President Joe Biden, speaking Thursday at the White House presentation of his nominee for chairman of the Joint Chiefs of Staff, said he had several productive conversations with the Speaker of the House, Kevin McCarthy, on the federal government’s debt ceiling. Biden told reporters at the event that his administration’s negotiating teams and Republicans in the House of Representatives would continue talks Thursday afternoon.
Biden said Republicans were pushing for drastic cuts that would lay off teachers, police and border guards and increase wait times for welfare applications.
“I disagree with that,” Biden said. “The only way forward is a bipartisan agreement, and I believe we will reach an agreement (that) will allow us to move forward and protect American workers.”
Biden said talks with McCarthy were about “an outline of what the budget would look like, not a default.” It’s about different visions of America.”
He added: “President McCarthy and I have very different views on who should bear the brunt of extra spending to get our finances in order. I don’t think the entire burden should fall on the backs of middle and working class Americans. … My Republican friends disagree with that.”
House Speaker Kevin McCarthy said Thursday morning that Biden and Republican administration officials had made progress in the talks overnight.
“Yesterday we worked well past midnight… I think we made some progress. There are still a few unresolved issues, and I’ve asked our team to work 24/7 to try to resolve this issue. McCarthy told reporters.
Oklahoma Republican Congressman Kevin Hern, who chairs the influential Republican investigative committee, told Reuters the “deal is expected to close on Friday afternoon.”
Negotiations will continue in Congress until late Thursday, after which lawmakers themselves will disperse to their constituencies in observance of Memorial Day on May 29.
The Treasury Department has previously warned that the US government may not have enough funds to cover all its expenses starting June 1, and that if Biden and Republicans in Congress do not find a compromise on budget spending and taxes, the United States faces a potential economic default. This could collapse global financial markets and plunge the country into an economic recession.
There is little time left. However, the doomsday Treasury forecast of June 1 is being questioned by some private sector analysts, who predict that the government will be able to operate for another week without default. Those doubts have led Republican hardliners in the House of Representatives to not view June 1 as a pre-default deadline.
Asked by reporters if McCarthy thinks the Treasury will be able to meet its obligations after June 1 without raising the debt ceiling, the top Republican in the House of Representatives replied, “The money is still coming in. But I leave that to the discretion of the Minister of Finance. I think the deadline is June 1.”
Ratings agency Fitch said on Wednesday it had downgraded the U.S. credit rating from “AAA” to “negative,” citing growing political wrangling over the national debt ceiling. The last time Fitch placed the United States on negative watch was in October 2013.
“The struggle over the debt ceiling, the inability of US authorities to meaningfully address medium-term fiscal issues…and the growing debt burden all signal downside risks to US solvency,” he said. Fitch said in a statement Wednesday.
Ratings agency Moody’s said it could revise the US government’s rating to the highest AAA level if lawmakers fail to reach an agreement. In a similar scenario in 2011, S&P Global had already downgraded the US rating.
The months-long standoff between the White House and Republicans in Congress has already caused a backlash in financial markets, hurting U.S. stocks and raising the country’s cost of borrowing. Yields on Treasuries maturing in early June rose in early trading Thursday, signaling investor anxiety.
If a compromise is reached, it will take several days for Congress to push the bill through the Republican-controlled House of Representatives and the Democratic-controlled Senate.
Congressman Steve Scalise, the second-highest ranking Republican in the House of Representatives, told reporters it would take three days to read the debt ceiling bill before it goes to a vote. . Scalise warned colleagues that despite a week-long Memorial Day break, lawmakers should be prepared to return to Washington to vote if necessary.
Representatives of both parties do not want to compromise. Some of the Republican hardliners in the House of Representatives are pushing for Biden to accept drastic spending cuts, especially in aid programs for poor Americans.
Democrats, in turn, accuse Republicans of holding the economy hostage in order to advance their otherwise doomed agenda. “They want to waste time and play games and make sure we don’t meet our commitments because they think it will be a political advantage in some way,” MP Ilhan Omar said during a press conference on Wednesday.
The last time the federal government came this close to defaulting was in 2011, when Washington had the same power split: Barack Obama was the Democratic president, while Republicans controlled the Senate and House of Representatives. .
The national debt ceiling now stands at $31.4 trillion and was reached in February 2023.
Read the Ukraine War News Latest Today on The Eastern Herald.
