Biden, McCarthy agreed 'no default', talks resume on US debt ceiling
ALBAWABA – Talks between United States (US) President Joe Biden and House of Representatives Speaker Kevin McCarthy, Monday, on raising the US debt ceiling to avert a major default on June 1 were “productive” but inconclusive.
New York-based news outlet Bloomberg said the president and house speaker described their meeting as “productive” and promised to keep talking until they find a solution.
President Biden reportedly said that both he and McCarthy agreed that defaulting is not an option, according to Bloomberg.
“We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement,” he said in a statement Monday evening.
White House negotiators returned to the Capitol on Monday night and met for more than an hour, news outlets have confirmed.
The US treasury is dealing with a severe shortage in cash, and has almost exhausted all of the extraordinary measures at their disposal, officials have confirmed.
With inflation on the rise in the US, the Federal Reserve Board (Fed) had to raise interest rates to curb rising prices.
In fact, the Fed raised interest rates by nearly 5 percent in a little over a year.
Although inflation did slow slightly in April, economists and academics expect the Fed to introduce more interest rates later on this year.
So far, US officials have been warning of an inevitable default on June 1, if the US debt ceiling is not raised.
The government hit the borrowing cap in January this year, at $31.4 trillion, and is seeking to raise the US debt ceiling by another $1.5 trillion.
Biden’s administration and Congress have been at each other’s throats for months.
What stalled the US debt ceiling talks?
Republicans in Congress want the government to address a number of economic “priorities” alongside the debt ceiling adjustment, to be included in the bill. But Biden’s administration refuses to be held at ransom nor strong-armed into a compromise.
Republicans want to cut domestic spending over as many years as possible. Whereas Democrats have offered smaller cuts over fewer years. Meanwhile, Democrats also want to include defence spending limits in any agreement moving forward, and Republicans don't.
Talks between the government and Congress have been ongoing, on and off, for months, until house speaker McCarthy announced Sunday that he will only talk with Biden himself.
The two met at the White House for more than an hour Monday evening in Washington, and seem to be getting somewhere, Reuters reported.
Either way, any agreement would have to be approved by Congress before June 1.
In the meantime, S&P 500 and Nasdaq 100 contracts increased about 0.1 and 0.2 percent, respectively, while Euro Stoxx 50 futures fluctuated slightly, as reported by Bloomberg. Bitcoin ticked higher for the fourth time in five days.
Warnings by Treasury Secretary Janet Yellen, that the Treasury may run out of cash early in June, drove some investors into gold and cryptocurrency.Yet, investor and trader confidence remains relatively high that the US administration and Congress will find a solution before the due date.