Democrats and Republicans remained far apart over plans for attacking America's mounting deficit before a meeting called by Barack Obama in a bid to break an impasse that threatens a first-ever default by the US on its international debt.
With the clock ticking on a potentially catastrophic default on August 2, reports suggest Democrats are willing to carve billions of dollars out of medical programs for the elderly, low-income earners and the disabled in an effort to clinch a deal - but only if Republicans agreed to some tax measures.
President Obama, who recently berated Republicans for defending tax breaks for ''oil companies … hedge fund managers and corporate jet owners'', said he believed a deal to raise the nation's debt ceiling in return for budget cuts worth trillions of dollars over several years was within reach.
But in an unscheduled appearance in the White House briefing room, he told reporters: ''I don't want to fool anybody. We still have to work through some real differences.''
At Mr Obama's invitation, the parties are expected to meet at the White House tomorrow (Thursday, Washington time) though the odds remain long on a deal being struck this week.
Republicans, who control the House of Representatives, have made lifting the nation's statutory borrowing limit from its current $US14.3 trillion ($A13.4 trillion) contingent on a deal to slash the deficit, tipped to reach a record $US1.6 trillion this year.
But they have flatly rejected any increase in taxes as part of the budget remedy, insisting instead on deep cuts to government spending that Democrats fear will further stymie America's tepid recovery.
Democrats say revenue-raising initiatives must play a part and have suggested closing tax loopholes that benefit the wealthy as a means of narrowing the deficit by about $US400 billion.
The standoff was underscored further by the House Speaker, Ohio Republican John Boehner, who responded to Mr Obama's meeting ultimatum: ''The legislation the President has asked for - which would increase taxes on small businesses and destroy more American jobs - cannot pass the House …
''The American people simply won't stand for it. And their elected representatives in Congress won't vote for it.
''I'm happy to discuss these issues at the White House, but such discussions will be fruitless until the President recognises economic and legislative reality.''
Earlier, Mr Obama urged the parties to leave their ''comfort zones and … agree on real compromise. I'm ready to do that.
''We need to come together over the next two weeks to reach a deal that reduces the deficit and upholds the full faith and credit of the United States government and the credit of the American people …
''This should not come down to the last second.''
The debt ceiling must be raised to allow Washington to continue to pay its bills, with the administration warning that a default could precipitate mayhem on financial markets, force the suspension of pension and welfare payments and shut down the government.
A suggestion by The New York Times that the Democrats were now willing to accept cuts to hallowed Medicare and Medicaid programs meant a deal too good for Republicans to refuse, according to the conservative columnist David Brooks.