Debt ceiling negotiators 'making progress,' Biden says even as deal remains elusive

WASHINGTON -- Seeking to strike a reassuring tone despite days of negotiations, President Joe Biden said Thursday afternoon that he's had several "productive conversations" with House Speaker Kevin McCarthy and their teams are "making progress" on debt ceiling talks as the country inches closer to default.

"I've made it clear time and again: Defaulting on our national debt is not an option," Biden said as he delivered remarks in the Rose Garden before nominating a new chairman of the Joint Chiefs of Staff.

But an agreement still remains elusive with just seven days until potential default. Treasury Secretary Janet Yellen maintains that the U.S. government could run out of cash to pay all its bills in early June, possibly as soon as June 1.

House members left town on Thursday for Memorial Day weekend but were told to be ready to return if a deal is reached.

"It is time for Congress to act now," Biden said in the Rose Garden. "I want to be clear: The negotiations we're having with Speaker McCarthy is about the outlines of what the budget will look like, not about default. It's about competing visions for America."

Leaving the Capitol later Thursday, McCarthy confirmed that there remains no deal in hand, having been "going back and forth" with the White House all day.

"The only way to move forward is with a bipartisan agreement," he said. "And I believe that we'll come to an agreement that allows us to move forward and that protects the hardworking Americans of this country.

"We've worked throughout the day, we'll continue to work to try to be able to solve the problem but there is no agreement," he said.

He said he would be working from Washington over the holiday weekend.

"I think there's a sense of understanding from both teams that we have serious issues still to work out and come to terms with and that's gonna take some time," Rep. Patrick McHenry of North Carolina, a key Republican negotiator, told reporters before heading into the speaker's office on Thursday. "That's all there is to it."

McHenry said then that work requirements on some federal aid were still a major sticking point.

Earlier Thursday, McCarthy had told ABC News Senior Congressional Correspondent Rachel Scott that "every hour matters" as the clock ticks toward June 1.

The speaker also expressed optimism the two sides will come to a solution, though he dodged questions on the narrowing timetable for Congress to be able to pass a deal.

"We worked well past midnight last night," McCarthy said. "And yesterday, I thought, was a very good day. We made some progress. There are still some outstanding issues, and I've directed our teams to work 24/7 to try to solve this problem."

McHenry previously said Thursday that there were still "fundamental disagreements" to resolve.

"Nothing's resolved. Nothing's resolved. And everyone wants to think you can lock up and bank something. You can't bank anything until you actually have a complete deal," he said.

Asked then if he was confident a deal would be reached by this weekend, McHenry replied, "I'm still trying to work for the deal. And it looks very difficult because it's very difficult subjects that we're dealing with. I don't think there's I've made no secret about this. It's not a position I wanted us to be in."

Even if a debt ceiling deal is reached, Congress faces a serious time crunch to pass legislation before the end of the month. After a bill is drafted, McCarthy's pledging to give House members 72 hours to review it, a concession he offered to conservative hardliners roadblocking his speakership vote at the start of this year. Then the Senate will have to take up the bill before it goes to President Joe Biden's desk.

Complicating the matter further is the Memorial Day recess. The House will gavel out Thursday, and the Senate left town last week, though leadership in both chambers has directed lawmakers to be prepared to return to Washington immediately if a deal is struck.

Several Democrats have voiced frustration in recent days over the status of negotiation, with House Minority Leader Hakeem Jeffries, D-N.Y., dinging McCarthy's plans to adjourn and excoriating Republicans for, in his words, making "unreasonable demands."

"It's my understanding that the designees of both President Biden as well as Speaker McCarthy will continue to talk, but it is unfortunate that House Republicans have chosen to get out of town before sundown," Jeffries said in a news conference.

He hit the GOP for a "manufactured crisis" over the debt ceiling, accusing the party of holding the economy hostage.

"Republicans are driving us down a dangerous road of default or have presented the American people with another unacceptable choice, which is devastating cuts to children, devastating cuts to Medicaid, devastating cuts to nutrition, devastating cuts to education, devastating cuts to public safety and devastating cuts to our veterans," he said.

Congressional Progressive Caucus leader Rep. Pramila Jayapal of Washington voiced similar concerns, warning Wednesday that progressives "are not going to take a deal that hurts working people."

Rep. Jamaal Bowman, D-N.Y., said he was "very concerned" that Biden was giving too much away in the negotiations.

Bowman added, "I'm advocating for the White House to ensure that we don't give away the house and default on our responsibilities."

Jeffries said Thursday that Biden "is continuing to hold the line" on the spending cuts Republicans are seeking.

Meanwhile, conservative hardliners are telling McCarthy to stand his ground, too. They say they are seeking to end Democrats' "addiction" to government spending, which they blame for inflation and other economic woes.

"Hold the line," said Rep. Chip Roy, R-Texas.

"This White House is a mockery of leadership. So we should hold firm and actually lead the country. And we have the ability to do that," said Rep. Bryon Donalds, R-Fla.

As the politics play out, credit rating agency Fitch warned Thursday it was putting U.S. credit rating on watch for a possible downgrade.

Pressed for his reaction, McCarthy said he wasn't concerned.

"I am concerned about, at the end of the day, if you do not have a deal worthy of the American public, you should be worried about Fitch. I'm not," he said.

ABC News' Alexandra Hutzler, Allison Pecorin and Trish Turner contributed to this report.