WASHINGTON (AFP) – United States (US) President Joe Biden was intervening personally yesterday 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 Group of Seven 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.
“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.”
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 said that the government could run out of money and default on its USD31 trillion debt as early as June 1 if Congress, where Republicans control the House of Representatives, does not authorise more borrowing.
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 zero 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-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 on 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.