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Washington DC, USA
Kevin McCarthy has said that he is sending Republican negotiators to the White House to finish the debt limit talks while affirming that “we are not going to default.” However, the House Speaker made it clear that the two sides were “still far apart” even as they make efforts to reach a budget deal.
It must be noted that the deadline to reach an agreement over the debt limit is as soon as next week, when the Treasury Department is expected to officially run out of cash, and push the nation into a deep economic crisis.
“Not my fault”, says McCarthy
McCarthy said that it was not his fault that the country was trudging towards a financial crisis, and blamed the White House for not entertaining Republican Party’s initial calls to slash spending and reach an agreement. “I’m hoping we can make progress,” McCarthy said, adding, “I am not going to give up.”
USA’s debt ceiling crisis is prompted by a deadlock between Republicans and Democrats over governmental spending. While Republicans want to roll back excessive federal government spending, Biden and company are pushing back!
Treasury Secretary Janet Yellen warns of an economic stress
Meanwhile, Treasury Secretary Janet Yellen has warned that the country may not get past early June without defaulting, a situation that she has termed “catastrophic.”
"It seems almost certain. We are seeing some stress already in Treasury markets,” she fretted.
Failing to increase the nation's debt ceiling, which currently stands at $31 trillion, would pose a significant risk of a disorderly federal default, likely resulting in economic turmoil, both domestically and internationally.
Negotiations enter third week
The negotiations to raise the debt limit have now entered their third week, a situation that was not anticipated. Initially, the White House adamantly stated that it would not entertain any discussions or compromises regarding the necessity of paying the nation's bills. It insisted that Congress should simply raise the ceiling without any conditions, as it has done numerous times in the past.
Watch: What is the US debt ceiling & what happens if it isn't raised?
However, in February, the newly elected Speaker of the House met with President Biden in the Oval Office and urged him to engage in negotiations for a budget package. The package aimed to reduce spending and address the nation's growing deficits in exchange for the necessary votes to increase the debt ceiling in future.
On February 1, the speaker conveyed his message to the president, emphasising that tax increases were not acceptable and that the government must spend less money than the previous year.
The negotiations currently revolve around determining the limit for the 2024 budget year. While Republicans initially insisted on rolling back spending to 2022 levels, they have now shifted their position to emphasise the need for reduced government spending in the coming year. On the other hand, the White House has proposed maintaining current spending levels from 2023 through a spending freeze.
Time is running out for decision-makers in Washington to reach a resolution. The consequences of failing to raise the debt ceiling could be dire, and finding common ground on the budget remains a challenging task.
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