Australia cancels Quad Summit following Biden shortening trip amid US debt crisis

US President Joe Biden was forced to shorten an upcoming Asia-Pacific tour for further crisis talks between Biden and opposition Republican leaders on Tuesday offered hope of a deal that could avoid a catastrophic US debt default. 

After the latest negotiations ended without a breakthrough, Republican House speaker Kevin McCarthy told reporters there was still "a lot of work to do" to break the high-stakes standoff with Democrat Biden over the borrowing limit. 

While the differences remained, the White House said Biden was "optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith." 

"America is the number one economy in the world. And when we get done with these negotiations, America's economy is going to be stronger," McCarthy said. 

The US president -- who flies to Japan on Wednesday for a G7 summit -- scrapped subsequent stops in Papua New Guinea and Australia, instead returning to Washington on Sunday.

In Sydney, Biden was scheduled to meet the leaders of Japan, India and Australia as part of a "Quad" grouping widely. Australian Prime Minister Anthony Albanese said Quad talks would instead take place in Japan. 

The Treasury has warned of grim consequences if the country runs out of cash to pay its bills, which would leave it unable to pay federal workers and trigger a likely surge in interest rates with knock-on effects for businesses, mortgages -- and global markets. 

Biden had directed his staff "to continue to meet daily on outstanding issues," and that he would confer with Republican leaders on his return from the G7 meetings, the White House said. 

In a sign of growing concern over what would be the first ever US debt default, more than 140 top US chief executives sent a letter to Biden and congressional leaders stressing the need for an agreement. 

"We strongly urge that an accord be reached quickly so that the country can avert this potentially devastating scenario," the letter signed by the CEOs from Pfizer and Morgan Stanley, among others, said.