Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

As a default crisis looms, Biden and McCarthy hope to break the US debt-ceiling impasse

As a default crisis looms, Biden and McCarthy hope to break the US debt-ceiling impasse

President Joe Biden and top Republicans and Democrats in Congress are scheduled to meet this week in an attempt to break a three-month deadlock over the $31.4 trillion US debt ceiling and prevent a devastating default before the end of May.
President Joe Biden and top Republicans and Democrats in Congress are scheduled to meet this week in an attempt to break a three-month deadlock over the $31.4 trillion US debt ceiling and prevent a devastating default before the end of May.

The Democratic president is urging Congress to increase the federal government's self-imposed borrowing cap without conditions. Republican House Speaker Kevin McCarthy has stated that any agreement that does not include spending cuts to address the nation's increasing fiscal deficit will be rejected.
For the first time since February 1, Biden will meet with McCarthy at the White House on Tuesday, along with Senate Majority Leader Chuck Schumer and senior Senate Republican Mitch McConnell. Hakeem Jeffries, the top Democrat in the House, will also participate in the negotiations.

Analysts do not anticipate a speedy agreement to avert a historic default, which the Treasury Department has warned may occur as early as June 1. Forecasters warn that a default would likely plunge the US economy into a catastrophic recession, with unemployment skyrocketing.

However, the start of active talks may calm the worries of investors who compelled the federal government to pay its highest interest rate ever for a one-month debt issue last week.

"We now have a lot of foamy water. We must calm them down. "Some of that could simply be saying, 'We've found areas of agreement, areas of disagreement, we're going to get back together and work on a solution,'" Republican Senator Thom Tillis told reporters late last week.

Outside observers, including people who have participated in previous budget negotiations and industry lobbying groups, have proposed a variety of potential agreements, the most of which revolve around extending the debt ceiling through the November 2024 presidential elections while freezing spending.

Legislative gridlock is nothing new in a country divided by profound partisanship, where Republicans have a razor-thin House majority and Biden's Democrats control the Senate by a mere two votes.

The stakes of the debt-ceiling dispute, though, are substantially higher than the budgetary debates that have forced partial government shutdowns three times in the last decade.

"That is excruciating. It is challenging. But, unlike previous shutdowns, it is not disastrous," Democratic Senator Chris Coons said, adding that "default would be devastating."

For months, Biden has emphasized that extending the debt ceiling, which is required to cover the expenses of already approved spending and tax cuts by Congress, should not be linked to budget talks.

"The two are totally unrelated," Biden stated on Friday. "They're two distinct issues." Let's get one thing straight."

DEADLINE IS UNCERTAIN
McCarthy has urged Democrats to either offer their own plan or vote on a House-approved package that would impose sharp spending cuts over the next decade and new work requirements on benefit recipients in exchange for raising the debt ceiling by $1.5 trillion or until the end of March.

Biden submitted a budget in March that aimed to reduce deficits by $3 trillion over ten years by boosting taxes on corporations and individuals earning more than $400,000 per year.

Lawmakers confront an uncertain deadline: the Treasury warned last week that it may be unable to pay all of its debts by June 1, but may be able to do so for several weeks beyond.

The Bipartisan Policy Center, a research tank specializing on budget issues, is scheduled to produce its own revised forecast on Tuesday, which may complicate negotiations further if it is released later than Treasury's.

The last time the country came this close to default was in 2011, when the country had a divided government with a Democratic president and Senate and a Republican-led House.

Congress eventually came around and avoided default, but the economy was hit hard, including the first-ever reduction of the US' top-tier credit rating and a severe stock selloff.

Financial markets have already begun to feel the strain of the standoff, but a default would have a far more direct impact on ordinary Americans.

"The thing for everyday folks is that declines in retirement savings, increases in interest rates that could affect their monthly payments for cars or houses - it's just going to hurt a lot of people, and it's going to hurt low- and middle-income people the most," Democratic Senator Tim Kaine said.

Adding to the difficulty of reaching an agreement, McCarthy agreed to a change in House rules that permits only one member to call for his ouster as speaker, giving hardliners more authority, including the roughly three dozen members of the House Freedom Caucus.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
×