Biden says debt deal 'very close' amid looming crisis
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US President Joe Biden says the country is "very close" to a deal on the debt crisis that has afflicted it, stocking concerns about the US market.
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US President Joe Biden talks with reporters on the South Lawn of the White House in Washington, May 26, 2023 (AP)
The United States is on the verge of resolving the debt ceiling issue that has been stocking concerns about the country defaulting on its debt, US President Joe Biden said Friday in a bid to assure the public.
"It's very close and I'm optimistic," Biden told reporters at the White House. "I'm hopeful we'll know by tonight whether we're going to be able to have a deal."
This comes amid uncertainty regarding the future of the country's debt situation after deliberations on raising the debt ceiling have been postponed countless times due to diverging points of view.
Although Biden's statements come at a time when there is no indication of any public announcement on the horizon, the president's words were the clearest indication that the country might reach a solution on the issue, which would allow the government to borrow money while avoiding a debt default that is more than likely to set off a recession that would subsequently affect the global economy.
This comes after US Treasury Secretary Janet Yellen said the country would be defaulting on its debt on June 5 unless a deal is reached before then.
US Treasury Secretary Janet Yellen stated in a letter on Friday afternoon that the United States has a few more days than anticipated before it runs out of money.
"Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," she said in a letter to House Speaker Kevin McCarthy.
US media has reported that the deal taking shape would include an agreement extending the government's borrowing authority for two more years, i.e., the status quo would not repeat itself before the upcoming 2024 presidential election.
However, the situation will depend on how Democrats deal with Republicans' demands for concessions, especially on the spending limits on social security among other domestic programs.
White House spokesman Andrew Bates asserted that Republicans were willing to put at risk "over eight million jobs unless they can take food out of the mouths of hungry Americans."
The yearly accounting technique of raising the debt ceiling normally happens without much attention. It only permits the government to continue borrowing money to cover expenses that have already been incurred due to the budget.
US House Speaker Kevin McCarthy and President Joe Biden said Monday in their first one-on-one talks in months to avoid a calamitous debt default were "productive", but disagreements were still blocking any possible deal.
The two parties have been settling their disagreements about expenditure caps. But according to two individuals involved with the negotiations, the Republican desire to impose stricter work requirements for Americans receiving federal benefits like SNAP, the Supplemental Nutrition Assistance Program, is a key sticking point.
Moreover, Yellen noted that waiting until the last minute "to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," adding that if Congress fails to increase the debt limit, "severe hardship" would befall American families and harm the US' position worldwide.
