President Biden and top congressmen agreed to postpone their next round of debt limit negotiations, scheduled for Friday, to next week, a White House spokesman said Thursday.
The decision to postpone the top-level meeting was described as a “positive development” by a person familiar with the decision and said it would give staff more time to work towards an agreement before Mr Biden and congressional leaders meet again .
The delay comes as the United States moves ever closer to defaulting on its debt. Janet L. Yellen, the Secretary of the Treasury, has warned that the government could run out of money to pay all its bills as early as June 1st.
The struggle for a solution begins less than a week before Mr Biden plans to travel to Japan for a meeting of the Group of Seven leaders. Ms Yellen, who uses accounting maneuvers to delay a default, is in Japan this week for a meeting of G7 finance ministers and on Thursday warned of the devastating economic fallout if the United States fails to pay its bills on time.
“An outage would jeopardize the profits we’ve worked so hard to achieve in our recovery from the pandemic over the last few years,” Ms Yellen said. “And it would trigger a global downturn that would set us back a lot further.”
She added, “It would also risk undermining US global economic leadership and raise questions about our ability to defend our national security interests.”
Mr. Biden and Republican leaders in Congress, who have long been at odds, appear to be working toward a compromise to raise the country’s debt ceiling. That includes trying to cut federal discretionary spending over the next year and possibly into the future.
Government officials have so far rejected any deal with Mr McCarthy that would undo Mr Biden’s landmark legislative achievements, particularly on climate change. They insist that Republicans drop key provisions of a debt-limit-raising bill passed by the House of Representatives last month, including removing most of Mr. Biden’s clean energy tax incentives and a slew of new incentives for fossil fuel development.
On the more narrow issue of discretionary spending, officials are pushing for significantly smaller cuts than House Republicans approved last month. They want shorter-term spending caps than the decade-long caps in the Republican bill. And they want to base those caps on a higher spending level than Republicans — the amount in this year’s government funding bill that Mr. Biden signed into law in December. Republicans capped spending growth beginning in fiscal 2022.
Government officials are also open to reaching an agreement with Republicans to speed up approvals for a variety of energy projects, including wind, oil, gas and solar projects — a top priority of West Virginia Senator Joe Manchin III. And Mr. Biden said Tuesday that he would consider reclaiming some unspent stimulus funds included in a law he signed into law in 2021, which is a Republican priority.
Officials hope such an agreement could attract approval — and pressure on Republicans — from business groups. That combination of issues formed the basis of a possible debt-limit agreement that officials at the US Chamber of Commerce put forward this month.
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