U.S. Senate Majority Leader Harry Reid says the Senate is canceling a holiday recess next week, as lawmakers consider whether to raise the U.S. debt ceiling or face possible default on the nation's loans.

Reid said Thursday lawmakers will take a holiday July 4 for Independence Day, and return to work Tuesday, rather than taking the week off as had been scheduled. He said if the U.S. defaults on its loans, it could push the economy into a “full-blown depression.”

President Barack Obama held talks earlier this week with Senator Reid and Republican Senate Minority Leader Mitch McConnell, though no progress was made on restarting joint negotiating sessions.

Talks stalled last week after Republican lawmakers walked out of the debt ceiling negotiations chaired by Vice President Joe Biden. They said the White House was using the crisis to push for tax increases.

The United States risks defaulting on its $14 trillion national debt unless Congress acts to raise the legal limit on the amount the U.S. government is allowed to borrow by August 2.

Republicans, who control the House of Representatives, say they will not raise the debt ceiling without deep spending cuts. Democrats say Republicans are holding the debt ceiling vote hostage to an ultra-conservative fiscal agenda the Republicans could never enact on their own.

The head of the U.S. central bank, Ben Bernanke, says 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.

U.S. Treasury Secretary Timothy Geithner has also warned that the U.S. could face “catastrophic consequences” if lawmakers fail to raise the debt limit.