Senate cancels recess to work on debt ceiling

WASHINGTON (CNNMoney) -- The Senate will forgo its scheduled recess for the week of July 4 to work on legislation to raise the debt ceiling and cut the deficit, Senate Majority Leader Harry Reid said Thursday.

"The work we're doing to cut the deficits and create jobs is too important, the obstacles too steep and the time too short to waste even a moment," Reid said. "There's still so much to do to put American back to work and cut our deficits."

A day after President Obama criticized lawmakers and urged them to cancel vacations, Reid announced the Senate will take Monday, July 4 off, but will return to work on July 5.

Lawmakers must raise the nation's $14.3 trillion legal borrowing limit soon.

The Treasury Department says that on Aug. 2 it will run out of money to pay the nation's bills in full and on time. That deadline is now just weeks away.

Republicans have demanded that any deal to raise the debt ceiling include deep spending cuts, but they have been reluctant to consider measures favored by Democrats that would increase revenue.

In making the announcement of no July 4th break, Reid added that failure to raise the debt ceiling, he predicted, would plunge the economy into a "full-fledged depression."

The House is out of town, with lawmakers working in home districts this week and on recess July 4. They'll be back in Washington July 6.

Is the debt ceiling constitutional?

However, Congress need not be in session to get a deal to raise the debt ceiling. A small group of Republican and Democratic leaders have been working with the White House behind closed doors. Senate aides quietly wondered how much actual work lawmakers would do next week, or whether the announcement is a publicity stunt.

But the pressure to look busy mounted, after President Obama's criticism of lawmakers for failing to deliver a compromise to raise the debt ceiling and cut deficits.

On Wednesday, several Senate Republicans called on Reid to cancel the recess. "Our country is going bankrupt. We shouldn't be going home on a holiday," said Ron Johnson of Wisconsin.

Minority Leader Mitch McConnell made a public invitation to President Obama to "come on over," to the Capitol Thursday to broker a deal, in a speech on the Senate floor.

"He says he wants us to start working and I can't think of a better way than for him to come up today," said McConnell, a Kentucky Republican.

Brendan Buck, spokesman for House Speaker John Boehner, said a Senate in session was better than one in recess.

"In terms of accomplishments, there hasn't been much difference this year between the Senate in session and the Senate in recess," Buck said. "Still, if we're going to put together a serious package to cut spending, any sign of life over there is a good thing."

-- CNN Radio Producer Lisa Desjardins and CNN Congressional Producer Deirdre Walsh contributed to this report.