With time running out, the US government announced Friday that June 5 is now the new date to reach a debt limit deal before defaulting, likely leading to the White House already Republicans to tougher negotiations on spending cuts and raising the nation’s legal debt limit.
However, President Joe Biden was optimistic as he left to spend the Memorial Day holiday weekend at Camp David. “It is very close“, he claimed.
As Republican lawmakers chatted with Biden’s team, the president said that “there is a negotiation underway. I hope that tonight we will know if we are going to be able to reach an agreement”.
Yellen noted that if an agreement is not reached before the new estimated date, it will “would cause severe hardship to American families, affect our global leadership position, and raise questions about our ability to defend our national security interests”. Retirees were already making contingency plans for lost checks, as the next Social Security payments are due next week.
The new deadline gives four more days to negotiators on both sides. Yellen said that by then all the “extraordinary measures” to which the Treasury Department has resorted.
Biden and Republican House Speaker Kevin McCarthy appear to be closing in on a two-year budget cut deal that would also extend the debt ceiling beyond the next presidential election. After frustrating rounds of private talks, it appeared a deal had come close on Friday.
Republicans have made some progress in their push to slash spending, which Democrats oppose. However, the parties are especially “entrenched” over McCarthy’s demands for tougher work requirements for government food stamp recipients, which Democrats see as unfeasible.
Any deal would have to be a political compromise, with the support of both Democrats and Republicans, in order to pass a divided Congress. If the debt limit, currently at $31 trillion, is not raised to pay the nation’s bills, it would wreak havoc on the US and world economy.
Source: Gestion
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