US President Barack Obama is about to address the nation, to discuss the approaching August 2nd debt limit deadline, and the apparent political stalemate.

US President addresses the nation on debt

One official said the president is expected to call for compromise. They said Obama would quote Ronald Reagan - a hero to many conservatives - who said during his presidency that failure to raise the debt ceiling would do "incalculable damage." The White House has sided with a plan, put forth by Senate Majority Leader Harry Reid on Monday, calling it "a responsible compromise". This is despite the plan failing to include any increase in tax revenues, a condition initially demanded by Obama.

Republicans and Democrats upped the ante on Monday by putting forth competing plans to resolve the high stakes fight over the government deficit and increasing the U.S. borrowing limit. But no compromise was in sight with time running out to prevent a potentially catastrophic default in barely a week.

Underscoring the dramatic standoff, several networks have agreed to carry rebuttal remarks after the President's speech by House Speaker John Boehner.

Despite warnings to the contrary, U.S. financial markets have appeared to take the political maneuvering in their stride - so far. Wall Street posted losses on Monday but there was no indication of a panic among investors.

On a day of political jousting, Senate Republican leader Mitch McConnell urged Obama to shift his position rather than "veto the country into default."

The Republican approach, referred to as "less than perfect" by House Speaker John Boehner, takes no account of Obama's threat to veto a short-term plan, that would fail to raise the debt limit sufficiently to keep it from returning to the congressional agenda until after the 2012 elections.

Finding a compromise is extremely important so the U.S. can raise its Current 14.3 trillion US dollar cap on borrowing, by August 2nd to prevent a potential financial catastrophe at home and abroad.

Without an increase in the debt limit, major global credit ratings agencies have threatened to downgrade the U.S. government's triple-A credit rating.

An unprecedented U.S. default could cause spark turmoil in the U.S. financial system, and force a delay in Social Security checks to retirees, payments to government contractors and other government spending.

The International Monetary Fund, meanwhile, reiterated its call for U.S. politicians to act quickly to solve the debt issue to "prevent significant global repercussions."

It was the second time the IMF has taken the unusual step of issuing public advice on a domestic US tax and spending question.

The organization said again that the U.S. should not only cut spending, but also raise taxes, with all actions carefully timed to prevent a renewed downturn in the American economy.

A drop in U.S. credit standing would likely increase the cost of US government borrowing.

Americans seeking home mortgage or car loans would see interest rates climb, as would people with outstanding credit card balances.

Obama says that effectively amounts to a tax increase on Americans.

Many economists think default could push the U.S. economy back into recession or worse, while producing chaos in the global economy.