My WordPress Blog

US debt ceiling talks hampered by ‘serious differences’

  • By Sam Cabral
  • BBC News, Washington

image source, Getty Images

The White House and Republican negotiators have resumed talks on the US debt ceiling after a brief pause on Friday that rattled financial markets.

House Speaker Kevin McCarthy said negotiations at the Capitol were back on, but the White House warned of “serious differences.”

Republicans had suspended the talks hours earlier, accusing the White House of “unreasonable” requests.

Without a deal, the US could default on its $31.4tn (£25.2tn) debt.

This would mean that the government could not borrow more money or pay all its bills.

The Ministry of Finance has warned that a default may begin on 1 June.

Speaker McCarthy told Fox Business on Friday night: “We are back in the room tonight.

“But it’s very frustrating if they want to come into the room thinking we’re going to spend more money next year than we did this year. That’s not true and it’s not going to happen.”

He said he had not spoken to President Joe Biden, who is attending the G7 summit in Japan and will be back in Washington on Sunday after cutting short his foreign trip.

Garret Graves, the lead Republican negotiator, told reporters they had had a “frank discussion about realistic numbers, a realistic path forward and something that really changes the trajectory of this country’s spending and debt problem.”

The White House suggested the two sides were still some way from a deal.

At a news conference in Hiroshima, press secretary Karine Jean-Pierre said: “We have serious differences. And this will continue to be a difficult conversation. It is not lost on us.”

She also questioned whether congressional Republicans were serious about reducing the deficit and reaching a “reasonable” deal.

image source, Getty Images

If the debt ceiling is not raised from its current limit, the United States could suspend its social security payments and the salaries of its federal and military employees. Default also threatens to wreak havoc on the global economy and affect prices and mortgage rates in other countries.

The break in talks earlier Friday was widely seen as a negotiating ploy on Capitol Hill, but US financial markets recoiled at the development and closed in negative territory later that afternoon. The Dow ended up 0.3%, the S&P 500 fell 0.1% and the Nasdaq fell 0.2%.

In exchange for support for raising the debt ceiling, Republicans are demanding $4.5tn in budget cuts, which include removing several of Mr Biden’s legislative priorities.

The White House has called the Republican proposal “a plan to destroy hard-working American families,” although it has indicated in recent days that it may make some budgetary concessions.

Both President Biden and Speaker McCarthy are under pressure from the left and right of their respective parties to hold the line. With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proven elusive.

And when the clock is ticking, the two parties remain far apart.

Patrick McHenry, a Republican from North Carolina who is also involved in the negotiations, told the Wall Street Journal earlier on Friday that the negotiations were at “a very bad time”.

Sir. Biden has argued that raising the debt limit and reducing the budget deficit should be two separate issues, but about six in 10 Americans disagree, according to a new Associated Press-NORC poll.

Leave A Reply

Your email address will not be published.