[1/2] A cyclist passes the US Capitol building, on the morning of the first day of the 118th Congress in Washington, DC, US, January 3, 2023. REUTERS/Jon Cherry/File Photo
WASHINGTON, May 9 (Reuters) – President Joe Biden and top Republican lawmakers will state their positions face-to-face on raising the $31.4 trillion U.S. debt ceiling on Tuesday, with looming which expects an unprecedented default in three weeks if Congress does not act.
Before the 4 pm ET (2000 GMT) session in the Oval Office, there were no signs that either side would quickly agree to any concessions that would avoid a default as early as June 1.
Economists have warned that a high default could send the US economy into a deep recession with rising unemployment while undermining a global financial system built on bonds. in the US. Investors are bracing for the impact.
The Democratic president called on lawmakers to raise the self-imposed federal borrowing limit unconditionally. House of Representatives Republican Speaker Kevin McCarthy said his chamber won’t approve any deal that doesn’t cut spending to address the growing budget deficit, and on Tuesday signaled he wasn’t open to short-term deals. – okay.
Past battles over the debt ceiling usually ended with a quickly arranged agreement in the final hours of negotiations, thus avoiding a default. In 2011, the scramble prompted a downgrade of the country’s top-notch credit rating. Veterans of that war warned that the situation is more dangerous now because of the growing political divisions.
Tuesday’s meeting is likely to be the start of a more intense season.
McCarthy, whose party has a slim majority in the House, wants to tie a vote on the debt ceiling to broad spending cuts that the White House considers draconian.
On Tuesday, McCarthy appeared to be closing the door on a short-term solution, saying he opposed a deal that would have raised the debt ceiling until September to give more time for a deal with Democrats. to spend.
“No,” McCarthy said when asked by reporters if he would agree to align the debt ceiling with the budget process if Biden proposed such an idea.
“He needs to stop ignoring the problems,” McCarthy added. “And why are you still kicking the can in the street? Let’s solve it.”
The White House responded that “a short-term extension is not our plan either.” Spokeswoman Karine Jean-Pierre called the clash a “man-made crisis led by the speaker.”
He added: “The president will be very clear to today’s leaders that they must act.”
The U.S. Chamber of Commerce, the nation’s largest business association, on Tuesday urged a “smart” bipartisan deal on the debt limit that would also include energy project-authorizing reform and an agreement on discretionary spending caps.
Few countries in the world have debt ceiling laws, and Washington’s frequent lifting of the borrowing limit only allows it to pay for spending already authorized by Congress.
Biden would agree to a separate budget discussion but not be tied to the debt ceiling, the White House said.
His meeting with McCarthy was their first since February 1. They were accompanied by Senate Majority Leader Chuck Schumer, a Democrat, as well as top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries.
The start of active talks will ease the nerves of investors who last week forced the federal government to pay the highest interest for a one-month debt issue.
White House staff and aides to congressional leaders met quietly Friday to begin talks about the debt limit. Louisa Terrell, the head of the White House Legislative Affairs Office, was present as representatives from the Office of Management and Budget and the National Economic Council.
Biden’s foreign travel plans and the House and Senate recesses mean there are seven days when all three parties are scheduled to be in town before June 1.
On Tuesday, Biden added a stop in Papua, New Guinea, on May 22 to his itinerary that includes Japan and Australia, but the addition is not expected to extend his Asia trip.
Treasury Secretary Janet Yellen on Monday said that failure to raise the debt limit could cause a big hit to the US economy and weaken the dollar as the world’s reserve currency.
White House officials have discussed whether Biden has the authority to lift the debt limit himself by invoking the 14th amendment to the U.S. Constitution, but Biden told MSNBC last week that “no I have yet to come” to this argument.
The 14th amendment states that the validity of the public debt of the United States “shall not be questioned.” Invoking it is likely to trigger a legal challenge.
Reporting By Steve Holland; Editing by Heather Timmons and Lincoln Feast
Our Standards: The Thomson Reuters Trust Principles.
