About three weeks before the US defaults, talks between the Democrats and Republicans on raising the debt ceiling are still deadlocked. “There’s a lot of politics and fuss and it’s going to continue for a while,” US President Joe Biden said Tuesday after the latest negotiations. But policymakers are “getting to work”.
“All participants in the meeting understood the risk of a default.” The President of the US House of Representatives, Kevin McCarthy, explained that there had been no progress in the talks, which lasted about an hour. “I haven’t seen any new movement,” the Republican told reporters. Biden and McCarthy plan to continue talks on Friday.
Biden is asking Congress to raise the government’s self-imposed borrowing limit without strings attached. McCarthy, has said his chamber will not agree to any deal that does not result in drastic spending cuts to deal with the growing budget deficit.
Republicans have a narrow majority in the House of Representatives. Biden is insisting that Republicans take their default threat off the table. At the same time, he did not rule out invoking the 14th Amendment ploy to bypass Congress and order further borrowing. That would spark litigation, but it’s an option he could consider, Biden said.
A protracted default would plunge the US economy into a deep recession with rising unemployment and also destabilize the US bond-based global financial system. (Reuters)
