President Barack Obama called on Republican and Democratic leaders on Monday night to reach a fair compromise on raising the debt ceiling to avert a "reckless and irresponsible" national default.
In an address to the nation, Obama spelled out the severe economic consequences of a default or even a credit ratings downgrade resulting from failure to strike a deal on raising the $14.3 trillion debt limit and reducing the budget deficit.
"Defaulting on our obligations is a reckless and irresponsible outcome to this debate. ... We would risk sparking a deep economic crisis - one caused almost entirely by Washington," Obama said.
He appealed for compromise to reduce the deficit by $4 trillion and share the burden of cuts evenly across society as the clock ticked toward an August 2 deadline to raise U.S. borrowing authority so the nation can pay its bills.
The deadlock over dueling and divergent debt plans presented by Democratic and Republican leaders, highlighting the ideological gulf in the divided Congress, has raised the risk of a credit ratings downgrade and national default.
The stalemate is rattling investors worldwide, sending stocks and the dollar down and pushing gold to a record high, but falling far short of the panicky sell-off some politicians in Washington had feared after weekend talks broke down.
Obama warned that a first default in U.S. history would directly affect the lives of ordinary Americans, because the government would not be able to pay bills that include monthly Social Security checks, veterans' benefits, and government contracts with thousands of businesses.
"I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress - a compromise I can sign," he said.
"The American people may have voted for divided government, but they didn't vote for a dysfunctional government," added Obama.
He chastised some Republicans for insisting on a "cuts-only" approach and opposing White House calls for the country's wealthiest companies and individuals to give up tax breaks.
In his response, the top Republican in Congress, House Speaker John Boehner, reiterated his party's objection to the plan proposed by Obama.
"The sad truth is that the president wanted a blank check six months ago and he wants a blank check today. That is just not going to happen," Boehner said.
It was Obama's seventh address to the nation since he took office in 2009. Obama has used previous addresses to deal with major national issues like the war in Afghanistan and the killing of Osama bin Laden.