Joe Biden was due to meet Kevin McCarthy on Monday as the White House sought to stave off a US debt default, a potentially catastrophic event the US treasury secretary, Janet Yellen, has said will happen on or around 1 June if no deal to raise the $31.4tn debt ceiling is reached.

If the debt limit is not raised, the US government will default on its bills: a historic first with probably catastrophic consequences. Federal workers would be furloughed, global stock markets would be likely to crash and the US economy would probably drop into recession.

McCarthy, the House speaker, leads a Republican caucus demanding harsh spending cuts in return for raising the ceiling. Democrats fear Republicans are willing to allow talks to fail, thereby pitching the US and world economies into chaos, seeing it as a price worth paying for beating Biden at the polls next year.

On Monday, in a message seen by the Guardian, a senior Democratic Senate staffer predicted disaster ahead.

“I think we will” default, the staffer said. “I think most House Republicans want a default so even if McCarthy could make a deal he won’t have the votes to pass it.”

Biden has said he will consider spending cuts but has called Republican demands “unacceptable”, for example saying he will not back subsidies for big energy companies and “wealthy tax cheats” while putting at risk healthcare and food assistance.

Biden and McCarthy were due to meet at the White House at 5.30pm ET.

On Sunday, arriving at the White House after attending the G7 summit in Japan, Biden told reporters a conversation with McCarthy from Air Force One “went well”.

The House speaker said the call was “productive” and added: “Our teams are talking today and we’re … meeting tomorrow. That’s better than it was earlier. So, yes [I am more hopeful].”

On Friday, talks paused after Republicans rejected a White House offer to impose spending freezes rather than cuts.

On Sunday, McCarthy added: “There’s no agreement. We’re still apart.”

On Monday, according to Bloomberg News, the speaker said morning staff-level talks were productive and would continue, adding: “We’re not at a deal.”

The debt ceiling was imposed in 1917, a response by Congress to US entry into the first world war. For most of the next 100 years, raising the ceiling was a formal process, if often subject to political grandstanding.

Under Donald Trump, Republicans raised the ceiling three times while contributing to rising debt with spending increases and tax cuts for richer Americans.

Now, under McCarthy but drawing inspiration from a 2011 standoff in which House Republicans under the then speaker, John Boehner, extracted major concessions from Barack Obama, the GOP is presenting itself as the party of budget hawks.

On Sunday the lead Republican negotiator, Garret Graves of Louisiana, told reporters: “A red line is spending less money. And unless and until we’re there, the rest of it is really irrelevant.”

Trump, the clear frontrunner for the Republican presidential nomination, has said the US should default if Biden will not concede to demands that would hobble much of his signature domestic legislation.

As the far right of the Republican House caucus remains loyal to Trump, so it exerts its hold on McCarthy after stretching the process by which he became speaker through 15 rounds of voting.

Republicans control the House 222-213, while Democrats hold the Senate 51-49, making it tough to secure votes for any bipartisan deal.

Democrats have pondered an attempt to peel off Republican House moderates, most in seats in areas won by Biden in 2020, in order to pass their own spending package.

Biden has also been urged to invoke the 14th amendment to the US constitution, which says “the validity of the public debt of the United States shall not be questioned”, as a way to bypass House Republicans and stave off a default.

The president has progressed from opposing such a move to saying he thinks he has the authority to do it but fears Republican appeals would snarl the process in the courts, leading to a default regardless.

On Monday, global markets were gripped by unease.

“We expect a resolution to be reached before the deadline, but anticipate unforeseen developments throughout the process,” Bruno Schneller, a managing director at Invico Asset Management, told Reuters.

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