President Joe Biden and House Speaker Kevin McCarthy concluded discussions without reaching an agreement on raising the US government’s debt ceiling, leaving just 10 days before a potential default that could have severe repercussions for the US economy. While both leaders have pledged to continue negotiations, time is running out as the June 1 deadline approaches.
Debt Ceiling Talks Reach Stalemate
The impasse stems from McCarthy’s insistence on spending cuts in the federal budget, which Biden deems “extreme,” while the president advocates for new taxes on the wealthy, a proposition rejected by Republicans. Failure to reach a deal by June 1 could trigger an unprecedented debt default, leading to a catastrophic market crash and a potential recession, according to economists and market experts.
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After having discussions with Biden for more than an hour, McCarthy stated to the press that the negotiators are “going to get together, work through the night” in an effort to establish a middle ground.
Yellen Predicts Running Out Of Cash
On Monday, Treasury Secretary Janet Yellen emphasized the pressing timeline, stating that it is “highly likely” the Treasury will be unable to meet all government commitments by early June if the debt ceiling is not raised. In an official letter sent to lawmakers, Yellen was quoted as saying:
Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1.
Yellen had previously stated that by early June, it was “likely” that the Treasury will use up all of its special accounting techniques to stay under the debt ceiling. The Treasury’s cash reserves had dwindled, with only $57.3 billion remaining as of May 18, after exhausting nearly all available space created by such special accounting measures.
Republican Representative Patrick McHenry, who was present at the White House meeting, dismissed the possibility of a partial budget agreement, highlighting the need for a finalized deal before any agreement can be reached. As the clock ticks, the pressure intensifies for Biden and McCarthy to bridge their differences and find a resolution to either raise the debt ceiling or file for a default.
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Source: https://coingape.com/debt-ceiling-talks-end-with-no-deal-yellen-run-out-of-cash/