President Joe Biden expressed confidence Wednesday in reaching an agreement to raise the US debt limit to avoid an unprecedented default on the sovereign debt of the world’s most powerful nation. Before leaving for Japan for the G7 summit, Biden made a brief statement at the White House, where he said that the Republican congressional leaders he met with on Tuesday “are in agreement on avoiding a default.”
Biden stated that he is confident that a budget agreement will be reached and that the US will not default, as he believes it would be catastrophic for the economy and the American people. He also announced that he would cut short his trip to Asia to participate in the final negotiations and sign an agreement with congressional leaders, thus canceling his diplomatic tour of Papua New Guinea and Australia.
After the meeting with Republican leaders, Biden was optimistic that a bipartisan budget deal could be reached if both sides negotiated in good faith. However, Kevin McCarthy, the Republican majority leader in the House of Representatives, said there is still much work to be done, although he acknowledged that the meeting was more productive than the previous one.
Republicans insist on reducing government spending and the fiscal deficit and want to reduce the debt issuance traditionally used to cover that gap. Biden’s representatives met with Republicans Tuesday night to continue negotiations, and the president said he will not accept a deal that affects health benefits.
Democrats and Republicans are unable to agree on raising the US debt issuance limit, even though it is essential to meet payments to creditors, suppliers, public employee salaries, and pensions. While raising the debt limit used to be a routine procedure in the country, this time it has become an increasingly frequent political confrontation.
The United States exceeded the ceiling for public debt issuance in January, set at $31.4 trillion, and since then extraordinary measures have been implemented to meet obligations for a limited time.
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