President Joe Biden and House Speaker Kevin McCarthy have discussed the impasse over the debt ceiling, and described the talks as productive.
“I just concluded a productive meeting with Speaker McCarthy about the need to prevent default and avoid a catastrophe for our economy. 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,” Biden said in a statement after the meeting.
He added that while there are areas of disagreement, he will continue to discuss the path forward with the Speaker, his lead negotiators Patrick McHenry, the Chairman of the House Financial Services Committee, and Rep. Garret Neal Graves.
“We don’t have an agreement yet. But I did feel the discussion was productive in areas that we have differences of opinion,” McCarthy told reporters after the meeting held at the White House.
“I believe we can get a deal done,” the House Speaker added.
On Monday, as the two leaders met to break the deadlock, Treasury Secretary Janet Yellen sent a letter to Congressional leadership warning that the U.S. government will likely default on its debt as early as June 1 if no deal is reached.
She reiterated that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” the letter says.
Yellen noted that the Treasury’s borrowing costs increased substantially for securities maturing in early June.
She warned that if Congress fails to increase the debt limit, it would cause severe hardship to American families, harm the United States’ global leadership position, and raise questions about the U.S. Government’s ability to defend its national security interests.
The debt ceiling is a spending limit stipulated by Congress which determines how much money the government can borrow.
If the debt ceiling is not raised beyond the current cap of $31.4 trillion, U.S. could enter a default on its debt by June 1, which could lead to global financial crisis.
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