Biden and senior Republicans meeting postponed for further staff discussions

Crunch negotiations between US President Joe Biden and senior Republicans have been delayed until early next week, allowing staff to continue their discussions, according to a statement from the White House yesterday. An insider familiar with the talks between the Democratic and Republican leaders described this as a positive development, implying that it was not the right time for the leaders to convene today as discussions between the two parties were progressing.

However, House of Representatives Republican speaker, Kevin McCarthy, 56, accused Democrats, including Senate Minority Leader Chuck Schumer, of stalling the agreement. “President Biden and Senator Schumer are stuck on no, they have no plan, no proposed savings and no clue,” he told reporters shortly after the White House announced that the talks had been delayed.

McCarthy added, “The staff has met over the past two days. We think it’s productive for them to meet again,” indicating that another meeting between senior Republican and Democratic leaders could take place next week.

The two parties continue to disagree significantly over the debt ceiling. Republicans in Congress insist that Biden agrees to substantial budget reductions in exchange for support to raise the limit before the US runs out of funds to pay existing bills. Democrats are calling for a “clean” increase of the borrowing limit, accusing Republicans of employing extreme tactics to push their political agenda before the impending “X-date” – the point at which the US can no longer meet its financial commitments.

The planned discussions between Biden and McCarthy represent the second scheduled meeting for this week as both sides aim to avoid the X-date, which US Treasury Secretary Janet Yellen has cautioned may arrive as early as June 1. President Biden earlier this week hinted that he might cancel a planned trip to Asia if the debt ceiling talks do not produce a breakthrough.

Former President Donald Trump, 75, suggested at a CNN event earlier this week that Republicans should trigger a default if Biden refuses to agree to spending reductions. “I say that Republicans in Congress if they don’t give you massive cuts, you’re going to have to do a default,” said Trump, who currently leads the 2024 Republican nomination race.

There are increasing calls for the US to avert a debt default as the X-date approaches. “The debt ceiling is potentially catastrophic,” warned JPMorgan Chief Executive Jamie Dimon, 65, in an interview with Bloomberg TV yesterday. “People should remember the American financial system is the foundation of the global economic system,” Dimon added, expressing hope that a debt default could be avoided.

Additionally, International Monetary Fund (IMF) Communications Director Julie Kozack warned of serious consequences if the US failed to pay its debts yesterday. “Our assessment is that there would be very serious repercussions not only for the US but also for the global economy should there be a US debt default,” Kozack told reporters, urging all parties to resolve the issue as soon as possible, reports Channel News Asia.