[Economics] Biden and McCarthy meet to discuss raising the US debt ceiling before it's too late

[LiunxZm]

 

 

By David Morgan and Garrett Renshaw

WASHINGTON (Reuters) - Democratic President Joe Biden and Republican House Speaker Kevin McCarthy will meet on Tuesday to try to make progress in negotiations to raise the $31.4 trillion U.S. government debt ceiling and avert a catastrophic default.

She does not have much time to reach an agreement. On Monday, the US Treasury warned again that its finances may fail to meet all US government obligations by June 1, which would lead to the US defaulting on its debt for the first time and most likely to a severe economic contraction, according to economists.

"Time is running out," Treasury Secretary Janet Yellen told a group of bankers. "Every day that Congress doesn't act, we see an increase in economic costs that can slow the US economy... We don't have time to lose."

Republicans, who control the House of Representatives by 222 seats to the Democratic Party's 213, have been demanding for months that any increase in the government's debt ceiling be tied to spending cuts. Last week, representatives from the two sides discussed a number of issues, including spending limits and changes to permitting mechanisms in the energy sector in return for a vote to raise the debt ceiling, according to people briefed on the discussions.

White House officials described the talks as constructive, but McCarthy warned on Monday that, in his view, there had been little progress.

"Given the timetable for anything in the House and anything in the Senate, it's imperative that we make progress by the end of this week ... which we're nowhere near," McCarthy told reporters.

Biden is scheduled to leave the country on Wednesday to participate in the G7 summit in Japan, while the House of Representatives is scheduled to go into a week-long recess after Thursday's session.

Democrats including Senate Majority Leader Chuck Schumer, who is expected to attend the White House meeting on Tuesday, said the talks were going "in earnest".

Schumer criticized the Republicans for obstructing the plan to raise the debt ceiling after they supported raising it three times under former Republican President Donald Trump.

The crisis has spooked investors and raised the cost of holding US government debt to record levels.

 

https://sa.investing.com/news/economy/article-2415610