans to come to an agreement.
“Simply put, it will take a balanced approach, shared sacrifice, and a willingness to make unpopular choices on all our parts,” Obama said in his weekly radio address.
In his Saturday address, Obama insisted that the deficit problem could not be solved without asking the wealthiest Americans to pay their share.
“I don’t think oil companies should keep getting special tax breaks when they’re making tens of billions in profits. I don’t think hedge fund managers should pay taxes at a lower rate than their secretaries.”
The president warned on Friday that inaction could lead to higher borrowing costs for ordinary Americans – “effectively a tax increase on everybody,” he said.
Congress must raise the $14.3 trillion limit on US borrowing by August 2 or the government will run out of money to pay its bills.
But both Democrats and Republicans have refused to budge from their position.
Republicans want hefty spending cuts to balance the budget, affecting Obama’s social security programmes, while Democrats insist on taxing wealthy Americans.
Republicans say the tax hikes for rich would hurt the shaky economic recovery.
The top two Republicans in the House of Representatives, John Boehner and Eric Cantor, met senior Obama officials on Friday.
“Meetings have been occurring, ideas have been exchanged, and scenarios are being discussed,” said Boehner spokesman Michael Steel.
The US government reached its debt limit in May, and since then the Treasury Department has used special measures to allow the government to keep paying its bills.
But unless the limit is raised by August 2, the Treasury says, growing spending and debt service commitments will force a default, which would have disastrous ripple effects throughout the global financial system.
As the two sides bicker, the consequences of inaction are looming.
Ratings agencies Moody’s and Standard & Poor’s have signaled they may cut the gold-plated US credit rating if the borrowing limit is not raised and deficit-reduction measures are not laid out.
China, the US’s biggest foreign creditor with more than $1 trillion in US debt, has also urged Washington to adopt responsible policies to protect investor interests.
Experts say failure to seal a deal would cause turmoil in global financial markets and could force the United States into another recession.