Republicans who control the House of Representatives have pushed for sharp spending cuts and other conditions, including new work requirements in some benefit programs for low-income Americans and defunding the Internal Revenue Service, the tax agency for USA.
Biden and McCarthy held a 90-minute phone call to discuss the deal. This would prevent an economically destabilizing default, as long as they can get it through Congress before the Treasury Department runs out of money to cover all its obligations.
The long standoff spooked financial markets, weighing on stocks and forcing the United States to pay record interest rates on some bond sales. According to economists, a default would cost much more, likely pushing the nation into recession, shaking the global economy and causing unemployment to rise.
We recommend: The US debt ceiling negotiations “progress”, says McCarthy
Democrats accused Republicans of playing a dangerous risky game with the economy. Republicans say the recent increase in government spending is fueling the growth of US debt, which is now roughly equal to the economy’s annual output.
The last time the nation came this close to default was in 2011, when Washington also had a Democratic president and Senate and a Republican-led House.
