Republicans beat solid Democratic opposition in the House Friday, approving the GOP plan to raise the debt limit by a 218-210 vote.
But as promised, the Democratically-controlled Senate rejected the legislation shortly after.
With no signs of bipartisanship, President Obama warned Friday that the nation is perilously close to losing its AAA credit rating.
"We're almost out of time," he said during a live television address from the White House. "What's clear now is that any solution to avoid default must be bipartisan."
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"It must have the support of both parties that were sent here to represent that american people...not just one faction...and there are multiple ways to resolve this problem," he said.
House lawmakers announced late Thursday that the vote on House Speaker John Boehner's plan had again been postponed after unsuccessfully trying to win over Tea Party holdouts.
The plan would cut $900 billion from the deficit and extend the debt ceiling only through next spring. But some House conservatives say it doesn't go far enough.
Once Boehner's bill passed the House Friday, it was rejected less than two hours later in the Senate.
"The bill being considered in the House cannot be an option because it will not pass the Senate. So it's dead on arrival," White House Press Secretary Jay Carney said before the vote.
Senate Majority Leader Harry Reid, D-Nev., was quick to respond to the GOP setback.
"I apologize to everyone for the late hour. We've been waiting for the House to conduct their business and they're having trouble conducting it," he remarked.
House Republican leaders are growing increasingly frustrated, noting that they already passed one bill that Senate Democrats rejected.
"The fact is the president has asked us to compromise. We've compromised," House Majority Leader Eric Cantor, R-Va., said.
"We sent over our idea, the vision of how we would take this country forward if we were in control; that was 'cut, cap and balance,'" he said.
"The Senate dispensed with that immediately and tabled it," he said.
Meanwhile, with the Aug. 2 deadline to raise the debt ceiling just days away, some Democrats want the president to invoke the Fourteenth Amendment of the U.S. Constitution to prevent the nation from going into default.
"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned," the amendment reads.
The clause was originally formed to settle any doubt that the U.S. would pay debts incurred during the Civil War.
The White House, however, has rejected that idea.
"Our position hasn't changed," Carney told reporters. "There are no off-ramps. There's no way around this. There's no escape. And you know, having an esoteric constitutional argument won't resolve the fact that our borrowing authority is due to expire on Aug. 2."
The president continues to oppose any plan that would have Congress return to the debt ceiling issue next year, hoping to avoid a sticky election year debate.