- The emerging deal would limit most spending for two years, exempting military and veterans programmes.
- A default on the $31.4tn (£25tn) US debt would upend the economy and have a global impact.
The White House and congressional Republicans are closing in on a deal to raise the government's capacity to borrow money, staving off a damaging default on US debt.
The emerging deal would limit most spending for two years, exempting military and veterans programmes.
Republicans and Democrats say they have made progress in their negotiations.
A default on the $31.4tn (£25tn) US debt would upend the economy and have a global impact.
Kevin McCarthy, who leads Republicans in the House as Speaker, said on Friday that he thought the two sides had "made progress" after working into the night on Thursday.
A day earlier, President Joe Biden also said the negotiations were moving forward.
Mr Biden said: "I made clear time and again defaulting on our national debt is not an option." He said Americans deserved certainty over issues such as social security payments, which could be delayed unless Congress authorises the US Treasury to borrow more money.
The US must borrow money to fund the government because it spends more than it raises in taxes.
The debt ceiling is a limit set by Congress, determining how much debt the government can accrue.
Republicans have said they will not raise the cap unless the government reduces its spending in the years ahead. They are seeking cuts in areas such as education and other social programmes.
Democrats have countered with proposals to raise certain taxes.
With no deal yet struck, the Treasury has warned the US will not have enough money to pay all of its bills as soon as 1 June.
US media reported that the emerging deal would raise the debt limit for two years - removing it as a political issue until after the 2024 presidential election.
It could also strip $10bn from the Internal Revenue Service, scaling back the $80bn boost approved last year - despite Republican objections - for the tax collection agency to hire more auditors.
Republican efforts to impose tougher work requirements for recipients of certain government benefits remained a sticking point, however.
US stock indexes were trading higher on Friday on hopes a deal would be presented by the end of the day.
Any agreement formed between the two sides will need to be turned into a legislative text to be approved by Congress.
Mr McCarthy has promised to give lawmakers 72 hours to review the bill, and at least 24 hours' notice if they have to return to Washington early. If a deal is reached this week, a vote could happen early next week.
Some Republicans have already said the potential spending limits appear too modest, while some Democrats have raised opposing concerns.
With Congress already broken up for the Memorial Day holiday, there is little wiggle room for objections.
The Senate would also have to vote on the bill, which would then go to the White House for signing.
Lawmakers could also temporarily lift the debt cap to give the talks more time.