Biden-McCarthy meeting ends with no deal. But optimism is now greater – Politics

There is still no political agreement around the debt ceiling in the United States – which, if not raised, leaves the country in trouble, as the federal government may not be able to make its payments as of June 1, putting the country in default. However, the scenario is more promising.

US President Joe Biden met with the “speaker” of the Republican majority in the House of Representatives, Kevin McCarthy, to try to overcome the impasse, but it was not this Monday that they reached an understanding. The meeting started at 5:30 pm in Washington (10:30 pm in Lisbon) and it was past midnight here when it was announced that there was still no agreement. But both revealed to be more optimistic.

“I believe that we will reach an agreement”, declared the speaker of the House of Representatives to the journalists present. According to McCarthy, the reason for the impasse between Democrats and Republicans remains the same: spending. Still, while acknowledging the differences, he said the tone of the meeting “was better than at any other time”.

Joe Biden, on the other hand, declared that the meeting was “productive”, adding that both have an agreed point: “the ‘default’ is not an option”.

This impasse has cast doubt on the financial viability of the federal government, which, according to the US Secretary of the Treasury, Janet Yellen, could lead to the US entering into default as of June 1st.

The current debt limit – the so-called “debt ceiling” – is at 31.4 billion dollars but was reached on January 19th. The US Treasury has been able to make the necessary payments, but it may be about to run out of money. Yellen has, therefore, warned of the risk of a “default” at the start of next month.

The ceiling applies to debt held by the general public (that is, those who purchase Treasury Bonds, such as private investors, pension funds, and other governments) and money that is owed to various programs that are funded by the federal government, such as Social Security and Medicare, as well as military salaries, sovereign debt interest, tax refunds and other payments.

The disagreement between Democrats and Republicans has also left investors in pause mode, preferring to exercise caution, since, without an understanding between the two parties, the approval of an increase in the “debt ceiling” in Congress is called into question (but via the “House”, since the Senate has not raised concern for having a Democratic majority).

What essentially divides them is public spending. McCarthy has been pressing the White House to set cuts in federal budget spending that Biden calls “extreme.” The US president has already defended new taxes on the richest – which the Republicans reject.