WASHINGTON - Lawmakers are preparing to leave town for a holiday weekend, with time running out to reach a deal over raising the debt ceiling.

The US Treasury has warned that the country will not have enough money to pay all of its bills as soon as 1 June.

Analysts say if the US fails to honor obligations it could have severe economic consequences.

Investor worries have increased, despite assurances from negotiators that talks are making progress.

Republicans are seeking spending cuts to government programs, in exchange for raising the $31.4tn cap on government borrowing.

President Joe Biden said the two sides had different visions for how to get America's "fiscal house in order", but added that all leaders involved agreed that default was not an option.

House Speaker Kevin McCarthy, who leads Republicans in the House and has been the most high-profile public face of the talks for his party, earlier said Democrats and Republicans had worked past midnight on Wednesday and would continue to negotiate.

"There's a couple of issues still hanging out there that we've got to get done," he said. "We're gonna work 24/7 to try to make that happen."

Another key Republican said he believed a deal to raise the nation's debt-ceiling deal was "likely" by Friday afternoon.

"We are inching closer to a deal. I think it's some of the finer points they are working on right now," Rep Kevin Hern told Reuters. "You are likely to see a deal by tomorrow afternoon."

"Neither side is going to get exactly what they want," White House press secretary Karine Jean-Pierre said, while adding that the latest negotiations had been "productive".

McCarthy has promised to give lawmakers 72 hours to review the bill, and at least 24 hours' notice if they have to return to Washington early. If a deal is reached this week, a vote could happen early next week.

There is little wiggle room for objections to be raised, as the Senate would also have to vote on the bill, which would then go to the White House for signing.

Lawmakers could also temporarily lift the debt cap to give the talks more time. (Source: BBC News)

Story Date: May 26, 2023