WASHINGTON (Reuters) - A top Republican said on Wednesday his party could compromise on taxes as part of a broad budget deal as President Barack Obama warned the United States could spiral back into recession if Congress does not act soon.

Ahead of a Thursday meeting with Obama, House of Representatives Republican Leader Eric Cantor indicated that Republicans could break an impasse over taxes that has held up a deal to avert an early August default.

"If the president wants to talk loopholes, we'll be glad to talk loopholes," Cantor said at a news conference. "Any type of discussion should be coupled with offsetting tax cuts somewhere else."

Cantor's comments open the door to a compromise that would clear the way for Congress to raise the $14.3 trillion debt ceiling before the country runs out of borrowing capacity on August 2.

Failure to act by then could force the United States to default on debt service, retirement payments, or other obligations.

A U.S. default could cause "a whole new spiral into a second recession or worse," Obama told a Twitter town hall on Wednesday.

Cantor declined to say specifically what tax provisions would have to be part of the deal. An aide said possible elements could include an extension of last year's payroll tax break or a research and development tax credit.

Observers said Cantor's comments were a positive sign.

"It's a little bit of give on their part," said Andrew Richman, fixed income strategist at SunTrust Private Wealth Management in Palm Beach, Florida. "They do understand the gravity of the situation."

Democrats and Republicans have identified roughly $2 trillion in budget savings that would make it easier for lawmakers to show voters that they are trying to get the national debt under control even as they sign off on further borrowing.

But talks hit a brick wall two weeks ago after Democrats insisted that tax increases and not just spending cuts must be part of the deal.

The two sides will try to kick-start discussions at the White House at 11:15 a.m. EDT on Thursday.

(Additional reporting by Jeff Mason, Laura MacInnis and Richard Cowan in Washington and Richard Leong in New York; editing by Ross Colvin)