US Debt Ceiling Talks Between Biden and McCarthy Described as “Constructive” but No Agreement Reached Yet

The debt ceiling is a spending limit set by Congress, which in turn determines how much money the government can borrow.

Failure to raise the debt ceiling beyond the current ceiling of $31.4 trillion by June could result in the US defaulting on its debt.

This means that the government cannot borrow more money or pay all its bills, and threatens to wreak havoc on the global economy, affecting prices and mortgage rates in other countries.

Biden had early ended his trip to Japan, to attend the G7 summit, returning to the United States on Sunday to address the US debt crisis.

In a statement released after his meeting with the Speaker of the House, Biden said, “Default is off the table. The only way forward is with goodwill toward a bipartisan deal.”

And the language of dialogue during the talks in the White House seemed more optimistic, after weeks of divisive partisan rhetoric, but it is not yet clear how quickly the two sides reached an agreement.

McCarthy said: “We have not reached an agreement yet, I felt that the discussion was constructive in areas where we have a difference of opinion.”

He added, “Biden and I will continue to talk on a daily basis until we finish it.”

McCarthy said that the source of the crisis between Democrats and Republicans is the same spending as ever.

Although he acknowledged that there were differences, he said that the language of the dialogue “was better than ever.”

The Speaker of the House of Representatives had stressed, previously, the need to reach an agreement during the current week, to allow sufficient time for Congress to meet the deadline set on the first of June.

He estimated that the process of drafting, reading and voting on the agreement would take about 72 hours.

On Monday, Treasury Secretary Janet Yellen issued a warning letter to Congress emphasizing that the US could run out of money and default on its bills as early as June 1 without increasing the debt limit.

She stressed the urgency of the matter, describing the possibility of a default in early June as “extremely likely”.

“If Congress fails to raise the debt ceiling, it will lead to great suffering for American families,” its statement read.

Republicans are demanding more than $4 trillion in budget cuts, which would undo many of Biden’s legislative priorities.

Democrats reject the move, offering instead to keep spending unchanged.

Both President Biden and McCarthy are under pressure from the left and right wings, respectively, of their respective parties, to hold out and not make concessions.

And with a Democratic majority by one seat in the Senate, and Republicans narrowly controlling the House of Representatives, a deal seems elusive so far.