Debt Limit Stagnant Continues in the US

Concerns over a potential debt crisis are rising as the US debt ceiling deadlock remains unresolved.

Debt limit negotiators appointed by US House Speaker Kevin McCarthy walked out of talks they had begun with White House officials, shattering expectations of the limit deal. Of the debt. President Joe Biden also instructed his aides today to schedule a meeting with McCarthy.

THEY WAITING FOR BIDEN

According to a White House official, Biden received updates on negotiations stalled over the debt crisis in Japan, where he attended the G7 summit. McCarthy said the issue is unlikely to be resolved while the president is still abroad.

US Treasury Secretary Janet Yellen also said last week that the country could face a cash crunch if the debt limit is not raised or suspended by June 1.

Yellen said that unless action is taken by this date, it is estimated that the Treasury will not be able to meet all of the government’s obligations.

PEOPLE OF THE REPUBLIC

However, the Republicans continued to insist on the debt limit despite the warnings. “We have to spend less than we did this year,” McCarthy reiterated.

Republicans rejected a White House proposal to keep spending at the same level next year compared to 2023, according to two sources familiar with the negotiations.

McCarthy said they wanted to cut non-defense spending year after year, while Democrats argued that keeping appropriations stable meant an effective cut due to inflation.

Republicans also said they wanted an increase in the Pentagon budget on top of the cuts. The White House opposed these demands, saying that because of these two demands, the health and education programs would have to be reduced.

WHAT IS THE BASIC DEBT LIMIT?

In the US, the federal government has reached the $31.4 trillion debt limit that could lead to default.

The debt limit, or debt ceiling, means “the upper limit of the amount of money the US government can borrow to pay its debts.”

Republicans, who have a majority in the House of Representatives, favor major spending cuts in the debt limit negotiations. Democrats insist on raising the debt limit and reject Republican proposals to cut certain spending.

There is concern that the debt limit issue, which has become an impasse between Democrats and Republicans, will rock markets. As US recessionary expectations rise, the two-party standoff over the debt limit carries more risk than ever.