US President Joe Biden and House Speaker Kevin McCarthy met again Monday for tense talks in the Oval Office about raising the government’s borrowing limit, and again came to nothing. to no deal, as the US government faces a looming deadline for its first default.
US Treasury Secretary Janet Yellen, in a letter to congressional leaders Monday, said the government could default on its debt on June 1 and warned that even waiting until close to that time to reach a agreement “could cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and adversely affect America’s credit rating.”
On Tuesday, a Washington think tank, the Bipartisan Policy Center, also warned of the potential financial danger facing the United States.
“In early June, the Treasury [de EEUU] You will be skating on very thin ice that will get thinner with each passing day,” Shai Akabas, executive director of the group’s economic policy program, said in a statement. “Of course, the problem with skating on thin ice is that sometimes you fall.
“The longer politicians wait to address the debt ceiling, the more likely it is that our economic fate will be determined by external actors,” Akabas said. “Credit ratings agencies, Treasury investors and global financial markets are not going to wait forever. Once things turn around, things could quickly deteriorate and be difficult to reverse, immediately negatively affecting American consumers and businesses.
On Monday, as Biden and McCarthy sat down for another meeting, the president said failure to act could have major consequences.
“The American people would get a real boost in their economic well-being,” said Biden, who cut short a trip abroad to return to Washington for debt negotiations. “In fact, the rest of the world would too.”
Biden and McCarthy have met three times in recent weeks but have yet to reach an agreement on future public spending, even as they say they are making progress and neither wants a government default.
“We don’t have an agreement yet, but I felt the discussion was productive in areas where we have differences of opinion,” McCarthy said Monday. He said the two bargaining teams would continue to talk through the staff.
Past presidents and congressional leaders struck deals to increase the country’s debt limit 78 times in give-and-take negotiations in which neither side got everything on their wish list for the federal budget.
In the current debate, Republicans in the House have called for sharp cuts in public spending, while the White House has responded with proposals to close tax loopholes and enact more limited spending cuts.
Republicans also want higher work requirements for poor people without disabilities who receive government assistance, but Democrats say that under such a proposal, several hundred thousand people could lose the benefits they now receive.
The Republicans are also seeking funding cuts for the country’s tax collection agency and are asking the White House to accept provisions of their party’s proposed immigration reform bill to reduce the number of immigrants trying to enter the United States through the border with Mexico.
Biden said in a statement after the talks: “We reiterate once again that default is off the table and the only way forward is in good faith toward a bipartisan agreement.”
The president said he had done his part by offering ways to increase the country’s $31.4 trillion debt limit so the US government can continue to pay its bills, such as interest on government bonds, stipends from retirees, payments to health care providers and the salaries of government employees and contractors.
But as Biden warned Monday, the tight balance of political power in Congress means that any deal must appeal to both Democratic and Republican lawmakers. He previously called the House Republicans’ spending plan an “extreme position.”
“We have to be in a position where we can sell it to our constituents,” Biden said. “We’re split pretty well in the House, almost down the middle. And it’s no different in the Senate. So, we’ve got to get something that we can sell to both sides.”
Jeffrey Harris, a finance professor at American University in Washington, said: “The uncertainty that the debt ceiling injects into the economy adds another element of risk to the subdued economic conditions we are already experiencing.”
“In addition to the added burden of inflation and higher borrowing costs, consumer confidence is already near record lows. The possibility of continued stagnation in the US pushing rates higher would compound current problems of consumers and would threaten to push the economy into a worse state. ” he said.
[Parte de la información para esta historia provino de The Associated Press, Agence France-Presse y Reuters]
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