Despite ongoing negotiations and the looming deadline to raise the debt ceiling, both President Joe Biden and House Speaker Kevin McCarthy expressed confidence that the United States would not default on its debt.
Their assurances come at a crucial time when the government is racing against the clock to strike a deal and avert an economic catastrophe.
What are Biden and McCarthy planning?
Biden and McCarthy’s statements indicate that the previously stalled negotiations are now entering a more serious and concrete phase, with the possibility of a deal drawing nearer.
The June 1 deadline to raise the debt ceiling approaches, and if it is not met, the government may run out of money. McCarthy met with Biden and other top congressional leaders on Tuesday at the White House to discuss a potential deal before the president left for Japan.
Although McCarthy did not express outright optimism about the state of the talks, he appreciated Biden’s willingness to negotiate. He stated, “The only thing I’m confident about is now we have a structure to find a way to come to a conclusion.
The timeline is very tight. But we’re going to make sure we’re in the room and get this done.”
Work requirements: A contentious issue
In separate interviews on “Squawk Box,” McCarthy and House Minority Leader Hakeem Jeffries acknowledged that negotiations were moving forward, but both remained firm in their positions.
A key point of contention is the Republican request to attach work requirements to federal food benefits, which Jeffries described as a “nonstarter.”
Despite this, he remained optimistic about the negotiations, calling the meeting “very positive” and expressing hope that common ground would be found in the next week or two.
Jeffries noted that the last time work requirements were proposed, in the 2018 Farm Bill, Republicans, including McCarthy, voted against them. He argued that it was unreasonable to impose such requirements in the context of a debt ceiling showdown.
Conversely, McCarthy maintained that work requirements were the responsible course of action, citing Biden’s previous support for them as a senator.
Tax discussions off the table
Despite Democrats’ calls for revenue-raising mechanisms to be included in the debate, McCarthy asserted that taxes would not be discussed. He confirmed, “There is not going to be a tax discussion in this debt ceiling. The president admitted that yesterday.”
Defaulting on sovereign debt would have disastrous consequences for the economy and global markets. A default on Treasury bonds could send the U.S. economy into a tailspin, and even a brief default could lead to the loss of 2 million jobs, according to Moody’s Analytics.
Treasury Secretary Janet Yellen has warned that failing to raise the debt ceiling would cause an “economic catastrophe.”
As negotiations continue, both sides are working to find common ground and prevent a default. With President Biden and House Speaker McCarthy’s confidence in avoiding such a scenario, there is hope that an agreement can be reached before the deadline.
**The contents of this article were obtained from a recent CNBC report. You can read it here.**
