Cautionary Approach in US Debt Dispute
There is a cautious approach in the US debt dispute, as President Biden expressed optimism after a crisis meeting while also cancelling a planned trip to Australia and Papua New Guinea.
Following new talks concerning the debt dispute and the impending default of payments in the USA, there is hope for a resolution. The White House stated that President Joe Biden is “optimistic” that both parties could find a “responsible” budget solution. Republican Kevin McCarthy also hinted that he ultimately expects an agreement.
Despite this, Biden cancelled planned visits to Australia and Papua New Guinea due to the debt dispute.
Brief Visit to G7 Summit before New Negotiation Round
The President’s new talks with representatives of the opposition Republican party resulted in a cautious approach between both sides, but no breakthroughs. The White House stated that Biden had instructed his staff to “continue to meet daily” to discuss open questions. Biden will meet with leading Republicans once he returns from the G7 summit.
Although Biden is attending the G7 summit in Hiroshima, Japan this week as planned, the White House announced that he would cancel planned trips to Australia and Papua New Guinea to return to the US on Sunday.
Default of Payments to Be Avoided
Republican Kevin McCarthy hinted at a positive outcome of the negotiations. “America is the number one economy in the world. And when we are done with these negotiations, America’s economy will be even stronger,” said McCarthy.
Hakeem Jeffries, the leader of Biden’s Democrats in the House of Representatives, who was also present at the meeting, spoke of a “positive meeting” in which everyone agreed there should be no default of payments. Senate Majority Leader Chuck Schumer described the conversation as “respectful.” A meeting in the White House a week ago did not bring Democrats and Republicans closer together.
Business Leaders Write Joint Letter
As a sign of increasing nervousness about the possible consequences of a default of payments, more than 140 US business leaders wrote a letter to Biden and Congressional leaders to emphasize the need for a resolution. “We urge a quick agreement to prevent the country from facing this potentially devastating scenario,” the letter said, signed by, among others, the CEOs of Pfizer and Morgan Stanley.
Biden has been calling for months for Republicans to agree to a raising or suspension of the legally established debt ceiling. Without an agreement, the US faces its first default of payments in history in early June, with potentially devastating economic and financial consequences far beyond the country.
The US reached its debt limit of nearly $31.4 trillion in January. Since then, the US government has been preventing default of payments with “extraordinary measures,” but those measures will soon be exhausted. The opposition Republicans will only approve an increase in the debt ceiling in exchange for billions of dollars in cuts to government spending.
