Impasse between White House, Republicans continues over US debt ceiling standoff

The negotiations over the US debt ceiling crisis continue to be at an impasse as President Joe Biden’s administration and House of Representatives Speaker Kevin McCarthy have exchanged barbs over the issue, with both sides calling the other’s proposals too extreme.

When talks stalled early last week, Biden and McCarthy agreed to empower staff members for a deal while the president was in the Group of Seven (G7) meeting in Japan on Sunday. But officials did not meet on Saturday, saying they were not sure when fresh talks would take place.

White House Press Secretary Karine Jean-Pierre noted in a statement that Biden and McCarthy had agreed that any budget agreement would need to be bipartisan and accused Republicans of offering proposals too far to the right to pass Congress.

Republicans hold a slim majority of seats in the House and Biden's fellow Democrats have narrow control of the Senate, so no deal can pass without bipartisan support.

There is a growing concern that an agreement won’t come before the June 1 deadline, when the federal government could be unable to pay all its debts, according to Treasury Secretary Janet Yellen. A possible default would likely sink the US into a recession and rattle the global economy.

While it falls to Congress to adjust the government’s spending limits, Republicans in the House of Representatives have used their majority as leverage to demand spending cuts to social programs in exchange for a debt ceiling increase.

US stocks, Treasury yields, and the dollar currency all moved lower on Friday following the pause and after comments from Federal Reserve Chairperson Jerome Powell on monetary policy saying it was still unclear if interest rates would be hiked further or not.

“Republicans are taking the economy hostage and pushing us to the brink of default, which could cost millions of jobs and tip the country into recession after two years of steady job and wage growth,” Biden’s Communications Director, Ben LaBolt said.

Biden told his team to schedule a call on the debt limit with McCarthy later on Sunday, according to a White House official.

ME