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Democratic and Republican negotiators would have more time to reach an agreement that raises the debt ceiling, set at $31.4 trillion, as the Treasury secretary said on Friday that the US government is likely to stay without money to pay his bills on June 5, four days after what was previously predicted.
Janet Yellen’s announcement gives Democratic President Joe Biden and Republican Speaker of the House Kevin McCarthy a little more breathing room. to reach an agreement to raise the federal government’s self-imposed borrowing limit and avoid a potentially disastrous default.
the negotiators they seemed close to an agreement to raise the cap for two years and limit spending, but remained at odds with Republican pressure for new work requirements for some anti-poverty programs.
Any deal would have to be approved by the Republican-controlled House of Representatives and the Democratic-dominated Senate before Biden can sign it into law, a process that could take more than a week.
The two sides have reached a tentative agreement that would limit spending on many government programs next year, according to an official. But social protection programs remain a stumbling block.
A government official briefed on the talks said they could easily drag on into the weekend.
If Congress fails to raise the debt ceiling next week, a default could be triggered that would rock financial markets and plunge the United States into a deep recession.
“We know it’s crunch time,” McCarthy told reporters on Capitol Hill on Friday. “We’re not just trying to get a deal, we’re trying to get something that’s worthy of the American people, that’s going to change the trajectory.”
Wall Street’s main indexes rose as investors waited for progress in negotiations. Fitch Ratings has put the credit rating of the United States at downgrade risk.
Even if they manage to reach an agreement, the leaders of both parties will have to work hard to muster enough votes for passage in Congress.
The Republican right wing has insisted that any deal must include sharp spending cutswhile Democrats are resisting new work requirements for benefit programs.
The deal being considered would increase funding for military and veterans assistance while keeping discretionary non-defense spending at current-year levels, said the official, who asked to remain anonymous because he was not authorized to speak about internal discussions.
A two-year extension would mean Congress would not have to address the cap again until after the 2024 presidential election.
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