United States President Joe Biden and Republican House Speaker Kevin McCarthy held talks to discuss the “catastrophic” debt crisis, but the negotiations ended on Tuesday (May 16) after less than an hour, without any breakthrough.
The White House said Biden was “optimistic that there is a path to a responsible, bipartisan budget agreement if both sides negotiate in good faith.” But McCarthy told reporters there was still “a lot of work to do” to break the high-stakes standoff with Biden over the borrowing limit.
“I did think this one was a little more productive… We’ve got a short timeframe here to try to find out how we could come to an agreement,” McCarthy told reporters, as he said that Biden is attempting to achieve a debt ceiling agreement before June 1 in order to avert economic disaster.
According to McCarthy, Republican Congressman Garrett Graves will meet with White House counsellor to Biden, Steve Ricchetti, and Office of Management and Budget Director Shalanda Young as part of efforts to resolve the debt ceiling standoff.
The Treasury has warned of dire implications if the country runs out of funds to pay its debts, which would prevent it from paying federal employees and precipitate a likely rise in interest rates, which would have ramifications for businesses, mortgages, and global markets.
Treasury Secretary Janet Yellen said Monday that the nation could begin defaulting on its debts “potentially as early as June 1”, while the nonpartisan Congressional Budget Office has forecast June 15.
According to the White House, Biden has asked his staff to “continue to meet daily on outstanding issues,” and that he will consult with Republican leaders after returning from the G7 meetings.
Republicans have insisted on large expenditure cutbacks in exchange for their support for raising the debt ceiling, dismissing Democratic requests for a “clean” rise with no strings attached.
The president departs on Wednesday for a three-day G7 conference in Japan, but according to a source, Biden decided on Tuesday to miss subsequent stops in Papua New Guinea and Australia.
The White House national security spokesperson John Kirby said that Biden would depart for Japan on Wednesday as scheduled but a subsequent stop in Australia is being “reevaluated”.
“We’re working though, thinking through, the rest of the trip right now,” Kirby said, further clarifying that “there’s not been a cancellation as yet, but that could happen. We’ll see where it goes…”
(With inputs from agencies)
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