President Barack Obama said late Wednesday that averting a shutdown of the federal government will require sufficient urgency from all parties involved as negotiating House and Senate teams worked throughout the night to reach a package deal to pass a federal budget and non-budget policy elements by a midnight Friday deadline.

Leaders emerged from a late night meeting with a willingness to keep negotiating but indicated differences remained. A federal shutdown would place about furlough 800,000 people, putting them out of work until the funding issue is resolved. Only staff needed to protect life and property - including the military, and emergency workers - would remain on the job. Washington lawmakers would continue to work and federal agencies would remain with much smaller staffs.

Exceptions to the shutdown would also include federal programs which have multi-year funding such as Social Security.

I thought the meetings were frank, they were constructive and what they did was narrow the issues and clarify the issues that are still outstanding, President Barack Obama said late Wednesday.

Averting a shutdown will require sufficient sense of urgency from all parties involved, he said.

House Republicans reportedly are seeking a $40 billion reduction from current funding levels, a level $7 billion higher than a target Democrats were seeking. In addition, differences remained on policy issues.

House Speaker John Boehner said the meeting was productive.

We do have some honest differences but I do think we made some progress, he said.

There's no agreement on a number and there's no agreement on the policy riders, Boehner said.

There's an intent on both sides to continue to work together on both sides to try to resolve this.

Senate Majority Leader Harry Reid said the meeting was very honest.

We've narrowed the issues significantly, he said.

I have confidence that we can get this done. We're not there yet but hope lies eternal.