The US government debt hit its $31.4 trillion ceiling on January 19, and the Treasury Department has used special accounting measures to extend the time it takes to pay its bills.
In her second letter to the US Congress in two weeks, US Treasury Secretary Janet Yellen said the agency is unlikely to be able to meet all of the US government's payment obligations by early June, making the US very likely to default for the first time.
The US is running out of time to reach an agreement on the debt ceiling, so President Joe Biden and congressional leaders met on May 16 for face-to-face negotiations at the White House to prevent a default scenario from happening.
Positive signal
Negotiations between President Biden and Democratic and Republican leaders have offered glimmers of hope for a deal to raise the debt ceiling before June 1.
“We just concluded another good, productive meeting with congressional leadership about the path forward to ensure that America does not default on its debt,” Biden said after an hour-long meeting in the Oval Office.
US Treasury Secretary Janet Yellen reiterated on May 15 that the US could run out of money to pay its bills by June 1 if the US Congress does not raise or suspend the debt ceiling. Photo: NY Times
“There is still much work to be done, but I have made it clear to House Speaker Kevin McCarthy and others that we will be speaking frequently over the next several days. The staff will continue to meet daily to ensure that the United States does not default,” Biden told reporters after the talks.
Meanwhile, House Speaker Kevin McCarthy said he could see a deal reached “by the end of the week,” a marked change in tone after lamenting the state of negotiations just hours earlier.
However, Mr. McCarthy also admitted that the two sides' views in the negotiations were still far apart, so they had not agreed on any policy proposals.
As the talks appeared to gain some momentum, Mr Biden said he would cut short his overseas trip to Asia to return to Washington for “final talks” with US congressional leaders.
The US president will still depart for Hiroshima, Japan, on May 17 to attend the G7 meeting there, but he will return on May 21, canceling planned visits to Papua New Guinea and Australia.
His return would mark a crucial turning point in efforts to avoid a first-ever US debt default and prevent major economic damage to the country.
The only way
Mr Biden's decision reflects the fact that his presence will be crucial to resolving the political dispute that has left the US - a haven of global financial stability - at risk of default.
It is also a sign that progress in Oval Office talks between Mr Biden and Mr McCarthy on May 16 has not slowed the countdown to a potential disaster that could cripple the US economy and affect millions of people in this country.
Republicans and Democrats have both signaled that they see the May 16 session as a defining moment, far more important than a similar gathering at the White House a week ago and more urgent given that there are just 16 days before the country is expected to default on its debt.
US House Speaker Kevin McCarthy and Senator Chuck Schumer talk with President Joe Biden before a debt ceiling meeting in the Oval Office of the White House on May 16. Photo: CNN
As Tuesday’s meeting began, Mr. Biden said that “we’re having a great time. Things are going well.” However, the session ended without a breakthrough.
For weeks, Mr. Biden has insisted that Democrats would only accept a debt ceiling increase without any conditions from House Republicans. Now, it appears the White House will have to cave.
Both Democratic leaders from New York, Senator Chuck Schumer, the majority leader, and Representative Hakeem Jeffries, the minority leader, have insisted that passing a bipartisan bill is the only way forward.
“We have to find common ground. That’s the only way to solve this problem. We have to get both sides of the argument,” said Chuck Schumer.
Mr McCarthy has proposed recouping unused Covid funds, which Republican officials believe could be as much as $50-60 billion. “I think that will ultimately be included in the new deal,” Mr McCarthy said .
Nguyen Tuyet (According to NY Times, CNN, CNBC)
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