President Joe Biden and top Republican Kevin McCarthy have spoken by phone, changing the tone in stalled talks over raising the U.S. debt ceiling.
Mr Biden told reporters the call “went well” and the two would speak again on Monday, when he returned to the White House from the G7 summit in Japan.
The two sides are at odds over budget cuts as a condition for Republicans to raise the cap.
Failure to do so by June could result in the US defaulting on its debt.
This would mean that the federal government could no longer borrow money or pay all of its bills. The Finance Department has warned that the default could start from June 1.
Such an outcome would lead to chaos in the financial markets and further increase in interest rates.
Mr Biden told reporters as he left Japan on Sunday that the proposals from Republicans who control the House of Representatives were “simply, quite frankly, unacceptable”.
He added: “It’s time for Republicans to accept that there is no bipartisan deal to be made solely on their partisan terms. They have to move on, too.”
But Mr. Biden also said he would be willing to cut spending to reach a deal.
The president canceled foreign trips after a three-day summit in Hiroshima to address the federal debt impasse.
Earlier, Mr. McCarthy described his call with Mr. Biden as “fruitful.”
“I think we can solve some of these problems if he understands what we’re looking at,” he told reporters after the pair spoke.
On Sunday night, negotiators met in Mr. McCarthy’s office on Capitol Hill, a summit that lasted about two and a half hours.
Steve Ricchetti, one of Mr. Biden’s representatives and a senior adviser to the president, told reporters that negotiating teams would continue working through the night.
Meanwhile, Treasury Secretary Janet Yellen said Sunday that June 1 remained a “hard deadline.” He told JEE News that without a deal “we expect to not be able to pay all our bills at the beginning of June”.
Failure to raise the ceiling could freeze the U.S.’s Social Security payments and the pay of federal and military employees. A default also threatens to wreak havoc on the global economy, affecting prices and mortgage rates in other countries.
The standoff has rattled financial markets. The Dow was down 0.3 percent, the S&P 500 was down 0.1 percent and the Nasdaq was down 0.2 percent on Friday.
In exchange for support for raising the debt ceiling, Republicans are demanding 4.5tn (£3.61tn) in budget cuts, including scrapping several of Mr Biden’s legislative priorities, while the military and border They are also demanding increased spending on security.
The White House has called the Republican proposal “a blueprint for destroying hard-working American families,” though it has hinted that it could lead to some budget concessions.
Both President Biden and Mr. McCarthy are under pressure from the left and right of their respective parties.
With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proved elusive.
