US President Barack Obama pressed polarised lawmakers yesterday to reach a deal quickly to avoid an early August debt default he described as economic “Armageddon”, amid fevered congressional wrangling.

“We’re obviously running out of time,” Mr Obama warned at the White House, as Democrats and Republicans in the House of Representatives met separately to discuss the way forward and Senate leaders worked on a last-ditch compromise.

The President, looking ahead to the November 2012 elections, described the campaign as a vast argument over the US economy and predicted “I will win that debate because I think that we’ve got the better approach”.

After five straight days of crisis talks ended yesterday without a clear solution, Mr Obama told a press conference that he had given top lawmakers 24 to 36 hours to talk to their rank and file and return to him with a plan.

“My expectation and hope is that everybody in the coming days is going to be willing to compromise,” said Mr Obama, who urged divided Washington to rally behind efforts to “do some tough stuff” to close the yawning US budget deficit.

Economists and finance and business leaders have warned that failure to raise the US debt ceiling above the current $14.3 trillion by August 2 could send shock waves through a world economy still reeling from the 2008 collapse.

Ratings agencies Moody’s and Standard & Poor’s have warned they may downgrade Washington’s sterling Triple-A debt rating, and leading US creditor China, Wall Street titan JPMorgan Chase and the Federal Reserve have also sounded the alarm.

Republicans, whose votes Mr Obama needs to raise the congressionally set limit, have demanded sweeping spending cuts in return while rejecting calls from the White House and Democrats for tax hikes on the rich and corporations. But Mr Obama warned the calamitous effects of a default would amount to “a tax increase on everybody” in the form of skyrocketing interest rates.

The President left open the door to a “fall-back position” being crafted by Democratic Senate Majority Leader Harry Reid and Republican Senate Minority Leader Mitch McConnell that would pair spending cuts with a debt limit increase.

Mr Obama described the complex draft plan, which could let him raise the debt ceiling with just support from fellow Democrats, as “the least attractive option,” but said it could “at least avert Armageddon.”

The President scoffed at a fresh drive by House Republicans to tie any increase in cash-strapped Washington’s ability to severe spending cuts, no tax increases, and approval of a balanced budget amendment to the US Constitution.