Biden under pressure: no solution in sight for dispute over debt limit

Even after a meeting with senior Republicans and Democrats in the White House, there is no breakthrough in sight in the US debt ceiling dispute. “We agree to continue our talks and meet again on Friday,” President Joe Biden said Tuesday evening (local time) after exchanges with leaders from both sides. US bankruptcy is not an option, the Democrat said. If the debt ceiling is not raised soon, there could be an unprecedented bankruptcy of the US government, which could plunge the global economy into crisis.

In the US, parliament sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The debt limit is currently around USD 31.4 trillion (about EUR 28.6 trillion). This debt ceiling has now been reached and the US Treasury has to draw on the capital reserves – because the US is now no longer allowed to take on new debt to pay its bills. Biden and his Democrats need the Republicans in Congress to raise the debt ceiling. However, they oppose an increase without significant cuts in certain government spending.

To resolve the dispute, Biden received on Tuesday, among others, the Republican Speaker of the US House of Representatives, Kevin McCarthy. “Everyone in that session repeated the positions they had. I didn’t see any new movement,” McCarthy said after the meeting. His fellow party leader Mitch McConnell, Senate Minority Leader, tried to calm things down: “The United States will not default, it never has, and it will they never do.” He also joined in the exchange with Biden. Expectations for the meeting were low beforehand.

US Treasury Secretary Janet Yellen warns of possible government bankruptcy on June 1. A default by the world’s largest economy could lead to a global financial crisis and a serious economic downturn. The US would no longer be able to pay most bills – millions of people could lose their jobs as a result. When a newly elected Republican majority in Congress delayed raising the debt ceiling in 2011, the US credit rating was downgraded for the only time in history.

Biden was open to talking to Republicans about spending cuts — “but not under the threat of bankruptcy.” The Democrat also did not rule out canceling upcoming trips abroad if the dispute is not resolved. Biden plans to travel to Japan for the G7 summit next week. This is followed by an onward journey to the Pacific island nation of Papa New Guinea and to Australia. (oee/sda/dpa)