“There will be no default” on the debt, Biden said, referring to the “productive” negotiations he is having with Republican House Speaker Kevin McCarthy, the narrow majority leader in the House.
This comes seven days before June 1, which is the day from which the Treasury can empty funds to service its debts in the event that an agreement is not reached with the Republicans on raising the ceiling of the debt.
For her part, the spokesperson for the White House, Karen Jean-Pierre, confirmed that the negotiations between the American presidency and the Republican opposition are “fruitful”.
“Obviously that means there’s still room to move forward,” she added.
The spokeswoman said the latest round of talks was held almost early Thursday, but she did not elaborate on the content of the talks.
“Both sides will have to understand that neither side will get everything they want,” she said.
Republicans are pushing for massive cuts in government spending to raise the ceiling on government borrowing.
But Biden dismissed that, accusing Republicans of hijacking the world’s largest economy and pushing it to the brink of default.
“Default is not an option,” stressed Jean-Pierre, warning that the shock of default could lead to the loss of eight million jobs and “destroy pension accounts”.
When asked if Biden was preparing a contingency plan in case the talks break down, the spokeswoman replied that “the only option now is for Congress to do its job.”
For his part, the Chief of Staff of the United States Army, General Mark Milley, estimated that a default would harm the morale and the state of readiness of the army.
“There will be a very significant negative impact on the readiness, morale and capabilities of the United States military if we fail,” he told reporters at the Pentagon on Thursday, as well as “damage to international reputation”.
“If we default, it will … have significant economic consequences, which will then translate into national security implications – payment of soldier salaries, troop morale, weapons systems, contracts, all of that will be affected,” he added.
“Preparedness will of course be affected, so it is possible that the large-scale training that we are carrying out in the various training centers will slow down or stop in many cases,” he added.
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