US President Joe Biden and House Speaker Kevin McCarthy agreed on Sunday to meet on Monday afternoon to try to restart talks aimed at raising the US debt ceiling, less than two weeks before a key deadline to avoid a disastrous default.

After a weekend of near stalemate, Biden arrived back in Washington late Sunday, cutting short a trip to Asia to recommence talks in advance of the US Treasury's June 1 deadline for Congress to authorize more borrowing.

Before their Monday afternoon meeting, Biden and McCarthy talked as the President flew back to the United States on Air Force One.

"It went well," Biden told reporters of the phone call as he arrived at the White House Sunday night. "We'll talk tomorrow."

Earlier, McCarthy had said the conversation was "productive" -- in contrast to the razor-sharp words interchanged in a former round of negotiations.

Despite it all, the two sides are reportedly far from a final compromise, as Biden said Sunday that Republicans' latest demands for spending cuts as a condition for raising the US government borrowing authority were "frankly unacceptable".

"It's time for the other side to move from their extreme positions," he said at a press conference before leaving the G7 summit in Hiroshima, Japan. 

And in a tweet, Biden maintained that he was categorically opposed to slashing social and healthcare assistance.

"I will not agree to a deal with House Republicans that protects billions in subsidies for Big Oil while putting the healthcare of 21 million Americans at risk," Biden said. 

Let me be clear.

I will not agree to a deal with House Republicans that protects billions in subsidies for Big Oil while putting the health care of 21 million Americans at risk.

Or that protects wealthy tax cheats while putting food assistance at risk for 1 million Americans.

— President Biden (@POTUS) May 21, 2023

And for his part, McCarthy said his position remained unaltered.

"Washington cannot continue to spend money we do not have at the expense of children and grandchildren," he said on Twitter after talking to Biden.

Just got off the phone with the president while he’s out of the country.

My position has not changed. Washington cannot continue to spend money we do not have at the expense of children and grandchildren.

Tomorrow, he and I will meet in person to continue negotiations.

— Kevin McCarthy (@SpeakerMcCarthy) May 21, 2023

'The US is running out of money' 

In his comments in Japan, Biden expressed hope that "we can reach an agreement." However, he warned he could not "guarantee that they wouldn't force a default by doing something outrageous."

Biden said he was investigating an obscure constitutional article in the 14th Amendment that specifies that the legitimacy of public debt "shall not be questioned" – potentially permitting the president to bypass Congress and increase the debt cap himself.

"I think we have the authority. The question is could it be done and invoked in time," he said, stressing the likelihood of legal challenges to this and the rapidly approaching debt deadline.

Meanwhile, the Treasury Department says the government could run out of money and default on payments on its $31 trillion debt as early as June 1 if Congress, where Republicans control the House of Representatives, does not authorize more borrowing.

June 1 remains a "hard deadline" for raising the US debt ceiling, Treasury Secretary Janet Yellen said Sunday, cautioning that unless the standoff with Republicans in Congress is resolved, the government would be unable to pay its bills through the middle of next month.

"We expect to be unable to pay all of our bills in early June, and possibly as soon as June 1st," Yellen said on NBC's Meet the Press. "I think that that's a hard deadline.

A weak leader of a divided country

Biden had intended to fly from Japan to Papua New Guinea and Australia, but the debt discussions forced him to cut his trip short.

This added to the perception that he hobbled into the G7 meeting as a weaker leader of a divided country tripping from one crisis to the next as the rest of the world watched in dismay.

But National Security Advisor Jake Sullivan brushed off this idea, claiming that Biden had led allies at the G7 summit in dealing with China, the war in Ukraine, the environment, and other issues, as quoted by CNN.

"President Biden has been able to lead on the world stage and at the same time stay engaged to ensure that the United States does not default," Sullivan said.

The big picture

US Republicans called for negotiations on raising the debt limit on Saturday to be "paused" in light of the difficulty of resolving some serious "differences" with the White House. 

"We've got to pause," Republican leader Kevin McCarthy told reporters in Congress, adding, "We can't be spending any more money next year."

Investors have been paying close attention to the talks, while US stock indexes have slightly fallen after the news broke out.

For the US to default on its debt, it would have a tremendous impact on the global markets. 

So far, the demand for concessions on the part of the GOP involves the White House signing up for budget cuts in exchange for Republican backing to raise the debt ceiling. 

Democrats, on the other hand, have been calling for a "clean" raise of the debt limit, which would prevent a financial meltdown of the US economy ahead of the June 1 deadline - a day on which many predict the US will start defaulting if the debt ceiling is not raised. 

With the 2024 election campaign started and Biden potentially facing Donald Trump again, Republicans have taken the chance to blame Democrats for the country's massive debt, which has accumulated over decades.

Biden has seemingly responded with a plan to cut some expenditures while also raising additional income by raising taxes on the wealthiest Americans and companies that now receive significant tax advantages. Republicans will not agree to tax increases as part of an agreement.

"That's what we continue to have a significant disagreement on, on the revenue side," Biden said.

Read more: US Treasury: debt default will make the world not invest in dollars