Biden urges Republicans to abandon ‘extremist’ stance on stalled debt talks

US President Joe Biden called on Republicans to moderate their “extreme stance” and promised to speak directly with House Speaker Kevin McCarthy on Sunday to ease tensions over the worsening US debt ceiling crisis.

Biden said at a news conference on Sunday’s G7 summit in Hiroshima, Japan, that he planned to call McCarthy during his flight to Washington to see if the talks could resume.

“My guess is that he’s going to want to deal with me directly to make sure we’re all on the same page,” Biden said. “It’s time for Republicans to accept that there is no bipartisan deal made solely on their party terms. They also have to move,” he added.

The lack of movement in the talks is a concern because the government borrowing limit must be raised by June 1 or Washington faces an unprecedented default on the US debt. Such a possibility could send global markets into turmoil and the US economy into recession.

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US Treasury Secretary Janet Yellen warned on Sunday that if the debt ceiling is not raised soon, there will be “difficult decisions to be made about the unpaid bills”.

Debt ceiling deals take several days to be passed by both houses of Congress and signed by the president. Even the approach of the deadline could spook investors and cause economic disruption – and toughening rhetoric creates uncertainty and alarm about the outcome of the negotiations.

In a speech in Hiroshima, Biden said his administration was considering invoking the 14th Amendment to the US Constitution, which states that the “validity” of the US debt “shall not be questioned.” This would allow the Treasury to ignore the borrowing limit rather than default.

“I think we have the authority. The question is whether it can be done and referenced in time,” he said.

But such a move could still cause massive disruption in markets and a series of legal challenges, and Biden has suggested it is unfeasible. “We haven’t come up with a unilateral action that would be successful within two weeks, so it’s up to the lawmakers,” he said.

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Yellen echoed Biden’s comments on Sunday, telling NBC News that while there has been “a lot of debate” about the 14th Amendment, “because of the legal uncertainty, it doesn’t seem like it could be used properly under these circumstances.”

“Given the tight time frame we’re working on now. . . I sincerely hope Congress raises the debt ceiling,” he added.

McCarthy on Saturday poured cold water on any hopes of a market-calming breakthrough, saying no progress could be made until Biden returned to Washington from Japan late Sunday night.

“I don’t think we’ll be able to move forward until the president comes back to the country,” McCarthy said. “Unfortunately, the White House has moved backwards,” he added, saying the “socialist wing” of the Democratic Party was having a “real impact” on Biden’s negotiating position.

Biden is not expected to return to the White House until 11 p.m. local time on Sunday.

Given the negative economic consequences of default, as well as the unpredictable political impact, Biden and congressional Republicans will still eventually reach a deal.

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Many in Washington say the setback in talks, accompanied by pressure from factions within the Democratic and Republican parties not to concede, could be a precursor to a possible deal, rather than a sign that talks are slipping dangerously aside. course.

In order to pass a debt ceiling increase, Republicans are calling for deep spending cuts over 10 years, while Democrats would accept much more limited budget cuts over a shorter period of time. They also clashed over the imposition of new work requirements for social spending programs.