President Joe Biden and Republican leaders are still far apart on a plan to raise the limit on federal debt but made some progress today during a meeting at the White House, participants in the talks said.
The specifics of a debt limit bill are still being negotiated, but congressional leaders said today's session was more productive than an initial meeting a week ago. US House of Representatives speaker Kevin McCarthy (R-California) said Biden has agreed to have more direct negotiations with his team, which he said provided a better opportunity for a deal.
"It is possible to get to a deal by the end of the week," McCarthy said.
Biden said the meeting was "productive," noting that daily negotiations among staff would continue. Biden today canceled plans to visit Papua New Guinea and Australia after the G7 summit in Japan so he can return to Washington for negotiations.
The US is at risk of defaulting as soon as 1 June, according to the federal officials, meaning congressional leaders have slightly more than two weeks to reach an agreement and get it through the US Congress. That leaves little room for error in avoiding a potential US default, which most economists believe could set off a global economic and financial catastrophe.
A protracted default could wipe out all of the economic gains over the last three years, cause 8mn job losses in the US and send the value of the stock market crashing by 45pc, according to an analysis by the White House Council of Economic Advisers. A default could also set off chaos in markets because of the importance of US government bonds to the global financial system.
"It's very conceivable that we'd see a number of financial markets break, with worldwide panic triggering margin calls, runs and fire sales," US treasury secretary Janet Yellen said today.
Former president Donald Trump, who is leading the field to be the Republican nomination in the 2024 presidential race, has said that a default "could be, maybe, nothing."
House Republicans last month passed a bill raising the debt ceiling but only in exchange for deep spending cuts, the elimination of nearly all clean energy spending in last year's Inflation Reduction Act and major energy policy changes. Democrats at the meeting today said they saw encouraging signs that McCarthy agreed that a debt limit bill would have to be bipartisan.
"What gave me the most hope — there were a bunch of things — is that everyone, including the speaker, agreed we need to be bipartisan," said US Senate majority leader Chuck Schumer (D-New York). Schumer described the meeting as more cordial, with more honest discussions than a week ago.
The negotiations over the debt limit could include an overhaul of federal permitting, a goal of many Republicans and Democrats in hopes of making it faster to build energy infrastructure, highways and other projects.
White House officials have indicated that permitting should not be part of the debt limit. But US energy secretary Jennifer Granholm today urged business and union leaders to get lawmakers, "particularly Democrats, on board with permitting reform" given the need to expedite the approval of energy infrastructure needed to support the switch to clean energy.
"This is a singular moment," Granholm said at an event held by the lobbying group Business Roundtable. "The debt ceiling talks and the discussions about permitting right now are so ripe for your input."
