U.S. President Barack Obama says it is time to set aside politics and make a deal with both parties in Congress that will allow the United States to keep borrowing money, while cutting government deficits and debt.

Before meeting with opposition Republicans Monday, Mr. Obama said there is “a lot of work to do” to get an agreement, and said he will not sign any measure that only solves the debt issue temporarily.

The Speaker of the House of Representatives, Republican John Boehner, told journalists Monday that a budget deal cannot pass the House unless it rules out tax increases and includes deeper cuts in popular social programs for the poor and elderly. Democrats strongly oppose cuts in these programs and want to end some tax breaks for the wealthy.

Washington faces an August 2 deadline to reach an agreement or face a possible unprecedented default on U.S. debt.

Mr. Obama said a default would drive up interest rates and could trigger another economic recession. 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.