As the countdown to the debt ceiling negotiations begins, Biden and Republican leaders reassure the public that there will be no default.

As debt ceiling negotiations begin, Biden and GOP leaders reassure the public there will be no default.

Source: Wall Street Watch

Author: Li Dan

There are only two weeks left until the earliest possible default date warned by the US Treasury Secretary. Biden said on Wednesday that he is confident in reaching a consensus on the budget. Republican House leader McCarthy did not directly say he was optimistic about the situation in the debt negotiations, but said he was encouraged by Biden’s willingness to negotiate. Democratic House members have started collecting signatures in an attempt to bypass McCarthy and push for a debt ceiling vote.

As the debt ceiling talks are intensifying and approaching the deadline for the earliest possible default, both US President Biden and Republican House leader McCarthy are trying to reassure people and dispel concerns about the possibility of a default caused by the debt ceiling.

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On Wednesday morning, US Eastern Time, House Speaker McCarthy told the media: “I don’t think we will default on our debt in the end.” McCarthy did not directly say he was optimistic about the situation in the debt negotiations, but said he was encouraged by Biden’s willingness to negotiate.

Before leaving for Asia, Biden also expressed his attitude of not letting the US government default, saying that he “is confident that we will reach a consensus on the budget and the United States will not default.” He said: “We will come together because there is no other choice. Every leader in the (negotiating) room understands the consequences of failure.”

McCarthy said: “The only thing I am confident about is that we now have a structure to find a way to come to a conclusion.” “Time is very tight. But we need to make sure we get this done in the (negotiating) room.”

House Democratic leader Jeffries, who was interviewed on Wednesday morning, and McCarthy both believe that the negotiations are progressing, but they maintain their respective positions.

Jeffries commented that the talks on Tuesday were very positive and led to frank discussions. He optimistically believes that the two sides will find common ground in the next one or two weeks.

Jeffries said that the Republican Party’s demand that work requirements be attached to food welfare provided by the federal government is impossible to achieve, but he still maintains an optimistic attitude towards the negotiations. McCarthy said that the request for work requirements is a responsible matter and applies only to physically healthy people without dependents or caregivers. Biden voted in favor of these requirements when he was a senator.

Media reported that while the White House has made it clear that it opposes work requirements in the Medicaid program, officials have not ruled out Biden’s willingness to discuss stricter work requirements for the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program.

Before his trip on Wednesday, Biden said he would not accept “any work requirements that would affect the health care needs of the public,” but expressed confidence in reaching a budget agreement. The media believes that he has opened the door to some new rules.

While Republicans are pushing for work requirements, Democrats have been demanding mechanisms to increase revenue in debt negotiations. McCarthy said on Wednesday that negotiations on the debt ceiling would not discuss tax issues, which Biden admitted on Tuesday.

Also on Wednesday, Democratic lawmakers in the House began collecting signatures to seek a “discharge petition,” an unconventional way to increase the debt ceiling, which is a parliamentary strategy aimed at bypassing Republican leadership in the House and forcing a vote. Starting this voluntary process would bypass Republican leadership such as McCarthy and directly push for a vote on the debt ceiling bill.

Currently, there are only two weeks left until the so-called “X date,” the day when the US Treasury Secretary Janet Yellen warned of a possible debt default at the beginning of next month.

On the 1st of this month, Yellen warned in a letter to congressional leaders that if Congress fails to raise the debt ceiling or suspend it, the Treasury Department will be unable to fulfill all government obligations by early June, possibly as early as June 1.

Since then, Yellen has repeatedly warned that funds could be exhausted as early as June 1. On Monday and Tuesday of this week, Yellen reiterated the deadline of June 1.

On Tuesday, Yellen also issued her strongest warning yet, saying that a debt default would undermine the foundation on which the US financial system is built, leading to the collapse of many financial markets and a global run on banks. Default could leave millions of Americans without income and potentially cause an economic recession that would destroy multiple jobs and businesses.

Wall Street News mentioned that as of Tuesday, debt limit negotiations between the White House and Congress were still deadlocked, but participants said there was some progress.

After the Tuesday meeting, Biden appointed two senior aides – Office of Management and Budget Director Shalanda Young and senior advisor Steve Ricchetti – as chief negotiators. The aides said they would hold direct one-on-one talks with McCarthy and Republican Representative Garret Graves, his ally.

Biden decided on Tuesday to shorten his trip to the Asia-Pacific region and will return to the United States on Sunday, May 21, canceling his visits to Papua New Guinea and Australia. Some analysts believe that Biden’s move will be a crucial step in avoiding the first-ever default in US history and preventing major economic losses.

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