Biden and McCarthy hold productive talks on US debt ceiling deal
Negotiations between Democratic President Joe Biden and top congressional Republican Kevin McCarthy have progressed as both parties aim to reach a deal to raise the United States’ US$31.4 trillion debt ceiling and prevent a catastrophic default. Following a four-hour meeting at the White House, McCarthy stated that negotiations had improved and would continue. Although several issues remain unresolved, he predicted that an agreement would be reached. White House spokesperson Karine Jean-Pierre also confirmed that the talks had been fruitful.
However, the White House and congressional Democrats have accused Republicans of using the economy as leverage to advance their agenda, stating that Republicans need to make more concessions as they require Democratic votes to pass any deal. Time is of the essence, with the Treasury Department warning that the federal government could be unable to pay all its bills by June 1, and several days needed to pass legislation through the narrowly divided Congress.
I just concluded a productive meeting with Speaker McCarthy about the need to prevent default and avoid a catastrophe for our economy.
We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.
While…
— President Biden (@POTUS) May 23, 2023
McCarthy has insisted that any deal must not raise taxes and must cut discretionary spending, rather than holding it steady as proposed by Biden. The deal will face a narrow path for passage through the divided Congress, with Republicans holding a 222-213 House majority and Democrats controlling the Senate by a 51-49 margin.
The lack of progress has raised concerns that Congress could inadvertently trigger a crisis by failing to act in time. Ratings agency Moody’s might change its assessment of US debt if lawmakers indicate a default is expected. A lower rating could push up borrowing costs. The standoff has also impacted Wall Street, with US stock indexes falling on debt-ceiling concerns.
Treasury Secretary Janet Yellen has stated that the United States will be unable to pay all its bills by early June but could not confirm the exact day the government will run out of resources. This could trigger a Wall Street meltdown and push the US economy toward recession, with the default also affecting regular Americans, including medical providers relying on government payments, reports Channel News Asia.
