US President Joe Biden and Speaker of the House of Representatives Kevin McCarthy have failed to reach an agreement on raising the national debt ceiling, but negotiations continue, writes Reuters.
McCarthy is pressuring the White House for spending cuts that Biden sees as “extreme,” and the president is pushing for a new tax announcement that Republicans don’t support. Both sides emphasize the need to avoid default, but this requires a bilateral agreement.
After the meeting on the 22nd of May, which he called productive, Biden said: “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.”
McCarthy said the negotiators were going to come back together and work through the night to find a common position, adding that he believed it was possible. The Republican does not want to consider Biden’s plan to reduce the budget deficit by raising taxes on the rich and closing “loopholes” in the oil and pharmaceutical industries that have so far allowed tax evasion. McCarthy insists on spending cuts.
Democrats and Republicans have little time –
they must agree on raising the debt ceiling by the 1st of June, otherwise, a default may occur,
which, economists warn, may cause a recession and shake the economy around the world.
US Finance Minister Janet Yellen reminded on the 22nd of May that the government may face difficulties in fulfilling its obligations, including paying salaries, already at the beginning of June if no agreement is reached. Even after reaching a common denominator, it will take several days for the bill to be considered by Congress and signed into law, so it is important to conclude the negotiations as early as this week.
Republicans want cuts to certain spending groups in exchange for agreeing to raise the debt ceiling. Democrats want to keep next year’s spending at this year’s level, and Biden, who has put the economy at the center of the domestic policy agenda during the election campaing and is running for re-election, has said he might consider some spending cuts along with a tax overhaul, but the Republicans’ current offer is unacceptable.
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