‘Time is running out’ as Joe Biden, McCarthy meet in bid to resolve US debt ceiling deadlock

USPresident Joe Biden and top congressional Republican Kevin McCarthy will meeton Tuesday to make progress on a deal to raise the US government's $31.4 trillion debt ceiling. The meeting will be aimed at averting what the experts have cautioned as aneconomically catastrophic default that may become a reality amid the ongoing debt ceiling deadlock.

Meanwhile, the US Treasury Department on Monday reiterated its warning that it could run short of money to pay all its bills as soon as June 1. This, the department added, would trigger a default which islikely to spark a sharp economic downturn.

House of Representatives Speaker McCarthy on Tuesday told reporters that his party, which controls the chamber by a 222-213 margin, would only agree to a deal that cuts spending.

"We can raise the debt ceiling if we limit what we're going to spend in the future," McCarthy told reporters.

Both Republican and Democratic parties have agreed on the need for urgent action on debt ceiling.

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The White House meeting, which will include Biden, McCarthy, Democratic Senate Majority Leader Chuck Schumer, top Senate Republican Mitch McConnell and top House Democrat Hakeem Jeffries, is scheduled to begin on Tuesday late afternoon.

'Time is running out'

In the past week, staffs for both sides have discussed a range of issues, including spending caps, new work requirements for some benefit programs for low-income Americans.

"Time is running out. Every single day that Congress does not act, we are experiencing increased economic costs that could slow down the US economy," Treasury Secretary Janet Yellen told a group of bankers. "There is no time to waste."

Earlier in 2011, asimilar 2011 standoff led to a historic downgrade of the United States' credit rating. That downgrade sparked a selloff in stocks and pushed the government's borrowing costs higher.

ALSO WATCH |Biden, McCarthy debt ceiling meeting postponed, spending cuts on table

The current standoff has rattled investors, sending the cost of insuring exposure to US government debt to record highs. A Reuters/Ipsos poll completed on Monday found that three-quarters of Americans fear that a default would take a heavy toll on families like theirs.

"Nobody should use default as a hostage," Schumer said in a Senate speech on Tuesday. "The consequences would be devastating for America."

Meanwhile, McCarthy is keen to holdone-on-one talks with Biden.

"If the president comes to an agreement, the Democrats in the Senate will vote for it. The House will pass it, if we are all in agreement," McCarthy said. "Why do we waste more time going around and around, not solving any of the real problems? I think you’re putting the country in jeopardy when you do that."

Adding to the challenge of striking a deal, McCarthy agreed when he became speaker early this year to a change in House rules that allows for just one member to call for his ouster as leader of the chamber, which gives greater power to hardliners, including the roughly three dozen members of the House Freedom Caucus.

(With inputs from agencies)

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