After weeks of intense partisanship, U.S. President Barack Obama and congressional leaders made a last-minute stab at compromise Saturday night to avoid a government default threatened for early next week.

"There are many elements to be finalized … there is still a distance to go," Majority Leader Harry Reid cautioned in dramatic late-night remarks on the Senate floor.

Still, his disclosure that "talks are going on at the White House now," coupled with his saying progress had been made, offered the strongest indication yet that a default might be averted.

Officials close to the talks, speaking on condition of anonymity, said both Republican and Democratic sides were now discussing a plan to raise the debt limit by about $2.4 trillion, as well as enact slightly larger cuts in spending, to be carried over two stages.

The deal under discussion would also require Congress to vote on a balanced budget amendment to the Constitution, but not require its approval.

White House officials had no immediate comment.

U.S. Republican congressional leaders had said earlier Saturday they were "confident and optimistic" they would reach a last-minute deal with their Democratic counterparts to raise the U.S. government's debt ceiling and avoid an unprecedented default on the nation's bills.

"We now have a level of seriousness with the right people at the table," House of Representatives Speaker John Boehner told reporters, confirming he and Senate Minority Leader Mitch McConnell had resumed talks with Obama after a week-long stalemate.

"We're both confident and optimistic that we can get an agreement."

"Our country is not going to default," McConnell, the Senate's top Republican, added. "We're going to get a result."

But McConnell's upbeat assessment triggered a rebuttal from Reid.

"That's not true," said the Nevada Democrat after returning from a meeting at the White House with Obama and House Democratic leader Nancy Pelosi.

The Republican-controlled House rejected a Democratic Senate plan on Saturday to raise the debt limit. The Senate was expected to vote on the plan in the early hours of Sunday but that vote has now been postponed.

Boehner, in turn, accused Obama of "derailing" a tentative deal reached between him, McConnell and Reid last Sunday and forcing the country into a "cul-de-sac." McConnell said he expected most Democrats would follow Obama's lead. 

The president has indicated he would veto any last-minute debt package from Congress unless it extends the nation's borrowing limit into 2013 — after the next presidential election.

In his weekly address Saturday, Obama said failing to come to an agreement would be "inexcusable" and called on congressional leaders to find a common solution.

"There is very little time," the president said. "The time for compromise on behalf of the American people is now."

The House approved its own Republican-shaped emergency legislation Friday night, but Senate Democrats scuttled it less than two hours later in the hopes they could win enough support for their party's own measure.

Martin on U.S. debt crisis

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In an interview Saturday with CBC Radio's The House, former Canadian prime minister Paul Martin says U.S. politicians are involved in a "very unfortunate political game" and that the outcome of the debate is very important to Canada's economic health.

Martin admits the GST helped him make cuts in the 1990s and says he believes there's no doubt Americans will have to raise taxes.

Politicians in both parties have said they are determined to avoid a default.

"The president says the two sides aren't all that far apart," CBC's John Northcott reported from Washington.

Only three days remain before the government reaches its debt limit of $14.3 trillion.

If no agreement is reached by Tuesday and the government defaults on its loans, the U.S. would be left unable to pay many of its bills and economists warn that would lead to turmoil on global financial markets.

The Republican-drafted bill offers a quick $900-billion increase in U.S. borrowing authority, along with $917 billion in cuts from federal spending over the next 10 years.

Still, as soon as the measure reached the Senate, Democrats rejected it without so much as a debate on its merits. The vote was 59-41, with all Democrats, two independents and six Republicans joining in opposition.

Obama criticized Republican Boehner's own proposal, saying its two-step debt ceiling increase would lead to the same debt-default debate in six months' time.

Legislation presented by Reid is similar regarding the numbers, but it would allow the president to raise the debt ceiling in three stages by $2.4 trillion to cover U.S. borrowing needs through the November 2012 elections when he is running for a second term, while cutting spending by $2.2 trillion.

But in a news release, Boehner called Reid's bill a "non-starter" that will not pass a House vote.

"This will also expose any Senate vote on the Reid bill as a pointless political exercise that squanders precious time as the specter of a job-crushing default looms," Boehner said.

Failure to reach a deal would affect trading partners

In a CBC Radio interview broadcast Saturday, former Canadian prime minister Paul Martin said failure to resolve the U.S. debt crisis would have a negative impact on Canada's economy.

"The fact is that almost a fifth of our gross domestic product arises out of direct exports to the United States. That's a huge huge chunk," Martin told The House.

"And on top of that, our exports to other countries are, of course, affected by their ability to buy what we export to them because they're exporting to the United States, and if their exports are down, that's going to have an effect on their economies."

"It also affects our dollar," Martin said. "Primarily, it's a question of the dropping of the U.S. dollar, which makes it more difficult for Americans to buy our goods, which has a greater effect on us."

With files from The Associated Press