President Joe Biden and Republican House Speaker Kevin McCarthy are scheduled to hold a third meeting on the US debt ceiling on Monday, with only 10 days remaining until the country could face a catastrophic default.
Monday’s meeting between the two follows a weekend of stop-start discussions, and negotiators between the two parties continued to hold talks on Sunday night. Mr Biden and McCarthy also spoke by phone.
“It went well, we’ll talk tomorrow,” Mr Biden told reporters after returning from the G7 summit in Japan.
Mr McCarthy described their call as “productive” and said discussions were focused on spending cuts.
Treasury Secretary Janet Yellen on Sunday added more pressure on the White House and Congress to raise the debt ceiling, telling NBC that June 1 was the “hard deadline” before the US defaults on its $31.4 billion debt limit.
“My assessment is that the odds of reaching June 15, while being able to pay all of our bills, is quite low,” she said.
Failure to reach an agreement on the debt ceiling and defaulting would have profoundly negative impacts on the US and global economy. Unemployment and interest rates will surge, the US economy would enter a recession and the stock market would lose 45 per cent of its value, Ms Yellen said.
Even approaching the June 1 deadline without a deal will have negative effects on the economy, she added.
But time is running out and there is still some distance that Mr Biden and Mr McCarthy must cover before they strike a deal.
Republicans want to cut next year’s spending to 2022 levels with caps on future expenditure, as well as work requirements on social programmes. Mr Biden criticized “extreme” Republicans for their position.
“It’s time for Republicans to accept that there is no deal to be made solely, solely, on their partisan terms,” he said in Japan.
Meanwhile, some Democrats in Congress are calling on the president to invoke the 14th Amendment, a Civil War-era law that states “validity of the public debt … shall not be questioned”, potentially giving Mr Biden the authority to unilaterally raise the debt ceiling.
Mr Biden said he believes he has the authority to invoke the 14th Amendment, but such a move would undoubtedly be challenged in court.
Ms Yellen called the idea “legally questionable”.
Such a move appears unlikely at this stage, with multiple media outlets reporting officials within the White House do not see invoking the 14th Amendment as an option to circumvent negotiations.