'It's very close...': Biden sounds optimistic on breakthrough in debt ceiling talks

With the US debt default deadline precariously close, President Joe Biden said his administration was close to achieving a breakthrough. For the first time in many weeks, Biden seemed upbeat about the prospect of getting the deal done and raising the debt ceiling.

"It's very close and I'm optimistic," said Biden as he left for the Memorial Day weekend at Camp David.

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Biden's team at the White House was busy chalking out a deal with the Republicans at the Capitol via a conference call. Biden reflected on the same and said, “There’s a negotiation going on. I’m hopeful we’ll know by tonight whether we’re going to be able to have a deal."

Republican Representative Patrick McHenry, one of the lead negotiators of House Speaker Kevin McCarthy concurred with the president's statement and added, "I'm hopeful. But we have to make sure we have a line on tax, we have a line on agreement — there’s significant challenges ahead."

Meanwhile, US Treasury Secretary Janet Yellensaid the government will now run out of money on June 5, instead of the earlier projected date of June 1. She, however, warned that waiting till the eleventh hour to raise the ceiling could cause more harm.

"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.

Watch | US Treasury Secretary warns country running out of cash

What is the debt limit?

The debt limit is the amount of money that the US government can borrow to meet its financial obligations such as social security, military salaries and medicare benefits payments.

Congress earlier this year extended the statutory debt limit to $31.4 trillion. However, the weak economic fundamentals and overflowing expenditures mean that the US will be breaching the limit. Consequently, Congress has been engaged in a fierce tussle to raise the limit.

ALSO READ | Explained | US is 'running out of cash'. What is the debt ceiling crisis?

Notably, to raise the limit, any agreement reached will have to pass the scrutiny ofthe Republican-controlled House and the Democratic-led Senate before Biden could sign it into law — a process that could take more than a week.

So far, theRepublicans have been adamant that the Biden administration implement big spending cuts if the debt ceiling was to be raised. According to reports, if Republicans and Democrats arrive at a happy place, the limit could be potentially raised for two years.

(With inputs from agencies)

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