Debt talks between US President Joe Biden and senior Republicans have been postponed until early next week to allow staff to continue working, according to a statement by the White House on Thursday. The two sides remain divided over the debt ceiling, with Republicans insisting on significant budget cuts in exchange for support to lift the limit before the country runs out of money to pay its existing bills. Meanwhile, Democrats have been calling for a “clean” increase of the borrowing limit, accusing Republicans of using extreme tactics to push their political agenda ahead of the “X-date” – the point at which the US will be unable to meet its financial obligations.
The postponement of the talks was seen as a positive development by a source familiar with the meetings, who said talks between the two sides were progressing, making Friday not the right moment for the leaders to meet. However, Republican Speaker of the House of Representatives, Kevin McCarthy, accused Democrats, including Senate Minority Leader Chuck Schumer, of holding up the deal. McCarthy added that he expected there would be another meeting between senior Republican and Democratic leaders next week.
The debt ceiling talks were the second scheduled for this week, with both sides looking to avoid the X-date, which US Treasury Secretary Janet Yellen has warned could come as soon as June 1. President Biden suggested earlier this week that he may cancel a planned trip to Asia if talks do not yield a breakthrough on the debt ceiling. Calls for the US to avert a debt default have been growing as the X-date approaches, with the International Monetary Fund also warning of severe consequences if the US didn’t pay its debts.
JPMorgan’s Chief Executive Jamie Dimon, in an interview with Bloomberg TV on Thursday, called the debt ceiling "potentially catastrophic" and said the American financial system is the foundation of the global economic system. He added he hoped a debt default could be avoided. Earlier this week, former president Donald Trump suggested at a CNN event that Republicans should trigger a default if Biden fails to agree to spending cuts.
As the talks continue, the world will be watching closely to see if a compromise can be reached before the US faces a debt default, which could have serious repercussions not only for the US but also for the global economy.
