US Congress, White House Begin Tough Debt Limits, Budget Negotiations

WASHINGTON (Reuters) – Detailed talks on raising the U.S. government’s $31.4 trillion debt ceiling came a day after Democratic President Joe Biden and Republican congressional leader Kevin McCarthy met for the first time in three months. opened Wednesday amid calls for drastic spending cuts.

The time is running out to avoid a historic and economically destabilizing government debt default, with the Treasury Department warning it could happen as early as June 1, but Tuesday After the White House meeting, some areas of possible compromise emerged.

The rivalry has unsettled investors, driving up the cost of securing exposure to U.S. government debt. record highWall Street is growing concerned about the risk of an unprecedented default.

Also on Wednesday announced by the Ministry of Finance Government tax revenues in April confirm the recent trend of declining revenues, which, combined with higher spending, are likely to increase pressure on Congress to reach a debt-straightening deal quickly.

US long-term foreign exchange ratings at the end of each year

“It sounds like the dance has started,” said Republican Congressman Frank Lucas. He added that while he was unlikely to win the budget cuts proposed by House Republicans, a compromise could be found that slowed what he called Democrats’ “overspending.”

There was still deep disagreement over the conflicting pressures of spending cuts and tax increases.

Biden Signaled Be tolerant of Republican requests to recover some of the unused funds. COVID-19 The relief amount is less than $80 billion. Meanwhile, the White House reiterated its support for legislation that would expedite government approvals for energy projects by setting maximum deadlines.

A White House fact sheet distributed Wednesday states that the “administration supports important reforms” included in the bill by Democratic Senator Joe Manchin. Republicans do not support the bill, but say: To give permission Reforms will help the US maintain its dominance in oil and gas development.Democrats see it as boost Development of “clean” power projects.

Biden aides McCarthy, Democratic Senate Majority Leader Chuck Schumer, Senate Republican leader Mitch McConnell and House Democratic leader Hakeem Jeffries meet Wednesday afternoon, with Biden meeting four congressional leaders on Friday We plan to meet again on Thursday before doing so.

“Defaulting is not an option,” Mr. Biden told reporters after Tuesday’s meeting. “I have told congressional leaders that I am ready to start a separate discussion on the budget.”

clean conflict

Mr. Biden and opposition Republicans have been at odds for months over the debt ceiling, with Democrats calling for a “clean” increase without conditions to pay the debt through congressional-approved spending and tax cuts.

Meanwhile, Republicans in both houses of Congress said they would not allow more borrowing without a deal to cut spending.

McCarthy estimated that it would take just two weeks for the two countries to reach a deal, after which it could be passed by Congress.

Adding to the urgency, Biden plans to leave on May 18 to attend the G7 summit, but said he would cancel the trip if necessary to avoid a default. Stated.

Rohit Kumar, a former Senate aide and now co-director of PwC’s IRS in Washington, said Biden’s visit to Japan could ultimately be the deadline for the framework agreement on which the bill is based. Said he was watching.

“For me, the real action will probably come next week when the president leaves for Japan for the G7 meeting. That will be the event that forces action in the short term,” Kumar said.

Even if there is significant progress, the House and Senate each have their own time-consuming procedures for advancing legislation, which opponents of the deal could use to delay passage.

The last time the country came so close to default was in 2011, again with a Democratic president and a Republican-led Senate.

Washington’s rivalry over the debt ceiling is the result of a U.S. electoral system that rewards congressional candidates who are more content to keep fighting once in office than to seek legislative compromises, according to a new report. .

“This dynamic could justify stubborn and reckless behavior, like playing chicken over debt limits,” the bipartisan Fix Our House group said in a research report released Wednesday. claimed. The long-term goal is to reshape how Congress is elected.

It calls for the creation of new, larger congressional districts elected by independent committees from which multiple representatives are elected at each election. The result, the study argues, will be increased competition for seats in the House of Representatives and the creation of proportional representation.

Reporting by Richard Cowan and Katherine Jackson. Additional reporting by Moira Warburton.Editing: Scott Malone

Our criteria: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published. Required fields are marked *

Skip to content