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Debt talks spiral downward as US moves toward default


Debt talks took a downward turn as the White House accused Republicans of taking a ‘big step backwards’ in rejecting their offer and Chairman Kevin McCarthy said talks were on hold until on the return of President Joe Biden from Japan.

Both sides have accused the other of negotiating in bad faith as time is running out towards the June 1 deadline to raise the country’s borrowing limit, now at $31 trillion, so the United States can pay their bills. Otherwise, he will default on his debt.

A war of words began over the weekend as meetings between the two negotiating teams were cancelled, rescheduled, only to be canceled again.

President Joe Biden’s White House has accused Republicans of taking a ‘big step’ backwards in debt talks by rejecting their bid

The White House, which had sounded hopeful that a deal was in the works, issued a pessimistic statement accusing Republicans of backing down and preferring a default over a deal.

“The president’s team put an offer on the table that was a big step backwards and contained a set of extreme partisan demands that could never pass through both houses of Congress,” the press secretary said. White House, Karine Jean-Pierre, in the press release.

“It is only a Republican leadership beholden to its MAGA wing – not the President or the Democratic leadership – that threatens to default our nation for the first time in our history unless extreme partisan demands are met” , she said.

Republicans have rejected an offer from the Biden administration that would have kept discretionary non-defense and defense spending flat next year from fiscal year 2023, according to reports.

McCarthy reportedly asked to speak to Biden, who has a full day of meetings in Hiroshima, Japan, where he is attending the G7 summit. This includes a meeting with Ukrainian President Volodymyr Zelensky and a trilateral meeting with the leaders of Japan and South Korea.

The speaker said it was the White House that was holding up.

“Unfortunately, the White House backed down,” McCarthy told reporters on Capitol Hill. “I don’t think we can move forward until the president can come back.”

Biden is due to return to the United States on Sunday evening.

“From the last day until today, they have gone backwards. They actually want to spend more money than we’re spending this year,” McCarthy said of the talks.

1684633327 637 Debt talks spiral downward as US moves toward default

“I don’t think we can move forward until the president can come back,” Chairman Kevin McCarthy said.

McCarthy has said he wants to cut non-defense spending from what has been spent in previous years, while Democrats argue keeping those numbers fixed equates to an effective reduction due to inflation .

President Biden appointed a negotiating team and spoke with them regularly while in Japan. The White House said those negotiators are ready to meet with McCarthy’s team at any time.

“Let’s be clear: the president’s team is ready to meet at any time,” Jean-Pierre said in his statement.

The two sides are vying for spending cuts. The Republicans are demanding them in exchange for raising the debt ceiling.

House Republicans have passed a bill that would bring spending back to fiscal year 2022 levels and impose a 1% cap on future spending for a decade. But he was dead when he arrived in the Democratic-controlled Senate.

The White House dismissed the GOP demands as too extreme, but expressed a willingness to cut some spending.

But as the talks break down, the attacks have intensified.

“Republicans are holding the economy hostage and pushing us to the brink of default, which could cost millions of jobs and tip the country into recession after two years of steady job and wage growth” , White House Communications Director Ben LaBolt said Saturday. .

“We’re too far off on the main number,” Republican Rep. Dusty Johnson, an ally of McCarthy, told CNN, referring to the level of discretionary spending for fiscal year 2024.

“McCarthy holds the line. He knows where the Republican conference is. And the White House doesn’t understand that Washington has a spending problem.

With Republicans holding just a five-seat majority in the House and Democrats controlling the Senate, any deal must be bipartisan.

To achieve this, spending cuts must be large enough to be accepted by conservative Republicans but also acceptable to Democrats, who hold the Senate and will likely need to deliver between 50 and 100 votes in the House.

Republicans, in addition to spending cuts, want to increase defense spending in the 2024 federal budget.

Democrats argue that for this to happen, social programs, education and health care would have borne the brunt of the cuts. The progressive wing of the Democratic Party would not support that.

Additionally, Republicans have refused to roll back Trump-era tax breaks for corporations and wealthy households, as Biden has proposed.

Republican Rep. Garret Graves of Louisiana, a lead mediator in debt limit talks for House Speaker Kevin McCarthy, leaves a meeting on Capitol Hill

Republican Rep. Garret Graves of Louisiana, a lead mediator in debt limit talks for House Speaker Kevin McCarthy, leaves a meeting on Capitol Hill

Biden, speaking in Japan on Saturday, expressed hope that the two sides could reach an agreement.

“I still believe we can avoid a default and we’ll do something decent,” the chairman said.

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