- By Sam Cabral
- ` News, Washington
May 19, 2023
Updated May 20, 2023
image source, Getty Images
White House and Republican negotiators have resumed negotiations on the US debt ceiling after a brief pause on Friday that rocked financial markets.
House Speaker Kevin McCarthy said negotiations in the Capitol were back on, but the White House warned of “serious differences.”
Republicans had suspended talks hours earlier, accusing the White House of “unreasonable” demands.
Without an agreement, the US could default on its $31.4 trillion (£25.2 trillion) debt.
That would mean the government could no longer borrow money or pay all the bills.
The Treasury Department has warned that a default could begin on June 1.
Spokesman McCarthy told Fox Business Friday night, “We’ll be back in the room tonight.”
“But it’s very frustrating when they come into the space thinking we’re going to spend more money next year than we did this year. That is not right and will not happen.”
He said he has not spoken to President Joe Biden, who is attending the G7 summit in Japan and will be back in Washington on Sunday after his trip abroad was cut short.
Garret Graves, the leading Republican negotiator, told reporters they had an “open discussion about realistic numbers, a realistic way forward, and something that would really change the trajectory of this country’s spending and debt problems.”
The White House indicated that both sides are still far from an agreement.
At a press conference in Hiroshima, spokeswoman Karine Jean-Pierre said: “We have serious differences. And this will continue to be a difficult conversation. We didn’t miss that.”
She also asked if Republicans in Congress were serious about cutting the deficit and reaching a “reasonable” deal.
image source, Getty Images
Failure to raise the debt ceiling from its current limit could result in the US suspending its Social Security payments and the salaries of its federal and military employees. A default also threatens to wreak havoc on the global economy and impact prices and mortgage rates in other countries.
The halt in talks earlier Friday was widely seen as a negotiating ploy on Capitol Hill, but US financial markets winced at the development, ending the afternoon in negative territory. The Dow ended down 0.3%, the S&P 500 lost 0.1% and the Nasdaq slipped 0.2%.
In return for their support for raising the debt ceiling, Republicans are demanding $4.5 trillion in budget cuts, which include removing several of Mr. Biden’s legislative priorities.
The White House has called the Republican proposal “a blueprint to crush hard-working American families,” though it has hinted in recent days that it might make some fiscal concessions.
Both President Biden and Speaker McCarthy are under pressure from their respective parties’ left and right flanks to stand the line. With a single Democratic majority in the Senate and narrow Republican control in the House of Representatives, an agreement has so far proved elusive.
And even though the clock is ticking, the two parties remain far apart.
Patrick McHenry, a North Carolina Republican who is also involved in the talks, told the Wall Street Journal earlier Friday that the negotiations are at a “very bad moment.”
Mr. Biden has argued that raising the debt ceiling and reducing the budget deficit should be two separate issues, but about six in 10 Americans disagree, according to a new Associated Press-NORC poll.
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