McCarthy says no progress on US debt talks until Biden is back from G7

Republican House Speaker Kevin McCarthy said there would be no progress on debt ceiling talks until US President Joe Biden returned from the G7 summit in Japan late Sunday, as tensions escalated over a fiscal impasse for the world’s biggest economy.

Speaking to reporters at the US Capitol on Saturday afternoon, McCarthy accused the White House of “going behind” in talks on a budget accord, dashing hopes of a breakthrough that could calm markets ahead of Monday’s opening. .

“I don’t think we’ll be able to move forward until the president can return to the country,” McCarthy said.

Biden is not expected back at the White House until 11 p.m. local time on Sunday.

The lack of any momentum in the talks will be a concern as the government borrowing limit needs to be extended by June 1 or Washington will face an unprecedented default on US debt. Such an event could send global markets into turmoil and the US economy into recession.

Any deal on the debt ceiling would take several days to be passed by both houses of Congress and signed by the president. Even as the deadline approaches, investors may be scared away and economic disruption could result.

McCarthy’s downbeat tone was matched by more pessimism coming from the White House about the status of negotiations.

“The President appointed an experienced negotiating team and instructed them to act in good faith to reach an agreement. But now, Republicans are holding the economy hostage and pushing us to the brink of default, costing millions of jobs. spending, and after two years of stable job and wage growth, the country could slide into recession,” Ben LaBolt, White House communications director, said in a statement on Saturday.

He said Republicans were still pushing “a wish list of extreme MAGA priorities” that would punish middle class and needy Americans and set back our economic progress.

Given the negative economic consequences of a default as well as the unforeseen political ramifications, Biden and congressional Republicans are still hopeful of eventually reaching an agreement. The setback in talks, which have been accompanied by pressure not to concede from factions within both the Democratic and Republican parties, could be a necessary precursor to a final deal rather than a sign that talks are veering dangerously close.

To approve an increase in the debt ceiling, Republicans are pushing for spending cuts over 10 years, while Democrats would accept more limited budgetary cuts over a shorter period of time. They have also clashed over the introduction of new work requirements for social spending programmes. Both sides expressed more optimism about the talks last week until Friday, when talks broke down for several hours before resuming.

In Japan on Saturday morning, Biden said he still thought the default could be avoided and “something good” could be done – but he also said talks were progressing “in stages”.

“The first meetings were not so progressive. There were other ones. The third one was,” Biden said.

“And then what happens . . . the carriers go back to the principals and say: ‘This is what we’re thinking about’. And then, people make new claims,” ​​the US president said.