President Joe Biden and House Speaker Kevin McCarthy had what both called a “productive meeting” at the White House without reaching an agreement on a budget compromise to avoid a federal default.
Without an agreement by June 1, the US could start running short of cash to cover its debts, with Treasury secretary Janet Yellen saying in a letter to Congress on Monday “it is highly likely” the Treasury would be unable to pay all the nation’s bills.
Mr Biden said: “I just concluded a productive meeting with Speaker McCarthy about the need to prevent default and avoid a catastrophe for our economy.
“We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.”
He said the two sides would “continue to discuss the path forward”.
Both sides praised the other’s seriousness, but basic differences remained with the Speaker saying Republicans are determined to cut spending while Mr Biden wants to increase it.
“That has got to stop, and it’s got to end now,” said Mr McCarthy, who added their teams would work “through the night”.
Negotiations have narrowed on a 2024 budget year cap that would be key to resolving the stand off.
Republicans have insisted next year’s spending cannot be more than 2023 levels, but the White House offered to hold spending flat at current numbers.
A budget deal would unlock a separate vote to lift the debt ceiling, now 31 trillion US dollars (£24.9 trillion), to allow more borrowing.
After a weekend of start-stop talks, both men have declared a need to close out a compromise deal with US financial markets falling last week as negotiations paused amid a jittery economy.
Negotiators met again for nearly three hours on Monday morning ahead of the White House meeting.
Mr McCarthy continued to blame the president for having refused to engage earlier on annual federal spending, a separate issue but linked to the nation’s debt.