Crunch talks on whether to raise the US debt ceiling concluded without a deal on Friday, hours after Republican negotiators stormed out complaining that President Biden's team was being unreasonable.
After a short meeting on Friday night – which is understood to have lasted less than an hour – the White House and Republicans left without an agreement, CBS reported.
Talks resumed on Friday evening after Republican negotiators had earlier in the day walked out of crunch talks, throwing fresh doubt on a deal to avoid default.
Republican Garret Graves told reporters as he was leaving Friday night's meeting that the two sides had a “candid discussion”, while Patrick McHenry, a Republican from North Carolina, responded “no” when asked if he thought a deal would be reached over the weekend.
Before the meeting, Kevin McCarthy, the Republican House speaker, told Fox Business that “we'll be back in the room tonight”, adding that the situation was “very frustrating if they want to come into the room and think we're going to spend more money next year than ... we did this year.”
Joe Biden was forced to cut short a dinner with Rishi Sunak and other world leaders to focus on negotiations.
US stocks fell sharply on Friday as reports emerged that Mr McCarthy had left a closed-door meeting with White House representatives.
The S&P 500 and Dow Jones erased gains made earlier in the day, while yields on US short-term debt also spiked.
Republican Congressman Garret Graves said the talks are at an impasse.
He told reporters: “Look, they’re just unreasonable. Unless they are willing to have reasonable conversations about how you can actually move forward and do the right thing.
“We’re not going to sit here and talk to ourselves.”
The US President attended a working dinner with his G7 counterparts on Miyajima Island in Japan but left early “to receive an update from his debt ceiling negotiation team back in Washington”, according to his press secretary.
Mr Biden has already curtailed his trip to Asia, cancelling a planned visit to Australia and Papua New Guinea to focus on debt limit talks.
Unless the debt ceiling is raised, the world's biggest economy faces not having enough cash to pay its bills as soon as June 1.
Republicans and Democrats have been arguing over whether to raise or suspend the debt ceiling, which determines how much money the US government can borrow.
Republicans want deep spending cuts, along with regulatory changes that Democrats have opposed.
The row led independent senator Bernie Sanders to urge the President to invoke the 14th Amendment of the US constitution to overrule Republicans. The 14th Amendment states that the “validity of the public debt of the United States…shall not be questioned”.
A group of senators led by Sanders said: “Using this authority would allow the United States to continue to pay its bills on-time, without delay, preventing a global catastrophe.”
US Treasury Secretary Janet Yellen has also warned that if the deadlock is not broken, the Biden administration faces a catastrophic default.
Ms Yellen held talks with the bosses of America's biggest banks on Thursday to discuss consequences of the Federal government's $31.4 trillion debt (£25.2 trillion) ceiling not being raised.
After a standoff lasting several weeks, Mr Biden and House Speaker Kevin McCarthy agreed this week to negotiate directly on a deal, which needs to be passed by both chambers of Congress.
Mr McCarthy had previously said he remained optimistic that an agreement could be reached in time to hold a House vote on it next week.
Negotiators are currently thrashing out terms of the deal, with other sticking points including work search requirements for benefit claimants, as well as what to do with unspent cash from its pandemic funds.
A US default would lead to missed pension payments as well as delayed salary payments to Federal government employees and the military. US short-term borrowing costs have edged up as tensions over a debt deal increased, though investors still believe a deal will eventually be done.
The drop in US stocks came despite Federal Reserve chairman Jerome Powell suggesting the central bank might not need to raise interest rates as much after the recent banking turmoil.