President Joe Biden and House Speaker Kevin McCarthy failed to reach a deal on how to deal with the US government’s $31.4 trillion debt ceiling at their latest meeting Monday evening. Treasury Secretary Janet L. Yellen warned that they have about 10 days before a possible default that could spell disaster for the economy.
“We don’t have an agreement yet,” McCarthy said to reporters at the White House after the meeting. “But I did feel like the discussion was productive.” The Speaker also described the tone of Monday evening’s conversation as “better than any other time we’ve had discussions.”
The country’s top Democrat and top congressional Republican will be talking daily to reach an agreement. The debt ceiling drama, which analysts early in the year said was “going to be a problem,” has been on for a while as the two parties continue to reject the other’s offer.
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McCarthy is insisting on massive spending cuts in the federal budget that effectively unravels the Biden administration’s 2024 budget proposal which includes spending on health, tax breaks, and childcare subsidies.
House Republicans, to whom McCarthy had to make a long list of concessions to in his bid for the gavel, are also against the Biden administration’s plan to raise taxes on the wealthy and close tax loopholes for the oil and pharmaceutical industries to cut the deficit on the federal budget.
Top House Democrat Hakeem Jeffries has accused McCarthy of running a “hostage negotiation.” Jeffries is trying to get Republican votes for a discharge petition that could, on its own, raise the debt ceiling and avoid default, working around the agonizing negotiations.
Prior to the meeting on Monday, Yellen sent McCarthy a letter to say that if no agreement is made, the Treasury will no longer be able to pay for its obligations as early as June 1.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” the Treasury Secretary wrote.
“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.”
Republicans have signaled that they may wait until the last minute. Former Republican President and GOP frontrunner for the 2024 election Donald Trump has also urged House Republicans to force a default if they don’t get what they want.
“I believe we can still get there,” McCarthy said on Monday evening. “I believe we can get it done,” adding that he expected to speak with the President every day until they reach an agreement.
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