Biden and Republicans in crunch talks to avert US default risk
President Joe Biden is set to hold crucial debt discussions with top Republican leaders, including House Speaker Kevin McCarthy, to prevent a potentially damaging US default. The US Treasury has cautioned that the country may run out of funds to pay its bills by June 1, resulting in federal workers not being paid and a likely spike in interest rates, significantly impacting businesses and mortgage holders.
Despite ongoing talks, the two parties remain at odds regarding the conditions under which the government’s borrowing cap will be raised to cover existing spending commitments. Republicans are demanding significant spending cuts in return for their support to increase the debt ceiling, while Democrats are advocating for a “clean” increase without any strings attached, reported Bangkok Post.
Treasury Secretary Janet Yellen has warned that the US could default on its financial obligations as early as June 1, while the nonpartisan Congressional Budget Office predicts a default date of June 15.
Over the weekend, negotiators from the House, Senate, and White House met in an effort to make progress ahead of the talks. However, McCarthy indicated that the two sides still have much to resolve.
“I still think we’re far apart,” McCarthy said, adding, “It doesn’t seem to me yet that they want a deal.”
As the deadline approaches, Democrats in Congress are exploring alternative options, including utilizing an obscure congressional procedure to bypass McCarthy or asking President Biden to invoke the 14th Amendment to unilaterally raise the debt ceiling, a move opposed by Republicans.
Deputy Treasury Secretary Wally Adeyemo emphasized the importance of avoiding a default, stating that it would be “catastrophic” and could lead to a recession. “The United States of America has never defaulted on its debt — and we can’t,” he said.
