The U.S. credit limit is almost maxed out. The national debt is expected to hit its limit Monday.
President Barack Obama warned the United States risked plunging back into recession if a standoff over the US debt ceiling lingers, as a top Republican said he was ready to cut a deal.
The United States is due to hit the $14.29-trillion ceiling set by Congress on Monday, creating a cash crunch that puts the country's credit standing at risk as politicians battle over its long-term deficit.
"If investors around the world thought that the full faith and credit of the United States was not being backed up, if they thought that we might renege on our IOUs, it could unravel the entire financial system," Obama warned at a CBS town hall meeting last week that was broadcast on Sunday.
"We could have a worse recession than we already had. A worse financial crisis than we already had."
Republican speaker John Boehner said Sunday he was ready to cut a deal over raising the US debt ceiling, but insisted the administration must move to resolve underlying problems in the US economy.
He told CBS's "Face The Nation" program Sunday that he believed it would be necessary to raise the debt ceiling, but added it would have to be done so in a way "that addresses America's long-term fiscal challenges."
"I'm ready to cut the deal today. You know, we don't have to wait until the 11th hour. But I am not going to walk away from this moment," he said.
"We have a moment, a window of opportunity to act. Because if we don't act, the markets are going to act for us.
"So I am committed to making sure that we have real reductions in spending and real changes to the budget process so this problem will never occur again."
Republicans have been steadfastly refusing to increase the ceiling without massive future spending cuts, but the longer the fight over bridging the country's deficit goes on, the higher the stakes will get.
Boehner has said he is looking for trillions of dollars in cuts from the federal budget, not just billions.
Reaching the debt ceiling will not have an immediate impact on government finances, because the Treasury has found about 10 weeks of wiggle-room in short-term adjustments and an unexpected April jump in tax revenues.
But if nothing is done by about August 2, there is a chance the United States, which has always merited a top-grade credit rating, could do the unthinkable -- default on its debt payments.
Economist Paul Krugman, a Nobel laureate, warned on ABC's Sunday show "This Week" catastrophe looms if "we start to look like a Banana Republic."
"A US Treasury bill is the gold standard of value, so much so that, during the height of the financial crisis, there were intervals where US Treasury bills had negative interest rates, because that's what people had to hold," he said.
"If you're going to suddenly say, oh, that's not safe because the US government is -- is a bunch of squabbling children, that is a real possible catastrophe."
Boehner insisted Sunday he was "not seeing real action yet" from the Obama administration in trying to implement huge spending cuts.
"We all know what the problems are. Why don't we just deal with them? No more kicking the can down the road, no more whistling past the graveyard. Now is the time to deal with the fiscal problems we have in an adult-like manner."