US Debt Crisis: Biden and McCarthy Teams Meet as Deadline Looms

President Joe Biden and House Speaker Kevin McCarthy were due to meet again on Wednesday to strike a debt limit increase deal amid the US Treasury Department's warning that the federal government may not be able to pay its obligations by June 1, making a settlement urgent.

On Wednesday, McCarthy told reporters that he and Biden hadn't talked since their Monday conversation at the White House, but he was optimistic about their negotiation teams' progress. McCarthy said that the negotiators would resume talks that morning, according to Reuters.

PIMCO, a major US bond firm, stressed the need to settle by midweek to fulfill the US debt ceiling deadline. However, President Biden and House Speaker McCarthy remain deeply opposed on the way ahead.

Republicans want huge expenditure cuts, while Democrats want to keep spending the same but raise taxes to pay off the debt. Biden and McCarthy's conversations after their Monday night White House meeting showed progress but did not result in a debt ceiling increase.

Democrats may now be forced to accept concessions, including clawbacks in pandemic money, job requirements for social programs, and other spending limitations, to obtain a measure that can win congressional support. These concessions depart from the White House's original demand for an unqualified raise in the US debt ceiling.

US Debt Ceiling Crisis May Impact Biden's Presidential Bid

However, the political repercussions of a US government default exceed these financial agreements. Biden admitted that some Republicans feel a government default would be blamed on him as president, which might hurt his re-election chances in 2024.

Meanwhile, public opinion is divided on US default liability. A Tuesday NPR/PBS NewsHour/Marist poll found that 43% of Americans think Biden would take most of the responsibility, while 45% hold legislative Republicans liable. Only 7% of respondents said both parties should take the blame, as per a Bloomberg report.

The US economy would be devastated by a government default, as Treasury Secretary Janet Yellen and economic experts have cautioned. Although the particular US default effects are unclear, they would have a significant influence.

Yellen has warned of job losses, company closures, and unmet federal government payments to millions of recipients, including veterans, military families, and Social Security pensioners, per PBS.

Moreover, over 8 million jobs might be lost, perhaps causing a recession.