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

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Kevin McCarthy, the Republican House Speaker, said there would be no progress in the debt ceiling talks until US President Joe Biden returns from the G7 summit in Japan on Sunday evening, while tensions were erupting as the budget stalemate threatened the world’s largest economy.

Speaking to reporters at the U.S. Capitol on Saturday afternoon, McCarthy accused the White House of “backing off” in negotiations on a fiscal pact, dashing hopes of a breakthrough that could calm markets before they open on Monday.

“I don’t think we can move forward until the president can come back to the country,” McCarthy said.

Biden is not expected to return to the White House until 11 p.m. Sunday local time.

The lack of any movement in the talks will be worrying as the government borrowing limit must be raised by June 1 or Washington faces an unprecedented default on US debt. Such an event could plunge global markets into turmoil and the US economy into recession.

Any debt ceiling agreement would take several days to pass both houses of Congress and be signed by the president. Even getting closer to the deadline could scare off investors and trigger economic disruption.

McCarthy’s pessimistic tone was matched by pessimism from the White House, which blamed the state of negotiations on Republican hardliners currying favor with Donald Trump’s Make America Great Again movement.

“It is only a Republican leadership beholden to its Maga wing – not the President or the Democratic leadership – that threatens to default our nation for the first time in our history unless extreme partisan demands are met.” , said Karine Jean, press secretary of the White House. -Pierre said in a statement Saturday.

Given the negative economic repercussions of a default, as well as the unpredictable political impact, Biden and congressional Republicans are still expected to come to an agreement. The setback in the talks, which has been accompanied by pressure not to back down from factions in the Democratic and Republican parties, could be a necessary precursor to an eventual deal, rather than a sign that the talks are getting dangerously off course.

To approve a debt ceiling increase, Republicans pushed for deep spending cuts over 10 years, while Democrats would agree to much more limited budget cuts over a shorter period. They also clashed over the imposition of new work requirements for social spending programs. Both sides had expressed more optimism about the talks from last week until Friday, when talks were halted for several hours before resuming.

In Japan early on Saturday, Biden said he still believed the default could be averted and “something decent” could be done – but he also said talks were moving forward in “stages”.

“The first meetings were not so progressive. The latter were. The third was,” Biden said.

“And then what happens is. . . the carriers go back to the originators and say: “That’s what we’re thinking”. And then people file new claims,” the US president said.