WASHINGTON – US Senate leaders have expressed optimism after a flurry of negotiations on raising the federal debt ceiling to avert a potentially disastrous default.
They were also nearing a deal to end a partial government shutdown, now in its third week, congressional sources said.
A budget bill would also need to pass the House of Representatives. House Republicans triggered the whole political deadlock two weeks ago.
The US must raise its $16.7tn (£10.5tn) borrowing limit by Thursday.
As he toured a soup kitchen for the poor in Washington DC on Monday, President Barack Obama warned that "defaulting would have a potentially devastating effect on our economy".
He had been due to hold talks at the White House with congressional leaders that afternoon, but the meeting was postponed to allow the parties more time to cobble together an agreement.
According to US media, the deal currently under discussion would fund the government until 15 January while raising the debt ceiling until early to mid-February.
Senate Democratic Majority Leader Harry Reid told the chamber on Monday evening: "We've made tremendous progress.
"We hope with good fortune… perhaps tomorrow will be a bright day. We're not there yet."
Republican Senate Minority Leader Mitch McConnell also sounded upbeat, hailing "substantial progress".
John Boehner, the Republican leader and speaker of the House of Representatives, met Senator McConnell, too.
A closed-door session of Republican senators and representatives was set for Tuesday morning.
Democrats appear to have so far fended off Republican attempts to force any major changes to President Obama's signature healthcare law.
Conservative hardliners were initially vocal in demanding that the White House agree to delay or eliminate funding for the Affordable Care Act.
However, Senate Republicans are still reportedly pushing for slight modifications to the law. According to US media, they want stricter measures to verify the incomes of those seeking health insurance subsidies. They also aim to suspend a tax paid by employers who participate in the health law.