White House and Republicans see progress in US debt limit negotiations.

Negotiators for the Democratic president, Joe Biden, and the main Republican congressman, Kevin McCarthy, held on Wednesday what both sides described as productive talks to try to reach an agreement that allows raising the debt ceiling of the United States, from US$ 31.4 trillion, and avoid a catastrophic default.

After a four-hour meeting at the White House, McCarthy said negotiations had improved and would continue in the afternoon. He predicted that the two sides would reach an agreement, although several issues remain to be resolved.

“We have made some progress. So that’s very positive.” said McCarthy to journalists. “I want to make sure we get the right deal. I see we are working on it.”

The spokeswoman for the White House, Karine Jean-PierreHe said the talks are still fruitful. “If you keep moving forward in good faith, we can come to an agreement.”, he held at a briefing while the discussions were taking place.

However, the White House and congressional Democrats also accused Republicans of holding the economy hostage to advance an agenda they could not otherwise pass. They said the Republicans have to make more concessions as they will need the Democratic votes to pass any deal.

Time is pressing, as the Treasury Department has warned that the federal government may be unable to pay all its bills as early as June 1 – only eight days to go – and it will take several days to pass the legislation through Congress. closely divided.

House Republican leaders said they would adjourn Thursday for a scheduled week-long Memorial Day recess, but would reconvene lawmakers if necessary for a vote, Punchbowl News reported.

McCarthy he has insisted that any deal must not raise taxes and must cut discretionary spending, not hold it steady as he has proposed Biden.

Any deal Biden and McCarthy reach will have a narrow path to approval in Congress, where Republicans hold a 222-213 majority in the House of Representatives and Democrats control the Senate by a 51-49 margin.

The lack of progress has raised concerns about the possibility of changes to the legislation. In addition, concerns have grown that Congress could trigger a crisis if it does not act in time.

“Surely we’re getting too close“, said shai akabasof the Bipartisan Policy Center.

Ratings agency Moody’s could change its assessment of US debt if lawmakers indicate a default is expected.

Moody’s it currently has an “Aaa” rating for US debt, while S&P Global downgraded its rating after a debt-ceiling dispute in 2011. A lower rating could raise borrowing costs.

stock drop

The months-long stagnation has spooked Wall Street, pushing up US stocks and raising the country’s cost of borrowing. US stock indices fell on Wednesday on concerns over the debt ceiling.

“Until yesterday, investors had been very optimistic,” said Angelo Kourkafasinvestment strategist at Edward Jones. “But now, as we get closer … we see some caution again.”

Treasury Secretary Janet Yellen said Wednesday that the United States will not be able to pay all its bills by early June, but said she did not know exactly what day the government will run out of resources.

That would trigger a Wall Street crash and push the US economy into recession, with a default hurting ordinary Americans as well, economists say. Healthcare providers who rely on government payments could be the first to suffer the consequences.

Republicans want to cut discretionary spending for the 2024 fiscal year, which begins in October, by about 8%, while Democrats have pushed to keep it steady at this year’s pace.

Source: Reuters