WASHINGTON: With just 10 days left until a potential default that might destroy the US economy, President Joe Biden and House Speaker Kevin McCarthy were unable to come to terms on how to increase the $31.4 trillion debt ceiling for the US government, but they vowed to keep talking.
While McCarthy pressures the White House to accept spending cutbacks in the federal budget that Biden calls “extreme,” and the president pushes new taxes that Republicans have refused as the top congressional Republican and the Democratic president have battled to reach an agreement.
However, after Monday evening’s meeting, both sides stressed the need to avoid default with a bipartisan deal and signalled that they would talk regularly in the coming days.
A source familiar with the development told Reuters that White House negotiators were returning to Capitol Hill on Monday night to resume talks.
In a statement following the discussion, Biden said, “We reiterated once again that default is off the table and the only way to move forward is in good faith towards a bipartisan agreement.”
After over an hour of talks with Biden, McCarthy told reporters that negotiators were “going to get together, work through the night” to find common ground.”
McCarthy added, “I think we can still get there. He stated that he is focused on cutting expenditure in the federal budget for 2024 and is unwilling to entertain Biden’s proposal to reduce the deficit by increasing taxes on the wealthiest and removing tax loopholes for the oil and pharmaceutical sectors.
Democrats and Republicans must raise the government’s self-borrowing cap by June 1 to avoid a historic debt default that, according to analysts, may lead to a recession.
In a sobering reminder of how little time is left, Treasury Secretary Janet Yellen said on Monday that the earliest estimated default date is still June 1 and that it is “highly likely” that Treasury will no longer be able to pay all government obligations by early June if the debt ceiling is not raised.
Patrick McHenry, a Republican congressman who was present at the White House discussion, rejected the idea of a partial budget deal in exchange for raising the debt ceiling. Nobody will consent to anything up until we have a signed contract, he added.
He claimed that the atmosphere during the Biden meeting was the most upbeat yet.
Any agreement to raise the cap depends on support from both parties in Congress since it must be approved by both houses. While Biden’s Democrats govern the Senate 51-49, McCarthy’s Republicans command the House 222-213.
Failure to raise the debt ceiling would result in a default, which would roil the financial system and raise interest rates on everything from credit card balances to auto loans.
