WASHINGTON, May 22 (Reuters) – Top Republican in Congress Kevin McCarthy said talks on raising the US federal government’s $31.4 trillion debt limit were “on the right track” before a meeting with Democratic President Joe Biden.
The Democratic president and the Republican speaker of the House of Representatives have just 10 days to reach an agreement to increase the government’s self-imposed borrowing limit or trigger an unprecedented default.
Biden and McCarthy will meet at 5:30 p.m. EDT (2130 GMT), the White House said, after their negotiating representatives met for more than two hours on Monday.
“I strongly believe in what we’re negotiating at this point, most Republicans will see that it’s the right place to put us on the right track,” McCarthy told reporters.
Any agreement to increase the cap must be approved by both houses of Congress before Biden can sign it into law. The US Treasury has warned that it may not be able to pay all of its bills as soon as June 1.
If the debt ceiling is not raised, activate a default value that would shake up the financial markets and increase interest rates on everything from car payments to credit cards. The current uncertainty is already weighing on investors and stocks.
US markets pink on Monday as investors awaited updates on the negotiations.
McCarthy’s Republicans control the House 222-213, while Biden’s Democrats hold the Senate 51-49, making it difficult to reach a bipartisan deal that would ensure enough votes to pass.
It will also take several days to pass the legislation through Congress if Biden and McCarthy reach an agreement. McCarthy said a deal must be reached this week for approval by Congress and Biden to sign it into law in time to avoid default.
“We can make a deal tonight. We could make a deal tomorrow, but you have to do something this week to get it passed and passed to the Senate,” McCarthy told reporters.
A White House official said Monday that Republican negotiators have proposed additional cuts to programs that provide food aid to low-income Americans, adding that no deal could pass Congress without bipartisan support.
CUTS AND CLAIMS
Republicans are pushing for discretionary spending cuts, new work requirements for some programs for low-income Americans, and a recovery of COVID-19 aid approved by Congress but not yet spent in exchange for an increase, which is needed to cover legislators’ costs. pre-approved tax and spending cuts.
Democrats want to keep spending steady at this year’s levels, while Republicans want to return to 2022 levels. A plan passed by the House last month would cut a wide swath of public spending by 8% next year.
Biden, who has made the economy a centerpiece of his national agenda and is seeking re-election, has said he would consider spending cuts along with tax cuts, but the Republicans’ latest offer was “unacceptable.”
The president tweeted that he would not support “big oil” subsidies and “tax traps for the rich” while putting health care and food assistance for millions of Americans at risk.
Both sides must also weigh any concessions against pressure from hardline factions within their own parties.
Some members of the far-right House Freedom Caucus have called for the talks to stop, demanding that the Senate adopt legislation passed by the House, which has been rejected by Democrats. Former President Donald Trump, a Republican seeking another term after losing to Biden in the 2020 election, has urged members of his party to force a default if they fail to achieve all their goals, minimizing the economic fallout.
Liberal Democrats have opposed any cuts that hurt low-income Americans and families, with some urging Biden to act alone by invoking the 14th Amendment to the Constitution — an untested move that the president said on Sunday would face restrictions.
The amendment states that the “validity of the public debt of the United States…shall not be challenged,” but the clause has been largely unaddressed by courts.
Biden is vying for a solution after refusing for months to negotiate a debt ceiling and insisting that Republicans should pass an unconditional “clean” raise before agreeing to any spending talks.
In Japan on Sunday, he acknowledged the political implications, saying some far-right House Republicans “know the damage it would do to the economy” if there were a default, but he hoped the blame would fall on him and thwart his reelection.
Congress raised the debt limit three times under Trump, without a similar demand from Republicans for deep spending cuts.
Reporting by David Morgan, Richard Cowan, and Andrea Shalal; Written by Susan Heavey; Edited by Lisa Shumaker and Stephen Coates
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