Democrats and Republicans seemed within grasping distance Saturday of a deal to end the US debt ceiling standoff, with both sides playing hardball in the final race for an agreement to avert a potentially catastrophic default.

President Joe Biden gave the strongest sign yet on Friday night that the drama in Washington might be drawing to an end -- saying an agreement was "very close."

Talks ran into the early hours of Saturday, but Democrats reportedly drew a red line at Republican demands for tougher work requirements in exchange for social aid that they say would kill party support for a deal.

Briefing reporters on Capitol Hill Saturday morning, Republican congressional leader Kevin McCarthy acknowledged negotiators "are not there yet" -- but said he was confident of meeting the critical June 5 deadline for a deal.

That is the day when, short of an accord allowing it to keep borrowing, the US government says it will run out of money to pay its bills -- raising the prospect of a default that would likely trigger a recession and send shockwaves through the global economy.

"Yes," the House speaker said without hesitation, "I feel we can get there, I really do. I am an optimist."

"I feel closer to an agreement now than I did a long time before," McCarthy adding, saying: "Some things we just have to finish out."

The dreaded June 5 deadline is four days later than a previous X-date, but still guarantees that -- even with a deal this weekend -- it will be a frantic race to get a bill through Congress in less than 10 days.

Negotiators were hoping to settle on a text Saturday afternoon, but winning bipartisan support for its adoption will test the skills of party whips, with grumblings already on both sides over the concessions being made.

The deal believed to be taking shape would include an agreement to extend the government's borrowing authority for two years, meaning no repeat of the current drama before the 2024 presidential election.

But Democrats would have to offer some ground on Republican demands for sweeping spending limits on social safety and other domestic programs -- most controversially a demand that those applying for benefits like food assistance work for them.