WASHINGTON — House Speaker Kevin McCarthy said Thursday that “every hour matters” as his team scrambles to finalize a budget deal with the White House that would enable the government to avoid a potentially catastrophic default. The two sides have to strike a deal in a matter of days before the country runs out of cash to pay its bills.

McCarthy’s team visited the White House on Wednesday for what both sides said was a productive session — but it still failed to produce an agreement as time runs out. House Republicans left town ahead of the holiday weekend while waiting for leaders to produce a bill.

Republicans are insisting on spending cuts in exchange for raising the debt limit. Biden has come to the negotiating table after balking for months but says the GOP lawmakers will have to back off their “extreme positions.”

Treasury Secretary Janet Yellen has said the country could run out of cash by June 1. A debt default would be potentially devastating for the U.S. and global economy, depending on how long the standoff drags on.

On Wednesday night, the rating agency Fitch put the nation’s credit on “Rating Watch Negative, “which amounts to a warning that it might downgrade the U.S. credit as a result of the impasse.

A look at the negotiations and why they are happening:

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What is the debt ceiling fight all about?

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Once a routine act by Congress, the vote to raise the debt ceiling allows the Treasury Department to continue borrowing money to pay the nation’s already incurred bills.

The vote in more recent times has been used as a political leverage point, a must-pass bill that can be loaded up with other priorities.

House Republicans, newly empowered in the majority this Congress, are refusing to raise the legal limit unless Biden and the Democrats impose federal spending cuts and restrictions on future spending.

The Republicans say the nation’s debt, now at $31 trillion, is unsustainable. They also want to attach other priorities, including stiffer work requirements on recipients of government cash aid, food stamps and the Medicaid health care program. Democrats oppose those requirements.

Biden had insisted on approving the debt ceiling with no strings attached, saying the U.S. always pays its bills and defaulting on debt is non-negotiable. But he launched negotiations after House Republicans passed their own legislation and made clear they would not pass a clean debt ceiling increase.

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What happens if they don’t raise the debt ceiling?

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There isn’t really a blueprint for what would happen. But a first-ever government default would be unprecedented and possibly devastating to the nation’s economy. Yellen and economic experts have said it could be “catastrophic.”

If rating agencies like Fitch were to actually downgrade America’s debt, it would mean that Washington would have to pay higher interest rates on Treasury bonds, notes and bills.

White House estimates say a prolonged default could cause 8.3 million job losses and a world-shaking recession, while even a brief default could lead to 500,000 fewer jobs. Moody’s Analytics has estimated that a default of no longer than a week would lead to the loss of 1.5 million jobs.

And the repercussions would be global. Mark Zandi, chief economist at Moody’s Analytics, said that “no corner of the global economy will be spared.”

Yellen has said that federal government payments to millions of families would “likely go unpaid,” including Social Security beneficiaries, veterans and military families. Disruptions to government operations also would impact “air traffic control and law enforcement, border security and national defense, and food safety.”

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Is resolution close?

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The talks have been a weekslong see-saw of positive signs and rocky moments — a grind.

The two sides are at odds over how to trim annual budget deficits. Republicans are determined to cut spending, while Biden’s team offers to hold spending levels flat.

Biden wants to increase some taxes on the wealthiest Americans and some big companies, but McCarthy said early on that that is out of the question.

But reaching a negotiators’ agreement is only part of the challenge. Any deal would also have to pass the Republican-led House and Democratic-majority Senate with significant bipartisan support. In the end, leaders from both parties will need to muscle it over the finish line.

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What are the hangups?

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Republicans have dropped their demand to roll back spending to 2022 levels but say 2024 spending must be less than it is today. They also want to cap spending for the next decade.

Democrats aren’t willing to go that far. The White House has instead proposed freezing spending at the current 2023 levels.

There are also policy priorities under consideration, including steps that could help speed the construction and development of energy projects that both Republicans and some Democrats want.

Democrats have strenuously objected to a Republican push to impose stiffer work requirements on people who receive government aid through food stamps, Medicaid health care and the cash assistance programs.

Biden, though, has kept the door open to some discussion over work requirements.

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Can they get it done in time?

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As each day goes by with no deal, the timeline gets narrower.

Treasury says it will run out of money as soon as June 1. Yellen said Wednesday it’s “almost certain” the U.S. would default by early June if nothing is done.

It’s hard to pinpoint an exact date the government would start missing payments, because tax revenues and expenditures vary from day to day.

McCarthy has promised that he will allow 72 hours for lawmakers to look over any proposed deal before it is brought for a vote, so the soonest the House could vote at this point is over the weekend. The bill would then have to go to the Senate, where Majority Leader Chuck Schumer, D-N.Y., has said it could pass more quickly.

But it’s a crunch time. And before the legislative text can be reviewed, it needs to be written, which won’t happen until a deal is made.

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Is there a backup plan if talks fail?

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Democrats have urged Biden to raise the debt ceiling on his own, without help from Republicans.

Progressives have urged Biden to invoke a clause in the Constitution’s 14th Amendment that says the validity of the public debt in the United States “shall not be questioned.” Default, the argument goes, is therefore unconstitutional.

The president has resisted that option, which raises legal issues. He says it’s a “question that I think is unresolved,” as to whether he could act alone.

In Congress, meanwhile, House Democratic leader Hakeem Jeffries has launched a process that would “discharge” the debt ceiling issue to the House floor forcing a vote on raising the limit. But it has no Republican support.