U.S. President Barack Obama warns any failure to raise the government debt limit will have a “significant” and “unpredictable” impact on the nation's struggling economy.

During a news conference at the White House on Wednesday, Mr. Obama told reporters lawmakers in Congress must “seize this moment” and work together to prevent the U.S. from defaulting on its $14 trillion national debt.

The country is facing an August 2 deadline to raise the amount of money Washington can borrow or default on its loans, but talks between Democrats and Republicans have stalled. Republicans want to see the government slash spending and accuse the White House of using the crisis to push for higher taxes.

Mr. Obama agreed the government needs to reduce spending, but said the yearly budget shortfall and the mounting overall debt load cannot be cut without higher taxes. He said big oil companies and corporate jet owners are not hurting like the country's middle class families and should not enjoy tax breaks no one else gets.

Earlier Wednesday, Senate Republican Leader Mitch McConnell criticized the president's approach, saying the U.S. cannot create jobs while raising taxes.

Republicans, who control the House of Representatives, have said they will not raise the debt ceiling without deep spending cuts.

Mr. Obama expressed confidence the sides will come to an agreement.

Mr. Obama said the government will not be able to restore the confidence of American businesses or the American people without what he called a balanced approach that also preserves government spending on scholarship programs, medical research and medical care for older Americans.

President Obama said the two sides have already identified more than $1 trillion in spending cuts. He also said he wants to extend tax cuts for middle class families and that he would support additional tax cuts that could help stimulate long-term economic growth even if it costs the government more money now.

Mr. Obama is scheduled to meet with Senate Majority Leader Harry Reid and other Democratic Senators later Wednesday.

The head of the U.S. central bank, Ben Bernanke, has said politicians must not allow the government to default on its loans, saying even a short-term break in payments could cause “severe disruptions” in financial markets. The Federal Reserve chairman also said the debt ceiling should not be used as a bargaining chip to force the government to reduce its spending deficit.