Thursday, February 29, 2024
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Negotiators move closer to debt ceiling deal as Yellen extends deadline to June 5 US politics

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Democratic and Republican negotiators struggled to reach an agreement on Friday to raise the US government’s $31.4tn debt ceiling, as a leading Republican cited disagreements over work requirements for some benefit programs for low-income Americans.

On Friday, Treasury Secretary Janet Yellen said the US would run out of money to pay its bills by June 5, a slight extension of her earlier June 1 prediction.

The talks were reported to be nearing conclusion, as lawmakers sought to avoid a disastrous and unprecedented default. Wall Street and European shares rose as the White House and congressional Republicans worked on the final touches of a package to present to Congress.

Negotiators appeared close to a deal to lift the two-year limit and cap spending limits, with agreement on funding for the Internal Revenue Service (IRS) and the military, Reuters quoted a US official as saying. But a White House official told the same outlet that talks could easily slip into the weekend.

Lawmakers were put on call after they left Washington for the Memorial Day holiday.

Chief Republican negotiator Garrett Graves told reporters, “We’ve made progress.” “I said two days ago, we have some progress on some major issues, but I want to be clear, we have major issues we haven’t bridged the gap, major among them are work requirements.”

Republican House Speaker Kevin McCarthy told reporters at the Capitol, “We know this is a time of crisis. We’re not just trying to make a deal, we’re trying to get something that’s right for the American people.” Be able to change the trajectory.

Democrats indicate Joe Biden willing to consider spending cuts, including planned additional funding for IRS, target of right-wing attacks, The Washington Post informed of, Citing an anonymous official, Reuters said the deal would raise the cap for two years “while slashing spending on everything except the military and veterans”.

On Thursday night, Congressman Patrick McHenry of North Carolina, a Republican interlocutor, Said: “I think there’s an understanding from both teams that we still have serious issues to work through and come to terms with, and that’s going to take some time. That’s all there is to it.”

Any deal must pass the House and Senate, which typically take several days to complete.

Yellen has been warning for months that failing to raise the debt ceiling would be a huge loss “Destruction, one in letter to congress Released on Friday, she said the federal government was due to pay more than $130 billion in the first few days of June, including payments to veterans and Social Security and Medicare recipients, and left the treasury at “an extremely low level of resources”. was left with. ,

Raising the debt limit is usually a formality, subject to political grandstanding. Republicans raise ceiling without preconditions three times Under Donald Trump, the debt increased as tax cuts and spending increased.

But McCarthy only has a five-seat majority and is the far right wing of his party, which is calling for tough cuts.

On Thursday, the White House press secretary, Karine Jean-Pierre, told reporters: “We are fighting against the Republicans’ extreme, destructive proposal that … law enforcement, education, food aid, all these things that are important to American families.” who are just trying to make ends meet.,

Most analysts say a default would plunge the global economy into market chaos and a possible recession. This week, the US Treasury cash balance fell to $49.5 billion, prompting Bloomberg TV reports: “Bloomberg Billionaires List Has 24 Individuals Who Have More Money Than the Treasury Right Now.”

Reuters spoke to David Beers, the former head of sovereign ratings for Standard & Poor’s, who reacted to a similar Republican-fuelled debt impasse in 2011 by downgrading its US credit rating, a move it which curbed the volatility of the market.

“We thought the country was likely to endure political polarization, and secondly, we were also concerned about the rising trajectory of the debt,” Beers said. “In both of our cases, our expectations, if anything…were exceeded. There is no doubt in my mind that it was the right decision.”

Now, some Republicans on the right, including trumpThe former president, and current frontrunner in the presidential race, says the party should allow America to default if Biden refuses to bow down.

Wally Adeyemo, deputy treasury secretary, told CNN that the government does not have the capacity to make “triage” payments if the debt ceiling is not raised. Adeyama also said that invoking the 14th Amendment – ​​which says the public debt “shall not be called in question” – would not solve the problem.

Adeyemo said: “I have no belief that we have the capacity to be able to put in place a kind of priority that would mean that all seniors, all veterans, all Americans would be paid.”

Some House Democrats are upset at being left out of the conversation, and how Biden has fielded advisers instead of consistently involving himself. Democrats have also pointed to how Republicans appear to be winning the messaging war, with public polling showing support for spending cuts – and raise a roof,

Rosa Delaro, from Connecticut, told Politico: “Scale of cut [demanded by Republicans] Shocking, about which the public knows very little. The President should be out of there.

Biden was scheduled to meet the winning basketball teams at the White House on Friday, then travel to the presidential retreat at Camp David in Maryland.

Steven Horsford of Nevada, Chairman of the Congressional Black Caucus, Said: “He needs to use the power of the presidency … I need the American people to know that Democrats are here fighting, working, ready to reach an agreement to avoid a default.” And only the White House, the President, can explain that in this moment.”

Biden has not been silent. on Thursday, in the white houseHe said Republicans want “huge cuts” that would hurt ordinary Americans.

“Now is the time for Congress to act,” he said. “Under my administration, we have already cut the deficit by $1.7 trillion in our first three years. But Speaker McCarthy and my There are very different views about who should bear the burden of additional efforts to set our fiscal house in order.

“I do not believe the entire burden should fall on the backs of middle class and working class Americans. My House Republican friends disagree.