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Biden, McCarthy appear near to deal on US debt ceiling as default looms

2023-05-25
Image: Credit: AFP via Getty Image

U.S. President Joe Biden and top congressional Republican Kevin McCarthy on Thursday appeared to be nearing a deal to cut spending and raise the government's $31.4 trillion debt ceiling, with little time to spare to head off the risk of default.

The deal would specify the total amount the government could spend on discretionary programs like housing and education, according to a person familiar with the talks, but not break that down into individual categories. The two sides are just $70 billion apart on a total figure that would be well over $1 trillion, according to another source.

The two sides met virtually on Thursday, the White House said. Biden said they still disagreed where the cuts should fall.

"I don't believe the whole burden should fall back to middle class and working-class Americans," he told reporters.

It is unclear precisely how much time Congress has left to act. The Treasury Department was warned that it could be unable to cover all its obligations as soon as June 1, but on Thursday said it would sell $119 billion worth of debt that will come due on that date, suggesting to some market watchers that it was not an iron-clad deadline.

"They have suggested in the past that they would not announce auctions that they did not believe they had the means to settle," Gennadiy Goldberg, senior rates strategist at TD Securities in New York. "So I do think that's a positive note."

Any agreement will have to pass the Republican-controlled House of Representatives and the Democratic-controlled Senate. That could be tricky, as some right-wing Republicans and many liberal Democrats said they were upset by the prospect of compromise.

"I don't think everybody's going to be happy at the end of the day. That's not how the system works," said House Speaker McCarthy.

His office did not respond to a request for comment about the possible agreement with the Democratic president.

The House adjourned on Thursday afternoon for a week-long break, and the Senate is not in session. Lawmakers have been told to be ready to come back to vote if a deal is reached.

Source:https://www.reuters.com/markets/us/white-house-republicans-seek-close-us-debt-ceiling-deal-deadline-nears-2023-05-25/

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