WASHINGTON (AP) — President Barack Obama and top lawmakers resume tense budget talks Monday at the White House, with both sides under pressure to reach a deal to stave off a potentially disastrous first-ever default on U.S. obligations.

An Aug. 2 deadline looms to raise the debt limit, the amount of money the U.S. government is allowed to borrow. The limit increase is normally routine, but Republicans have been using the issue as leverage this time to press Obama and his fellow Democrats to make major budget cuts.

The third White House meeting since Thursday is slated for the afternoon, hours after Obama holds a news conference.

The International Monetary Fund’s new chief, Christine Lagarde, said that if the U.S. fails to raise its debt limit, she foresees “interest hikes, stock markets taking a huge hit and real nasty consequences” for the American and global economies.

“I would hope that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also the rest of the world,” she said in an interview with ABC television broadcast Sunday.

In a rare Sunday meeting in the White House Cabinet Room, Obama continued to push for a “grand bargain” in the range of $4 trillion worth of deficit cuts over the coming decade, but momentum is clearly on the side of a smaller measure of perhaps half that size.

Obama continues to press for revenue increases as part of any agreement but Republicans remain stoutly opposed — despite some private hints to the contrary last week by Republican House Speaker John Boehner.

The two sides seem no closer than they were when Republicans withdrew from talks led by Vice President Joe Biden more than two weeks ago, citing an impasse on taxes.

Last week, Boehner and Obama had private talks that led Democrats to believe the House speaker was willing to entertain revenue increases as part of a full overhaul of the tax code later this year in exchange for Democrats agreeing to stiff curbs on costs on benefit programs for older Americans. But Boehner recoiled and abandoned the idea Saturday night in a move that rattled the talks.

Monday’s meeting will feature a discussion of tentative agreements reached in the discussions led by Biden. They include cuts to farm subsidies, student aid, federal workers’ pensions and domestic agency budgets, among others.

Republicans say the Biden group identified more than $2 trillion in cuts, but Democrats put the true figure significantly lower — in large part because many of their concessions on spending cuts relied on the assumption Republicans would accept some new tax revenues. However, the Biden group was bitterly divided over taxes.


Associated Press writers Andrew Taylor, Jim Kuhnhenn and Laurie Kellman contributed to this report.

Copyright 2011 The Associated Press.