Biden and Speaker McCarthy set for debt ceiling talks

Photo: Alex Wong/Getty Images

U.S. President Joe Biden and House Republican Speaker Kevin McCarthy are scheduled to meet on Monday to negotiate on the contentious issue of the debt ceiling, following a phone discussion, according to statements from both camps on Sunday.

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Speaker McCarthy, in a press briefing at the U.S. Capitol post-call, expressed optimism about resolving the current stalemate and announced that talks between staff members would continue later on Sunday.

Reacting to his conversation with the President, McCarthy stated, “Our teams are talking today and we’re setting to have a meeting tomorrow. That’s better than it was earlier. So, yes.” A White House official confirmed the impending meeting, albeit without providing a specific timeline.

Returning from the G7 summit in Japan, President Biden expressed readiness to concurrently address spending reductions and tax adjustments to reach a settlement, although he found the latest Republican proposal on the debt ceiling “unacceptable.”

The Treasury Department has issued a stark warning that, unless the debt ceiling is raised by June 1, the federal government could default on its financial obligations, a scenario likely to cause significant disruption in financial markets and a surge in interest rates.

Despite escalating rhetoric and stalled negotiations in recent days, McCarthy’s comments on Sunday signaled a positive shift in tone. The President, during a press conference in Hiroshima, emphasized the need for Republicans to compromise.

After the Sunday call, McCarthy acknowledged the absence of a final agreement but affirmed a mutual commitment to resume negotiations. Concerns surrounding a potential default are adding pressure to financial markets. The U.S. was compelled to offer record-high interest rates on its debt on Friday.

Time is running out for bipartisan consensus with just ten days left before the Treasury’s deadline. The last time the nation teetered on the brink of default was in 2011, under a similar political configuration with a Democratic president and Senate, and a Republican-led House.

That crisis was eventually averted, but not without considerable economic repercussions, including the unprecedented downgrade of the United States’ credit rating and a substantial stock sell-off.