President Barack Obama on Thursday gave congressional leaders a weekend deadline to find a way to raise the U.S. debt ceiling, but a divide over spending and taxes remained a huge hurdle to a deficit-cutting deal.
Credit ratings agency Standard & Poor's added pressure to the debate, warning the risk that the United States would lose its top-notch credit rating in the next three months had risen considerably, even if lawmakers reach an agreement to raise the ceiling on borrowing later this month.
S&P's warning came after China, the United States' biggest foreign creditor with more than $1 trillion in Treasury debt, pressed Washington to adopt responsible policies to protect investor interests.
Against that backdrop, Obama and lawmakers held their fifth set of talks this week without significant progress.
Republicans continued to reject tax hikes, even when Obama offered to pair them with the extension of a payroll tax cut to boost the struggling economy.
Time is running short for a deal.