Biden intervenes to try to break US debt ceiling deadlock

The US government could run out of money and default on its $31 trillion debt if Congress does not authorise more borrowing.

President Joe Biden was intervening personally Sunday to try and break the US debt ceiling deadlock with a call to the top Republican leader before the clock ticks down on a feared national default.

The White House said that Biden, winding up a three-day G7 meeting in Hiroshima, Japan, would call Speaker Kevin McCarthy as soon as the summit ended.

“President Biden has continued to closely track negotiations on a bipartisan budget framework and the pressing need for Congress to act to avert default,” the official said.

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“He received an update from his team both last night and this morning on the status of negotiations. The president directed his team to coordinate with Speaker McCarthy to schedule a call.”

The call will happen once Biden has given a closing press conference set to start around 6:15 pm in Hiroshima (0915 GMT), or early morning in Washington, the official said. It wasn’t clear if this would be on the ground or once Biden was on the way home aboard Air Force One.

Biden was meant to travel from Japan to Papua New Guinea and Australia next week but cut short the Asia trip due to the crisis.

The Treasury Department says that the government could run out of money and default on its $31 trillion debt as early as June 1 if Congress, where Republicans control the House of Representatives, does not authorise more borrowing.

‘Hostage’ accusation

The debt ceiling raise is usually an uncontroversial annual procedure but this year the increasingly hard-right Republican party has turned the threat of default into a powerful lever to try and force Biden to accept making heavy spending cuts. Biden has refused, accusing his opponents of putting the US economy at risk for political point scoring.

Discussions appeared to be at an impasse overnight Saturday in Washington, as both sides traded accusations.

“We’re making 0 demands to avoid default. You’re the only ones with a hostage,” tweeted White House spokesperson Andrew Bates, accusing Republicans of seeking to trigger a recession in the world’s leading economy. 

White House Press Secretary Karine Jean-Pierre said in a statement that the latest Republican demands were “a big step back and contained a set of extreme partisan demands that could never pass both houses of Congress.”

She said that McCarthy’s hand had been forced by his party’s pro-Donald Trump wing which is “threatening to put our nation into default for the first time in our history unless extreme partisan demands are met.”

McCarthy, however, tweeted Saturday to say the White House was the one “moving backward.”

“Unfortunately, the socialist wing of the Democrat Party appears to be in control – especially with President Biden out of the country,” he said.

On Friday, Republicans had briefly walked out of negotiations, but after talks restarted, Jean-Pierre said she was “optimistic.”

And Biden insisted Saturday that he was “not at all” worried.

More borrowing is required by the US government just to meet expenditures already made, meaning failure to strike a deal to lift the debt ceiling would leave Washington unable to pay its bills, triggering a likely array of economic shockwaves around the world.

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