Joe Biden and Kevin McCarthy are negotiating a ‘prolific’ debt ceiling, but a deal is still elusive

President Joe Biden and Republican House Speaker Kevin McCarthy failed to agree on a fiscal deal Monday night to avoid a U.S. debt default, but talks are continuing, suggesting a deal may be within reach.

The two men met at the White House to negotiate a deal critical to the fate of the United States and the global economic outlook and financial markets.

“I think the tone was better tonight than any other time we’ve had it. . . We’re still going to have philosophical differences, but I felt like it was productive,” McCarthy told reporters at the White House after the meeting. “We know the deadline. I think the president and I will talk every day. . . until we do that.”

Biden later issued his own statement with a similar assessment. “I just finished a productive discussion with Speaker McCarthy about the need to prevent default and avoid catastrophe in our economy,” Biden said. “We have reiterated that bankruptcy is not an option and the only way forward is a good faith bipartisan agreement.

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Earlier in the afternoon, Treasury Secretary Janet Yellen warned that it was “highly likely” that the United States would not be able to pay all the bills by early June and possibly June 1, which is 10 days away.

While Biden and McCarthy did not reach a final deal by the end of the meeting, they directed aides to step up negotiations in order to reach a deal that could pass both houses of Congress and be signed by the president before the deadline.

McCarthy has refused to raise the $31.4 billion U.S. borrowing limit set by law unless the White House and Democrats agree to deep spending cuts and new limits on eligibility for social safety net programs.

The impasse has been going on for months, but Biden and the Republican House leader only began talks this month on a fiscal deal to resolve the crisis. The president was forced to cut short a trip to Asia to return to Washington to resume talks.

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The urgency of the deal became even clearer after Yellen repeatedly warned that time was running out before the Treasury ran out of money.

“It is very likely that the Treasury Department will no longer be able to meet all of the government’s obligations if Congress does not act or suspend the debt limit by early June, or possibly as early as June 1,” Yellen wrote on Monday afternoon. is the latest in a series of letters to Congress on this topic.

Both sides continued to blame each other for the standoff in recent days. The White House accused Republicans of making “extreme” demands that remain unacceptable, and McCarthy blamed Biden for backtracking on his positions.

As McCarthy comes under pressure from the right wing of his party not to make further concessions to the White House, some Democrats are calling on Biden not to make concessions to Republicans. Several Democrats have called on the White House to invoke the 14th Amendment to the Constitution, which states that the “validity” of the U.S. national debt should not be “questioned” and continued borrowing above the limit.

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Although Biden said on Sunday that he believed he had the “authority” to do so, he did not think it would be a solution in the short term.

Private economists continue to argue that the government has slightly more leeway than Yellen’s forecasts. Oxford Economics estimated on Monday that the Treasury would be able to “squeak” by June 14.

He cautioned, however, that there is no margin of error and that estimates of incoming revenue, cash holdings and other extraordinary measures could change.

Economists at Goldman Sachs, meanwhile, predicted the Treasury’s cash holdings would fall below $30 billion by June 8 or 9. “At this moment, we believe that there is even a chance that the state treasury will completely exhaust its resources at that time,” they wrote in the announcement. a comment on Friday.