Debt talks tail off as US nears default

Debt negotiations faltered as the White House accused Republicans of taking a “major step backwards” by rejecting their offer, and Speaker Kevin McCarthy said talks were on hold until President Joe Biden returns from Japan.

Both sides have accused each other of malicious negotiation as the clock ticks down on June 1 to raise the country’s borrowing limit, currently at $31 trillion, to allow the United States to pay its bills . Otherwise it will be in default of payment.

A war of words broke out over the weekend as meetings between the two negotiating teams were canceled, rescheduled, and then canceled again.

President Joe Biden's White House accused Republicans of taking a

President Joe Biden’s White House accused Republicans of taking a “big step” in debt talks by rejecting their offer

The White House, which had sounded hopeful that a deal was in the works, released a dovish statement, accusing Republicans of going backwards and choosing a default over a deal.

“The spokesman’s team put on the table an offer that represented a major step backwards and contained a series of extreme partisan demands that could never pass both houses of Congress,” White House press secretary Karine Jean-Pierre said in the statement .

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

Republicans reportedly rejected an offer from the Biden administration that would have kept both nondefense spending and discretionary defense spending flat next year compared to fiscal 2023.

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

The spokesman said it was the White House that persevered.

“Unfortunately, the White House has taken a step backwards,” McCarthy told reporters on Capitol Hill. “I don’t think we can move forward until the President comes back.”

Biden is scheduled to return to the United States on Sunday night.

“Just from the last day to today, they’ve taken a step backwards.” “They actually want to spend more money than we did this year,” McCarthy said of the talks.

“I don’t think we can move forward until the President comes back,” said spokesman Kevin McCarthy

McCarthy said he wants to cut non-defense spending compared to previous years’ spending, while Democrats argue that maintaining those numbers would be tantamount to an effective cut because of inflation.

President Biden has appointed a negotiating team and has been in regular contact with them throughout his visit to Japan. The White House said these negotiators are ready to meet with McCarthy’s team at any time.

“To be clear, the President’s team is ready to meet at any time,” Jean-Pierre said in her statement.

The two sides are at odds over spending cuts. Republicans want them in return for raising the debt ceiling.

Republicans in the House of Representatives passed a bill that would reduce spending to fiscal 2022 levels and cap spending at 1% for a decade. But by the time it got to the Democratic-controlled Senate, it was dead.

The White House has dismissed Republicans’ demands as too extreme, but has agreed to cut some spending.

But when the talks broke down, the attacks intensified.

“Republicans are holding the economy hostage and pushing us to the brink of default, which will cost millions of jobs and could plunge the country into recession after two years of steady job and wage growth,” said Ben LaBolt, White House communications director, on Aug Saturday in a statement.

“We’re too far apart on the topline numbers,” Republican Rep. Dusty Johnson, a McCarthy ally, told CNN, referring to discretionary spending levels for fiscal year 2024.

“McCarthy is holding the line. He knows where the republican conference is taking place. And the White House doesn’t understand that Washington has a spending problem.”

To reach an agreement, the spending cuts must be significant enough to be accepted by conservative Republicans but also acceptable Democrats, who have a Senate majority and likely need between 50 and 100 votes in the House of Representatives.

Republican Rep. Garret Graves of Louisiana, one of the top brokers in the debt limit negotiations for House Speaker Kevin McCarthy, exits a session on Capitol Hill

Republican Rep. Garret Graves of Louisiana, one of the top brokers in the debt limit negotiations for House Speaker Kevin McCarthy, exits a session on Capitol Hill

In his speech in Japan on Saturday, Biden expressed hope that both sides could reach an agreement.

“I still believe that we can avoid a default and that we will do something decent,” the president said.

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