US: Biden hails ‘productive’ debt talks with McCarthy
US President Joe Biden said on Thursday that a US debt default would be avoided, praising “productive” talks with Republican President Kevin McCarthy ahead of a looming deadline to agree more loans.
Biden’s remarks to reporters on Thursday came a week before an estimated June 1 deadline, when the Treasury Department and Federal Reserve say they are unlikely to continue covering the nominal inability to borrow in other ways. as they did in the first months of the year during the stalemate.
Biden told reporters on Thursday that Republicans were pushing for steep cuts but that he was confident of a bipartisan deal.
“The only way forward is with a bipartisan agreement and I believe we will reach an agreement [that] allows us to move forward and protects the American workers of this country,” Biden said.
He argued that he and McCarthy “have a very different view of who should shoulder the burden of further efforts to get our fiscal house in order”, saying that McCarthy wanted middle and working class people to shoulder the burden while he too would seek to pass the costs on to the rich.
What’s the problem here? How much time is left?
Republicans, who have a slim majority in Congress, have yet to approve plans to raise the government’s debt ceiling by $31.4 trillion (about €29 trillion). They want to secure cuts to Biden’s aggressive spending plans, most notably his flagship Inflation Reduction Act program.
Raising the debt ceiling is supposed to be an almost automatic annual practice – almost all US governments borrow at least some money in a given year – but on several occasions in recent years an opposition-led Congress has used the requirement to try to securing concessions on White House spending.
In the first few months of the standoff, President Joe Biden categorically refused to speak with McCarthy, despite what many observers predicted would eventually be inevitable.
While the US government’s financial arms have been reticent to set a firm date when they can no longer effectively manipulate the books until they can take on new paper debt, both the Fed and Treasury have pointed to June in the past.
However, questions persist over whether that deadline is set, particularly as the Treasury Department announced on Thursday that wit would sell $119 billion in debt on June 1, something it could do to try to offset unavailable sources of revenue.
If the US is found to be technically indebted on its debt, this could have serious implications for the country’s future borrowing costs. But this could pose a greater risk to the wider global economy, with ripple effects that could hit the poorest countries the hardest.
Source: DW
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.