U.S. President Barack Obama is urging Republican and Democratic lawmakers to continue searching Wednesday for a last-minute compromise on a budget deal tied to raising the nation's borrowing limit.

A possible breakthrough emerged on Tuesday when a bipartisan group of senators known as the “Group of Six” unveiled a deficit reduction plan that calls for an immediate $500 billion in spending cuts as part of a larger effort to slash spending by $4 trillion over the next decade.

It also would make significant changes to major social welfare programs and raise $1 trillion in tax revenues over 10 years.

On Tuesday, President Obama called the plan “a balanced approach” to deficit reduction, although he did not specifically endorse it. The president did, however, encourage lawmakers to turn the plan into a bill that could be voted on as soon as possible. Meanwhile, Republican House Majority Leader Eric Cantor said the “Gang of Six” plan contained some good ideas.

The Republican-controlled House of Representatives on Tuesday approved a plan to raise the debt ceiling in exchange for cutting more than $100 billion from the federal budget next year. The so-called Cut, Cap and Balance Act would cut non-defense federal spending, limit future spending and require a constitutional mandate for a balanced federal budget.

Only 5 Democrats voted for the bill, which is expected to face defeat in the Senate. President Obama has also said that he would veto the bill.

If lawmakers can not agree on a deal to raise the nation's $14.3 trillion debt ceiling by August 2, the U.S. could potentially default on its loans and face a possible decreased credit rating.

Democratic Senate Majority Leader Harry Reid continues to hold talks with Republican Senate Minority Leader Mitch McConnell on McConnell's proposal to give the president sole authority to raise the debt limit by $2.5 trillion in three installments over the next year. Mr. Obama has characterized that plan as a fail-safe.