Wednesday, 31 May 2023

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Biden ‘optimistic’ on debt ceiling as default nears

Biden 'optimistic' on debt ceiling as default nears

Time running short, the government announced a new June 5 default deadline late Friday, threatening to send the White House and Republicans toward more cliff-edge negotiations over cutting spending and raising the nation’s legal debt limit

Yet President Joe Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring, “It’s very close, and I’m optimistic.”

With Republican at the Capitol talking with Biden’s team at the White House, the president said, “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal.”

The new date, set out in a letter from Treasury Secretary Janet Yellen, came with Americans and the world concerned about U.S. brinkmanship.

In a blunt warning, Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.” Anxious retirees were already making contingency plans for missed checks, with the next Social Security payments due next week.

The new deadline, a week from Monday, is four days later than earlier expected. Yellen said all “extraordinary measures” Treasury has resorted to would be exhausted.

Biden and Republican House Speaker Kevin McCarthy have seemed to be narrowing on a two-year budget-slashing deal that would also extend the debt limit past the next presidential election. After frustrating rounds of closed-door talks, a compromise had appeared to be nearing on Friday.

Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly “dug in” over McCarthy’s demands for tougher work requirements on government food stamp recipients that Democrats say is a nonstarter.

Earlier Friday, McCarthy said his Republican debt negotiators and the White House had hit “crunch” time, straining to wrap up an agreement with Biden as lawmakers broke for the long Memorial Day holiday weekend.

Any deal would need to be a political compromise, with support from both Democrats and Republicans to pass the divided Congress. Failure to lift the borrowing limit, now $31 trillion, to pay the nation’s incurred bills, would send shockwaves through the U.S. and global economy.

But many of the hard-right Trump-aligned Republicans in Congress have long been skeptical of Treasury’s…

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