The Republican leadership is facing increasing pressure from freshman members of Congress -- many of whom campaigned on the platform of cutting the deficit -- and the conservative Tea Party movement, even as they work with the Democratic leadership to avert a default on the debt that some economists warn could tank the U.S. economy.
Treasury Secretary Timothy Geithner has given a deadline of Aug. 2; the rough deadline until his department's emergency measures can stave off a crisis. The debt ceiling would need to be raised by roughly $2 trillion.
While the markets are adopting a wait-and-see approach, given that the final deadline for default is more than two months away, many people are skeptical about whether the House GOP can garner the support it needs from its freshman class.
Many of these members, buoyed by the Tea Party, argue they will not agree to raising the debt limit if their demands of major spending reductions are not met. Members of the Tea Party argue that claims about the repercussions of not raising the limit are over-hyped and simply "fear mongering."
"By raising it gives these guys cover to not make the tough decisions that need to be made," said Amy Kremer, chairwoman of the Tea Party Express. "What's coming out of the White House is a bunch of fear tactics that we're going to default on our debt and all this other stuff and its completely not true. There's enough revenue coming in from tax payments to pay our debt, pay Medicaid, pay Social Security, pay Medicare and still have money left over.
"Our message has not only been no, but hell no" to raising the debt limit, Kremer told ABC News.
The Tea Party message has resonated widely through Congress, especially because a large chunk of the freshman class rode to victory on the back of Tea Party support and any political moves contrary to their wishes could be suicidal.
But even those who say they realize the negative consequences of not raising the debt ceiling are hesitant about voting to do so unless significant spending cuts are made.
"America's caught between two unsatisfactory outcomes and we're wrestling to find a third," Rep. Mo Brooks, R-Ala., a freshman congressman, said. "The two that we are caught in between are unsustainable deficits ... [and] the debt ceiling issue, [which] if not properly addressed, will have definite and immediate adverse economic consequences. What I believe we have to do is address the debt ceiling in a way that satisfactorily addresses the unsustainable deficits."
Brooks said there hasn't been substantive progress made on budget and deficit negotiations, and he has little faith that the Senate -- including some Republican members -- and the White House will "understand the magnitude of the problem posed by unsustainable deficits."
"It's a damned if you do, damned if you don't problem," he told ABC News. "What difference does it make if you're given a choice between two poisons. Either way you're dead."
Business leaders have raised alarms on the possibly dire consequences of not raising the ceiling. More than 60 trade associations sent a joint letter to congressional leaders last week to urge them to raise the limit.
In a House hearing Thursday, executives of four major corporations also sounded warning bells.
"I think it would be devastating to the world economy, not just to the U.S. economy and not just to UTC [United Technologies Corp.] if Congress failed to raise the debt limit," Greg Hayes, chief financial officer of United Technologies, said.
"The full faith and credit of the U.S. government is the basis upon which the entire world financial system revolves around. If we think that the problems back in 2008, with the Lehman crisis, were devastating, a default by the U.S. government would have repercussions beyond anything we saw in 2008 and 2009."
Business lobby groups and local business leaders have fanned out across Capitol Hill to hold listening sessions with Congress members.
Some Progress on U.S. Debt Negotiations
Meanwhile, Vice President Joe Biden is leading a series of meetings with Republican and Democratic leaders, and administration officials to hash out a deal.
After their third round of talks, Biden Thursday said the group is "actually making progress" but "nothing is agreed to until everything is agreed to."
Republicans echoed that sentiment but they are unwilling to budge from their original demands of taking a scalpel to spending.
"We have a $14 trillion debt in this country," Sen. John Barasso, R-Wyo., said in an interview with Fox on Thursday. "The president wants to raise the debt ceiling. I am not ready to give him a blank check or a new credit card. We did talk about the need to put a cap on spending, as opposed to a total debt cap, which the president, I think, is more interested in having, which would involve additional taxes. ... But raising the tax rates, to me, is completely off the table."
Others, such as Senate Minority Leader Mitch McConnell on Kentucky, argue that any budget talks have to include a discussion of Medicare and Medicaid overhaul.
The next set of meetings is scheduled for after Memorial Day weekend.
Meanwhile, Tea Party leaders are warning that they are keeping a close eye on Congress members' voting records, for the next election.
"We are tired of the lip service. We want to see action follow through on your campaign promises," Kremer warned lawmakers. "[Otherwise] you will be fired just as fast as you were hired."