Democratic President Joe Biden and top Republican in Congress Kevin McCarthy were scheduled to resume talks on Wednesday morning in an effort to reach an agreement to raise the $31.4 trillion debt ceiling and prevent a catastrophic default.

Time is running out for a solution because the Treasury Department has issued a warning that the federal government may not be able to pay all of its debts by June 1 — just eight days away — and because it will take several days for legislation to pass through a Congress that is very closely divided.

U.S. bond giant PIMCO said it believed negotiators needed to strike a deal by the middle of this week to make that deadline.

Biden and McCarthy, the speaker of the House of Representatives, remain deeply divided on how to move forward. McCarthy told reporters on Wednesday that he and Biden have not spoken since a Monday meeting at the White House but that talks between their negotiating teams have been “productive.”

“We’ll get together this morning,” McCarthy said, referring to the negotiators. He planned a press conference for 11:45 a.m. (1545 GMT).

Any deal that Biden and McCarthy reach will have a narrow path for passage through the divided Congress, where McCarthy’s Republicans hold a 222-213 House majority and Biden’s Democrats control the Senate by a 51-49 margin.

The compromises needed to win both chambers’ approval will also cost each party some votes from its most partisan members.

Republicans are pushing for sharp spending cuts while Democrats have proposed new taxes to help reduce the federal government’s debt.

The months-long standoff has spooked Wall Street, weighing on U.S. stocks and pushing the nation’s cost of borrowing higher. U.S. stocks opened lower on Wednesday.

Treasury Secretary Janet Yellen on Wednesday said the United States will be unable to pay all its bills by early June, adding that it is difficult to be precise about the specific day the government will run out of resources. Her department on Monday forecast that it would be able to pay all the government’s bills only through June 1 without a debt ceiling increase.

That would trigger a Wall Street meltdown and push the U.S. economy towards recession, economists say. Medical providers that rely on government payments could be among the first to feel the heat.

Biden and McCarthy’s negotiating teams reported no significant progress after a two-hour meeting at the Capitol on Tuesday.

“The biggest gap we have is the funding issue,” said McCarthy’s lead negotiator, Representative Garret Graves, after Tuesday’s talks. Republicans want to cut discretionary spending for the 2024 fiscal year beginning in October by roughly 8%, while Democrats have pushed to hold it steady at this year’s rate.

“Both sides have to understand that they’re not going to get everything that they want,” White House spokesperson Karine Jean-Pierre said at a briefing on Tuesday.

Negotiators differ over Republicans’ proposals to impose new work requirements on benefits programs for low-income Americans and loosen energy permitting rules.

The White House has offered to limit discretionary spending for the coming two years, in line with previous bipartisan budget agreements. Republicans have offered spending caps for the coming six years.

Congress regularly needs to raise the nation’s self-imposed debt limit to cover the cost of spending and tax cuts it has already approved. It did so three times during Republican Donald Trump’s four years in the White House without triggering a similar standoff.

The last time the federal government came this close to default was in 2011, with a similar power divide in Washington – a Democratic president and Senate majority, and a Republican-controlled House.

Each party also faces opposition to the talks from within, with hardline Republicans insisting on the sharp spending cuts they passed in a House bill last month and progressive Democrats opposed to spending cuts or new work requirements.

Biden spent months saying he would not negotiate on raising the debt limit only to reverse course and begin talks with McCarthy in the last few weeks.