Agreement on Debt Controversy: US President Biden Remains Optimistic

Updated on 05/20/2023 09:07

  • The debt dispute in US politics may end soon: US President Biden was in a positive mood after the last talks.
  • The nation’s Democratic administration has been at odds with Republicans for months over raising the debt ceiling.

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Talks on a debt settlement in the United States were initially suspended and then resumed, with US President Jo Biden The deal with the Republican Party was shown to be optimistic. “I still believe we can do something dignified to avoid default,” Biden told reporters on Saturday on the sidelines of the G7 summit in Hiroshima, Japan.

Budget talks between the US government and opposition Republicans hit a setback on Friday to avoid a payment default. House Republican Speaker Kevin McCarthy said on Friday that negotiations in Washington have stalled. “Yes, we must pause.” He added, “We need movement from the White House, and we don’t have movement yet.”

Hours later, however, talks resumed, prompting White House spokeswoman Karine Jean-Pierre to say, “We’re really optimistic.”

Biden is currently attending the G7 summit in Hiroshima, Japan. According to the White House, he was briefed on the current situation in Washington on Saturday morning.

Ben LaBolt, Biden’s communications director, accused Republicans of “taking the economy hostage” and “pushing America to the brink of default.” LaBolt warned Saturday that it would “cost millions of jobs and plunge the country into recession after two years of steady job growth.”

Biden won’t accede to “extreme” Republican demands, LaBolt said. However, if Republicans return to the negotiating table to “negotiate in good faith,” there is a path forward to “reach a reasonable bipartisan deal.”

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The Biden administration and Republicans have been arguing for months about raising the debt ceiling. Without a deal, the U.S. could default for the first time in its history as early as June, with devastating economic and financial consequences far beyond the country. Due to the dispute, Biden canceled planned trips to Papua New Guinea and Australia. The president will return to Washington after the G7 summit.

US Debt Controversy: Debt ceiling reached in January

The US had already reached the statutory debt ceiling of $31.4 trillion (about 29 trillion euros) in January. Since then, the U.S. government has used “extraordinary measures” to stave off bankruptcy, but has quickly run out of options to do so.

Opposition Republicans want to approve raising the debt ceiling in exchange for billions worth of cuts in government spending. They want to roll back key elements of Biden’s reform policy, including billions in subsidies for renewable energy and certain student loan waivers. Biden rejects this, demanding that Republicans agree to a debt ceiling hike without preconditions.

The U.S. debt ceiling has been suspended or raised dozens of times over the past few decades by leaders of both parties — and by bipartisan majorities. This year, however, Republicans are flexing their muscles with their new majority in the House of Representatives, which they achieved in the midterm elections in the fall of 2022.

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