US still deadlocked in debt ceiling negotiations

With less than two weeks to go until the June 1 deadline, the Treasury Department has warned that the federal government may run out of money to pay its bills, triggering a default that would send financial markets into turmoil and interest rates soaring.

The US is in a heated debate over the debt ceiling. Photo: AP

Meetings on the US debt ceiling ended on May 19. Experts will not work again on May 20.

They said the meeting made no progress and did not announce plans to meet again. Both Democrats and Republicans said the other side's proposal was too extreme.

Republicans have so far insisted they will not accept an increase in the government 's borrowing limit without making deep spending cuts.

Republicans argue that excessive government spending and Democratic social policies create “freeloading” on federal benefits and that this must be addressed.

Republicans’ condition for raising the $31.4 trillion debt ceiling is that they cut spending by 7 percent this year and 8 percent next year in some agencies, under a plan approved by the House last month. Spending restrictions must increase by 1 percent each year after that.

Republicans are proposing overall spending cuts but increased defense spending, a source said, Reuters reported.

Democrats have proposed keeping spending steady in future years at this year's level. Democrats say the Republican spending cuts would force programs likeeducation and law enforcement to be cut by at least 22 percent.

Democrats propose keeping non-defense spending unchanged for next year, because with inflation adjustments real spending would be reduced.

According to White House press secretary Karine Jean-Pierre, Democratic leader - President Biden and Republican leader, House Speaker McCarthy only agreed on one point that the budget deal must be agreed by bipartisan representatives.

After the May 19 meeting, House Speaker Kevin McCarthy told reporters that the White House had “taken no action” on the Republican demands.

Republicans hold a majority in the House of Representatives and Democrats have narrow control in the Senate, so the parties must reach a deal.

White House officials said they expected the call between Biden and McCarthy to take place after Biden's press conference at the G7 summit in Japan.

During the summit, President Biden barely made a public appearance until May 20. He did not appear for a major announcement and left dinner early on May 19. Instead, he spent time in his hotel room, where aides in Washington kept him informed about the debt limit negotiations.

National Security Adviser Jake Sullivan acknowledged that world leaders have been pressuring President Biden about the debt impasse in Washington, but White House Press Secretary Karine Jean-Pierre said the situation is not yet a cause for panic.

A final deal, if reached, would need bipartisan support to pass Congress. The last time the US nearly defaulted on its debt was in 2011. At that time, Democrats also controlled the White House and the Senate, while Republicans held a majority in the House.

The US Congress eventually stepped in to prevent a default, but the economy still suffered severe shocks, including the country's first-ever credit rating downgrade and a massive stock sell-off.

Compiled by NGUYEN TAN

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