U.S. President Barack Obama and opposition Republicans are scheduled to resume tense negotiations Monday over proposed budget cuts and tax increases intended to cope with trillions of dollars in debt. They face a fast-approaching August 2 deadline to reach an agreement or face an unprecedented default on U.S. debt.

An unusual Sunday negotiating session between the President and key Republicans ended with no apparent progress. Mr. Obama has scheduled a news conference on Monday to discuss the debt issues.

U.S. Treasury Secretary Timothy Geithner has said failing to raise the $14.3 trillion legal limit on what the government can borrow to pay its debts would cause “catastrophic damage” to the U.S. economy.

The new head of the International Monetary Fund, Christine Lagarde, has said a U.S. default would have “real nasty consequences” for the global economy, including higher interest rates and falling stock prices. But she told a news program on Sunday that she cannot imagine U.S. leaders letting the nation default on its debts.

The speaker of the U.S. House of Representatives, Republican John Boehner, says he is giving up efforts to reach a comprehensive deal with the White House to cut the federal deficit by $4 trillion over the next 10 years. Boehner said he told President Obama that he wants to pursue a smaller $2 trillion deficit reduction deal.

Republicans say they will not agree to any tax increases, while Mr. Obama’s Democratic Party allies in Congress strongly oppose cuts in the programs that give income and health care to the elderly and poor.

Mr. Obama said earlier that congressional Democrats and Republicans need to make political sacrifices to meet the nation’s fiscal challenges.