The United States President Joe Biden has held a meeting with GOP House Speaker Kevin McCarthy to resolve the issue of raising the American debt ceiling, which determines how much the federal government can borrow to pay its accounts. The meeting was held after Janet Yellen, US Treasury Secretary, wrote three letters in three weeks to warn of the worst economic conditions. But till now, there is no solution defined to the country’s current financial challenges, as the government is going to run out of funds in early June.
After the meeting session on Monday, McCarthy showed optimistic signs and made a press discussion in the White House after the talk. He said the current conversation was better than the earlier one and would be productive. McCarthy said they had tough meetings earlier, but this meeting would be productive and bring results. As a negotiating team, they needed more details to get to a package that could pass Congress. Kevin added a deal to raise the debt ceiling is reachable before June and hoped it would be done. He expressed each side has to make some compromises before getting any results, and there is nothing agreed upon, everything is under talk, and negotiators would work all night to reach a possible solution.
The $31.4 trillion debt ceiling issue has been a topic of political disagreement for some time now. Republicans want to reduce government expenses by cutting social welfare programs, but many Democrats are against this idea. Finding a solution that satisfies both parties can be challenging. Recently Biden Government offered to increase the debt ceiling without any conditions attached. President Biden has also called for wealthy Americans and big organizations to pay all of their taxes so the country’s revenue can be increased and the national debt can be addressed.
Yellen Threatened for Weeks About Possible Economic Disaster
The meeting in the White House was held after Janet wrote a third letter, which warned of the possible economic threats and urged legislators to act as soon as possible. Treasury Secretary described on Monday that the government could default on its payments from the 1st of June, which is only a week away. It’s concerning to see that political deadlock has real-world consequences. As she pointed out, the Treasury’s borrowing costs have increased significantly for securities maturing in early June. Janet added, “Our leaders must find a way to break this deadlock and work towards a resolution that benefits everyone.”
Treasury Secretary stated that if Congress fails to resolve the issue of raising the debt ceiling, there would be catastrophic results for American families, global leadership position would be harmed, and would raise questions about our ability to defend our national security. Economists have anticipated that if the American government defaults on its loans, it could lessen the country’s credit rating and increment in interest rates, putting pressure on the economy. Many businesses and individuals reliant on government funds would see a stop or delay in the payments.
Last week, negotiations stopped when McCarthy left the White House, ending the talks, and he put the White House responsible for the delay and lack of progress in the negotiations; Monday talks have brought fresh air. Last weekend, President Biden was on a trip to Japan for a G7 meeting, and he also had scheduled stops in some allied nations in the Pacific region. Biden was criticized for being absent during important negotiations, so his team cut the visit short and canceled visits to Australia, Papua New Guinea, and Australia. During his departure from Japan, the President of the White House talked to McCarthy, rekindling the debt negotiation talks; both sides sounded optimistic.