“Cautious Optimism in the US Financial Scene Amid Debt Ceiling Negotiation Failure”

After the failure of Friday’s meetings, there is calm about raising the federal debt ceiling of $31.4 trillion today, Saturday, at a time when President Joe Biden said in Japan that he believed a default could be avoided.

Reuters quoted Republican White House negotiator Patrick McHenry as saying that White House negotiators and Republicans in Congress do not plan to hold talks on Saturday about raising the federal debt ceiling of $31.4 trillion.

This was also confirmed by Punchbowl News, which quoted multiple sources as saying that no meetings were scheduled for Saturday.

The second meeting ended on Friday. No progress was reported by either side, and negotiators said they were unsure when new meetings would take place. There are less than two weeks before June 1, when the Treasury Department warned that the federal government may be unable to pay all of its debts. This could lead to a default that could cause chaos in the financial markets, and lead to higher interest rates.

In Japan late Friday Washington time, Biden said he still believes a default can be avoided. “I still think we’ll be able to avoid default, and we’ll achieve something decent,” Biden told reporters in Hiroshima, Japan, where he is attending a meeting of leaders of the Group of Seven rich nations.

Biden was optimistic despite the White House’s admission that “serious differences” remain with the Republicans who control the House of Representatives, while House Speaker Kevin McCarthy said progress must be made in changing the “course” of government deficit spending and rapidly growing debt.

Republicans are pushing for sharp spending cuts in exchange for an increase in the government’s self-imposed borrowing limit, a step regularly needed to cover spending costs and tax cuts previously approved by lawmakers.

The Republicans control the House of Representatives by a narrow margin, while the Democrats, led by Biden, have a narrow majority in the Senate, making it difficult to strike a deal that would pass both chambers.

Democrats have been pushing to keep spending steady at this year’s levels, while Republicans want to return to 2022 levels.

A plan approved by Parliament last month would cut a wide range of government spending by 8% next year.

Democrats say that would force cuts, on average, of at least 22 percent in programs such as education and law enforcement, a figure not contested by senior Republicans.