Talking to reporters last night, immediately after the meeting with the House of Representative Speaker John Boehner and the Senate Majority Leader Harry Reid, Obama said they have been able to narrow the differences, but not enough to avoid the government shutdown.
"We have narrowed the issues, however, we have not yet reached an agreement. We will continue to work through the night to attempt to resolve our remaining differences," Boehner and Reid said in a statement following the meeting.
"We made some progress today. Those differences have been narrowed. And so once again the staff is going to be working tonight around the clock in order to see if we can finally close a deal."
Obama said, "But there is still a few issues that are outstanding. They`re difficult issues. They`re important to both sides. And so I`m not yet prepared to express wild optimism. But I think we are further along today than we were yesterday," Obama said.
As the efforts intensified ahead of Friday deadline, House Republicans voted through a stop gap spending bill including USD 12 billion in cuts that would avert a shutdown and take negotiations into another week.
Obama said he expected an answer from Republicans early Friday on a budget deal.
"I expect an answer in the morning. My hope is, that I`ll be able to announce to the American people sometime relatively early in the day that a shutdown has been averted, that a deal has been completed that has very meaningful cuts in a wide variety of categories, that helps us move in the direction of living within our means, but preserves our investments in things like education and innovation, research, that are going to be important for our long-term competitiveness," Obama said.
Less than 30 hours away from the government shutting down, Obama said that means that 800,000 families who are working hard all across the country in a whole variety of functions would suddenly be not allowed to come to work.
"It also means that they`re not getting a paycheck.
That obviously has a tremendous impact" he said.
Obama said his administration has been working very hard over the last two years to get this economy back on its feet.
The Republican-majority House has passed a bill that included USD 61 billion in cuts from current spending levels.
This has been rejected by Democrat-controlled Senate.