Republicans offer temporary US debt deal

US President Barack Obama has met Republican leaders from the US House of Representatives to discuss a possible deal that would avert the US defaulting on its debt, with both sides saying that while progress had been made, no decisions were forthcoming.

The White House said the president held a "good meeting" with Republicans, and Eric Cantor, one of the legislators, termed the initial talks "very useful".

"Hopefully, we will have a clearer path forward," Cantor, flanked by fellow House Republican leaders, told reporters on his return to the Capitol from the White House in Washington DC, the US capital. Talks were to continue, Republican leaders said.

John Boehner, speaker of the House, had earlier said that Republicans would advance legislation to temporarily extend the government's ability to pay its bills, averting a potential default by raising the debt ceiling.

But Boehner said the measure would only advance if President Obama agreed to negotiate over reopening the government, which was partially shut down last week, and to "start to deal with America's pressing problems".

The White House responded by saying that Obama would sign a "clean" bill to raise the debt ceiling, one that does not include policy demands.

Republicans have been demanding that Obama's signature health-care bill be defunded, and that if the president does not agree to such a measure, a partial shutdown of the US government would continue.

Boehner also said on Thursday he would appoint House negotiators to try to sort out differences between vastly different House- and Senate-passed budget blueprints.

The US government risks default next Thursday if Congress does not approve a bill increasing its borrowing authority. Most economists say it would deal a staggering blow to the world economy.

Earlier on Thursday, Christine Lagarde, head of the International Monetary Fund, gave warning that US failure to raise its debt ceiling because of a political impasse would do serious damage.

Boehner did not say for how long the Republicans would extend the government's borrowing authority.

Obama has asked Congress to raise the debt ceiling for a year, with no strings attached, which has been common practice for decades under both Republican and Democratic presidents.

"The president has made clear that he will not pay a ransom for Congress doing its job and paying our bills," a White House official said on Thursday.

"It is better for economic certainty for Congress to take the threat of default off the table for as long as possible."

If such a bill is passed without conditions, officials have said Obama would then be prepared to negotiate a broader budget deal.

The impasse has already sent the stock market south, boosted the interest rate for one-month Treasury bills and prompted Fidelity Investments, the largest US manager of money market mutual funds, to sell federal debt that comes due around the time the nation could hit its borrowing limit.