Aug. 2 is the day America hits its credit limit. The announcement follows the president's fifth meeting with congressional negotiators, with no agreement in sight.
The Obama administration says if the debt ceiling is not raised in the next three weeks the government will default on its obligations. And Thursday night, Standard & Poor's is placing the U.S. on a credit watch with a 50 percent chance it will lower the country's debt rating within the next 90 days.
But Democrat and Republican leaders in the Senate are reportedly working on a possible compromise plan designed to avert financial disaster.
"We're running out of time," said U.S. Treasury Secretary Timothy Geithner. "The eyes of the country are on us and the eyes of the world are on us."
And the war of words is boiling over.
"House Majority Leader Eric Cantor has shown he shouldn't be at the table," said Senate Majority Leader Harry Reid. "And Republicans agree he shouldn't be at the table."
"Reid is, I imagine, frustrated as we all are," said Cantor. "And the fact is we are going to abide by our principles."
Democrats say Cantor is holding things up by calling for a short-term extension of the debt ceiling, which Obama vows to veto.
"He is saying that leaders should lead, and we have to do the right thing here," said White House Press Secretary Jay Carney.
If the debt ceiling is not raised, the federal government will default on its debt. Taking a look at the books, next month the government will take in $172 billion in taxes, but it will owe $307 billion.
It'll be forced to make tough choices. After paying the interest on our debt the government could pay for social security, Medicare and Medicaid, troop salaries and veteran's benefits, Homeland Security, unemployment insurance, tax refunds, education and the FAA.
But that means it would not fund the Centers for Disease Control, food stamps, aid for the needy, federal housing, energy, highway programs, the FBI, and much more.
On Thursday, Federal Reserve Chairman Ben Bernanke warned legislators of a self-inflicted wound by not raising the borrowing limit.
"I think it would be a calamitous outcome," said Bernanke. "It would create a very severe financial shock that would have effects not only on the U.S. economy but on the global economy."
Obama asked leaders to consult with their members and report back to him within 36 hours with a possible deal.
