US President Barack Obama said Sunday night that Republican and Democratic leaders in the House and Senate have reached an agreement with him to raise the government's debt ceiling to avoid a default crisis.

US President Barack Obama delivers remarks on the debt ceiling crisis in the briefing room at the White House in Washington July 31, 2011.[Photo/Agencies]

Over US$ trillion in spending cuts will be imposed gradually so they don't create a drag on the economy, Obama told the nation on television, China Daily reported.

Obama said the cuts will reduce government spending to the lowest level it has been since when Dwight Eisenhower was president in the 1950s, according to the report.

He said that there will be no initial cuts to entitlement programs like Social Security and Medicare. However, he also said both could be on the table along with changes in tax law as part of future cuts.

He said a bipartisan plan could help lift the cloud of uncertainty over the US economy and financial markets, Xinhua reported.

He urged US lawmakers to approve the debt ceiling compromise plan in next few days.

The U.S. federal government's borrowing limit, currently at US$14.29 trillion, was reached on May 16. The Treasury Department said it would run out of cash to pay its bills unless Congress agreed to raise the limit by August 2.