Washington (CNN) - A fourth straight day of talks intended to head off a possible government default ended on a tense note Wednesday, with House Majority Leader Eric Cantor saying President Barack Obama cut him off by saying "I'll see you tomorrow" before walking out.
The exchange concluded almost two hours of talks that failed to achieve a breakthrough. Another session - the fifth in five days - was set for Thursday, participants said.
Administration officials have warned that a failure to raise the current $14.3 trillion debt ceiling by August 2 could trigger a partial default. If Washington lacks the money to pay its bills, interest rates could skyrocket and the value of the dollar could decline, among other things.
The seriousness of the situation was reinforced when a major rating agency said Wednesday it would put the sterling bond rating of the United States on review for possible downgrade.
Moody's Investors Services said it had initiated the review because of "the rising possibility" that Congress will fail to raise the debt ceiling in time - something that could lead to a U.S. default on its debt.
Cantor, R-Virginia, told reporters after Wednesdays meeting that he proposed a short-term agreement to raise the federal debt ceiling, a position Obama has previously rejected. The president wants one deal that will raise the amount of money the government can borrow to sufficient levels to last through 2012 - after his campaign for re-election.
"That's when he got very agitated and said I've sat here long enough - that no other president - Ronald Reagan - would sit here like this - and that he's reached the point that something's gotta give," Cantor said, adding that Obama called for Republicans to compromise on either their insistence that a debt-ceiling hike must be matched dollar-for-dollar by spending cuts or on their opposition to any kind of tax increase.
"And he said to me, 'Eric, don't call my bluff.' He said 'I'm going to the American people with this,' " Cantor quoted Obama as saying.
"I was somewhat taken aback," Cantor said. When he continued to press the issue, Cantor said, Obama "shoved back from the table, said 'I'll see you tomorrow' and walked out."
A Democratic source familiar with the talks said on condition of not being identified that Obama cut off Cantor at the end when the Virginia Republican questioned him for the third time on his opposition to a short-term extension of the federal debt ceiling.
Another Democratic source, also speaking on condition of anonymity, described the tone of the meeting as tense but constructive and said that at one point, Cantor was challenged on what the source called "talking out of both sides of his mouth."FULL STORY
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