The Democratic President’s Negotiators Joe Biden and the main Republican congressman kevin mccarthy they met again at the White House this wednesday to try To close a deal that allows raise the US debt ceilingof US$31.4 billionand avoid a catastrophic default.
Time is pressing, as the Treasury Department He warned that the federal government might be unable to pay all its bills in eight days, while passing the legislation would take several days in a highly divided Congress.
The US bond giant PIMCO said he believed negotiators needed to come to an agreement in the middle of this week in order to meet the deadline.
Biden and McCarthy remain deeply divided on how to move forward, with the Republican leader telling reporters on Wednesday that any deal must cut discretionary spending, not hold it steady as the president has proposed, and not raise taxes.
“The exit ramp is to solve the problem: spend less than we spent last year. It’s not that difficult”McCarthy said.
The Republican leader said he believed the two sides would reach an agreement and avoid default.
Any deal Biden and McCarthy strike will have a narrow path to approval in a divided Congress, where Republicans hold a 222-213 majority in the House of Representatives and Biden’s Democrats control the Senate by a 51-49 margin. .
The necessary consensus to win both chambers is not easy and will also cost each party some votes from its most partisan members.
Markets fall on nervousness about a possible default
The confrontation, which has lasted for several months, has frightened Wall Streetdragging down US stocks and making the country’s borrowing cost more expensive.
Treasury Secretary, Janet Yellenwarned this Wednesday that the United States will not be able to pay all its bills at the beginning of June, adding that it is difficult to specify the specific day on which the Government will run out of resources.
Bankruptcy would trigger a Wall Street crash and push the US economy into recession, economists say. Healthcare providers who rely on government payments could be the first to suffer the consequences.
Republicans want to cut discretionary spending for the 2024 fiscal year, which begins in October, by about 8%, while Democrats have pushed to keep it steady at this year’s pace.