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President Joe Biden and House Speaker Kevin McCarthy failed to reach an agreement Monday on how to raise the $31.4 trillion U.S. government debt ceiling with 10 days before a possible default would sink the economy. in the US, but promised to keep talking.
The Democratic president and the top Republican congress have struggled to reach an agreement, as McCarthy has pressed the White House to agree to finance federal budget cuts that Biden considers “extreme,” and pushed for president the new taxes rejected by the Republicans.
“We reiterate once again that default is not on the table and the only way forward is in good faith in a bipartisan agreement,” Biden said in a statement after the meeting, which he called “productive.”
McCarthy told reporters after an hour-long conversation with Biden that negotiators would “stay together, work through the night” to try to find common ground.
“I feel like we had a productive discussion. We don’t have an agreement yet,” McCarthy said. “I think we can get there.”
He said he hopes to talk to Biden every day. But he is unwilling to consider Biden’s plan to cut the deficit by raising taxes on the wealthy and closing tax loopholes for the oil and pharmaceutical industries. McCarthy is focused on spending cuts in the 2024 federal budget.
Democrats and Republicans have just 10 days to reach a deal – until June 1 – to increase the government’s self-borrowing limit or trigger an unprecedented debt default. an of economists that could lead to a recession.
Biden said before the meeting that he was “hopeful” they could make progress. Both sides need a bipartisan agreement to “sell it” to their constituents, he said, adding that there are some disagreements.
Treasury Secretary Janet Yellen on Monday offered a sobering reminder of how little time is left, saying that the earliest estimated default date remains June 1 and that it is “highly likely” that the Treasury will not already able to pay off all government obligations by early June if the debt ceiling is not raised.
Republican Representative Patrick McHenry, who was at the White House meeting, ruled out any partial budget deal to raise the debt ceiling. “No one is going to agree to anything until we have a finalized deal,” he said.
He said the tone of the meeting with Biden was the most positive.
Any deal to raise the limit must pass both houses of Congress, and therefore depends on bipartisan support. McCarthy’s Republicans control the House 222-213, while Biden’s Democrats hold the Senate 51-49.
Failure to raise the debt ceiling would trigger a default that would shake financial markets and raise interest rates on everything from car payments to credit cards.
US markets rose on Monday as investors awaited updates on the negotiations.
It will take several days to move the legislation through Congress if and when Biden and McCarthy come to an agreement.
McCarthy said an agreement must be reached this week to pass Congress and be signed by Biden in time to avoid default.
A White House official said Monday that Republican negotiators last week proposed further cuts to programs that provide food assistance to low-income Americans, and stressed that there is no deal to could pass Congress without support from both parties.
Injuries and clawbacks
Republicans want discretionary spending cuts, new work requirements for some programs for low-income Americans and a clawback on COVID-19 aid approved by Congress but has not yet been spent in lieu of raising the debt ceiling, which is needed to cover lawmakers’ expenses. previously approved spending and tax cuts.
Democrats want to keep spending steady at this year’s level through 2024, while Republicans want to return to 2022 levels next year and cap spending growth in future years. A plan passed by the House last month would cut broad government spending by 8% next year.
Biden, who has made the economy central to his domestic agenda and is seeking re-election, said he would consider spending cuts along with tax changes but the latest Republican offer ” unacceptable.”
The president tweeted that he would not restore “Big Oil” subsidies and “rich tax cheats” while putting health care and food aid for millions of Americans at risk.
Both sides must also weigh any concessions with pressure from hardline factions within their own parties.
Some far-right members of the House Freedom Caucus called for a halt to the talks, demanding that the Senate adopt their House-passed bill, which Democrats rejected.
McCarthy, who made several concessions to right-wing hardliners to secure the speakership, could risk being fired by members of his own party if they don’t like the deal he cut.
Former President Donald Trump, a Republican seeking another term after losing to Biden in the 2020 election, urged Republicans to force a default if they don’t meet all of their goals, downplaying the any economic consequences.
Liberal Democrats pushed for any cuts that would hurt families and low-income Americans. Hakeem Jeffries, the top House Democrat, accused Republicans of running a “hostage negotiation” in the talks and said he was seeking Republican votes for a removal petition that could raise the personal debt ceiling.
Biden offered to freeze spending at this year’s level, Jeffries said, an offer Republicans rejected.
(REUTERS)
