US political rivals have voiced cautious optimism about the chances of raising the USD 14.3 trillion debt limit by Tuesday and averting possible default, CNN reported.

Democrats and Republicans are "very close" to reaching a USD 3 trillion deal that would avoid a possible government default in coming days, Senate Minority Leader Mitch McConnell told CNN's "State of the Union" Sunday.

"We had a very good day yesterday," the Kentucky Republican said, adding that the two sides "made dramatic progress" in negotiations on a deal that would cut government spending and raise the federal debt ceiling.

Democrats in Congress and the Obama administration agreed that progress has been made, but noted negotiations continue on difficult issues.

With the deadline to reach a debt ceiling agreement just two days away, congressional leaders and the White House are trying to complete the possible deal that would extend the debt limit through 2012 -- a presidential election year.

If Congress fails to raise the current USD 14.3 trillion debt ceiling by Tuesday, Americans could face rising interest rates and a declining dollar, among other problems.

Some financial experts have warned of a downgrade of America's triple-A credit rating and a potential stock market plunge. The Dow Jones Industrial Average dropped for a sixth straight day on Friday.

Without an increase in the debt limit, the federal government will not be able to pay all its bills next month. President Barack Obama recently indicated he can't guarantee Social Security checks will be mailed out on time.