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President Joe Biden said on Friday that Democratic and Republican negotiators are close to resolving the debt ceiling crisis, as the deadline to default on US debt has been pushed back to June 5.
“It’s very close, and I’m hopeful,” Biden told reporters at the White House. “I hope we will know by tonight if we will be able to strike a deal.”
Although there was no indication of an imminent public announcement, it was the strongest sign yet that the drama in Washington might be coming to an end, allowing the government to borrow and avoid a default that would likely trigger a recession and send shock waves through the global economy.
Earlier, Treasury Secretary Janet Yellen said the dreaded Date X, when the government runs out of money unless it can borrow, would now be June 5, not June 1. However, Yellen cautioned that extending the deadline does not change the urgency.
She said in a letter to the House Republican leader, Speaker of the House Kevin McCarthy.
According to unconfirmed US media reports, the deal that is taking shape will include an agreement to extend the government’s borrowing authority for a period of two years, which means that the current drama will not be repeated before the 2024 presidential elections.
However, Democrats will have to compromise on Republican demands for sweeping limits on spending on Social Security and other domestic programs.
McCarthy told reporters that negotiators had “made progress” but added, “Nothing is agreed until everything is agreed.”
International Monetary Fund Managing Director Kristalina Georgieva cited new data that she said showed “the US economy has proven resilient,” but urged a “quick fix” to avert the first default in US history.
“We think of the US Treasury market as an anchor to the global financial system, and that anchor needs to hold,” she said.
With the country getting a three-day Memorial Day weekend, members of Congress were leaving Washington for a 10-day recess. Even Biden — to the consternation of some in his own party — headed to his Camp David retreat, and then his home in Delaware.
However, Wali Ademo, the deputy secretary of the Treasury, told CNN that Biden and McCarthy were focused on averting disaster.
“The president has decided, the speaker said so, and we have to get something done before June,” said Adeyou. “The president is committed to making sure that we have good faith negotiations with the Republicans to get a deal because the alternative is disastrous for all Americans.”
Raising the debt ceiling is an annual accounting maneuver that usually goes through with relatively little notice. It simply allows the government to continue borrowing money to pay bills that have already been incurred through the budget.
This year, the hard-right Republican Party has decided to turn the debt ceiling into leverage to force Biden to back away from favored Democratic spending priorities.
Republicans call this taking responsibility for the $31 trillion national debt. The White House accuses the opposition party, which controls the House of Representatives, of taking the economy hostage.
Democratic Minority Leader Hakeem Jeffries blasted Republicans from the House floor Thursday, accusing them of risking “a dangerous default in a crisis they have created.”
Economists have spent months raising the possibility of economic catastrophe in the event of a government default, and top military officers added their dire forecast Thursday, warning that the crisis would have a “significant negative impact” on the troops.
“Obviously, readiness is going to be affected,” Mark Milley, chairman of the Joint Chiefs of Staff, told reporters.
McCarthy pointed to a recent CNN poll that showed 60 percent support for raising the debt ceiling if it comes with cuts, though 51 percent of respondents to a new Monmouth University poll said they wanted to separate the two issues.
Although lawmakers are in recess, McCarthy said they will get 24 hours’ notice if they are required to return to vote.
“It’s very close, and I’m hopeful,” Biden told reporters at the White House. “I hope we will know by tonight if we will be able to strike a deal.”
Although there was no indication of an imminent public announcement, it was the strongest sign yet that the drama in Washington might be coming to an end, allowing the government to borrow and avoid a default that would likely trigger a recession and send shock waves through the global economy.
Earlier, Treasury Secretary Janet Yellen said the dreaded Date X, when the government runs out of money unless it can borrow, would now be June 5, not June 1. However, Yellen cautioned that extending the deadline does not change the urgency.
She said in a letter to the House Republican leader, Speaker of the House Kevin McCarthy.
According to unconfirmed US media reports, the deal that is taking shape will include an agreement to extend the government’s borrowing authority for a period of two years, which means that the current drama will not be repeated before the 2024 presidential elections.
However, Democrats will have to compromise on Republican demands for sweeping limits on spending on Social Security and other domestic programs.
McCarthy told reporters that negotiators had “made progress” but added, “Nothing is agreed until everything is agreed.”
International Monetary Fund Managing Director Kristalina Georgieva cited new data that she said showed “the US economy has proven resilient,” but urged a “quick fix” to avert the first default in US history.
“We think of the US Treasury market as an anchor to the global financial system, and that anchor needs to hold,” she said.
With the country getting a three-day Memorial Day weekend, members of Congress were leaving Washington for a 10-day recess. Even Biden — to the consternation of some in his own party — headed to his Camp David retreat, and then his home in Delaware.
However, Wali Ademo, the deputy secretary of the Treasury, told CNN that Biden and McCarthy were focused on averting disaster.
“The president has decided, the speaker said so, and we have to get something done before June,” said Adeyou. “The president is committed to making sure that we have good faith negotiations with the Republicans to get a deal because the alternative is disastrous for all Americans.”
Raising the debt ceiling is an annual accounting maneuver that usually goes through with relatively little notice. It simply allows the government to continue borrowing money to pay bills that have already been incurred through the budget.
This year, the hard-right Republican Party has decided to turn the debt ceiling into leverage to force Biden to back away from favored Democratic spending priorities.
Republicans call this taking responsibility for the $31 trillion national debt. The White House accuses the opposition party, which controls the House of Representatives, of taking the economy hostage.
Democratic Minority Leader Hakeem Jeffries blasted Republicans from the House floor Thursday, accusing them of risking “a dangerous default in a crisis they have created.”
Economists have spent months raising the possibility of economic catastrophe in the event of a government default, and top military officers added their dire forecast Thursday, warning that the crisis would have a “significant negative impact” on the troops.
“Obviously, readiness is going to be affected,” Mark Milley, chairman of the Joint Chiefs of Staff, told reporters.
McCarthy pointed to a recent CNN poll that showed 60 percent support for raising the debt ceiling if it comes with cuts, though 51 percent of respondents to a new Monmouth University poll said they wanted to separate the two issues.
Although lawmakers are in recess, McCarthy said they will get 24 hours’ notice if they are required to return to vote.
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