Biden and congressional leaders fail to reach agreement on debt ceiling

The head of government of the United States, Joe Biden, the speaker of the House of Representatives, Kevin McCarthy, and other leaders of Congress did not appear to be any closer on Tuesday to a consensus destined to reachan agreement on raising the debt ceiling of the country so that the Executive can finance its existing obligations.

The stagnation occurs in the midst of dire warnings from the Treasury that a default could cause “global panic” and spell “catastrophe,” as Biden prepares to leave for a summit in Japan on Wednesday with the world’s seven largest economies.

However, precisely the possible crisis that is coming also thwarted Biden’s plans to visit Papua New Guinea and Australia after the summit, the White House said in a statement.

“It is unfortunate that we are where we are,” McCarthy said after the hour-long meeting in the Oval Office ended. “But the good thing about this is that Republicans are always looking for a solution.”

Senate Majority Leader Charles Schumer, a Democrat, said the group agreed on some key issues.

“We all agreed that the only way forward is to come to a bipartisan agreement anchored on common ground,” he said. “We all agree that default is not an acceptable option and should be avoided.”

For his part, Biden said his staff would continue to work toward a deal in his absence.

“There is still work to be done, but I have made it clear to the Speaker of the House and others that we will be speaking regularly over the next few days, and staff will continue to meet daily to make sure we don’t default,” he said.

Also on Tuesday, Treasury Secretary Janet Yellen warned that “a default would open the foundation on which our financial system is built.” margin, runs and forced sales”, he assured.

“If Congress doesn’t address the debt limit, there are no good options that the Treasury or the government can use to save us from catastrophe,” Yellen said.

Biden has insisted that Congress raise the current debt ceiling of $31.4 trillion without conditioning it on future spending. McCarthy and the Republicans in Congress have called for substantial cuts in future public spending in exchange for raising the debt limit for one year.

That scenario would require a new round of debt ceiling negotiations in the midst of the initial phase of the 2024 presidential primary election.

Although the current debt limit was reached in January, Yellen and US financial officials have taken what they describe as “extraordinary measures” to juggle US spending accounts to keep paying government bills.

Secretary Yellen said the US could run out of cash to meet all its obligations before June 1 and then you might default on some of them.

A default would be historic

The United States has never defaulted on its debt. Yellen and other senior administration officials warned that doing so would have immediate and widespread consequences at home, including mass layoffs of American workers and delayed payments to retirees, government contractors and health care providers to treat older Americans.

The US Congress raised the debt ceiling 78 times under both Democratic and Republican presidents, including three times during the four-year term of former President Donald Trump.

While Biden has said he would not link an increase in the debt ceiling to future government spending cuts, he has also said separately that he is willing to talk about future caps to reduce chronic government spending, where annual deficits billions of dollars have been common for years.

If a deal is reached in the politically charged atmosphere in Washington, it could be a matter of semantics whether a debt ceiling hike and a cut in future spending are linked. Both Biden and the Republicans in Congress want to be able to claim victory.

The two sides are debating how far the debt ceiling would be raised and for how long, as well as specific spending cuts that House Republicans recently approved in a narrow vote over the united Democratic opposition.

Republicans have called for future spending caps, new work requirements for poor people without disabilities who receive government financial assistance and implementing changes to pass home energy projects at a faster pace.

[Parte de la información para este reporte provino de The Associated Press. Margaret Besheer, periodista de VOA, contribuyó a este informe]

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