President Joe Biden expressed optimism about reaching a deal to avert a US default but opened talks with House Speaker Kevin McCarthy by emphasizing fundamental differences that have stalled debt negotiations.
(Bloomberg) — President Joe Biden expressed optimism about reaching a deal to avert a US default but opened talks with House Speaker Kevin McCarthy by emphasizing fundamental differences that have stalled debt negotiations.
The two sat down at the White House just after Treasury Secretary Janet Yellen warned it’s now “highly likely” her department will run out of sufficient cash in early June and that default could come as soon as June 1.
“We’ve got to get something done,” Biden said. But he stressed Democratic demands to raise revenue in addition to spending cuts.
“Here’s the disagreement — I think we should be looking at tax loopholes and make sure the wealthy pay their fair share,” Biden said. Republicans have resisted any tax changes as part of a debt deal.
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As investors awaited word from the crucial meeting, Asian equity futures showed small gains while contracts for US benchmarks inched higher.
Biden and McCarthy both talked about the need to cut spending and the speaker said the two men agree the US debt is too large.
“We both agree we need to change the trajectory,” McCarthy said.
Republicans want to slash domestic spending over as many years as possible, while Democrats have offered slimmer cuts over a couple of years. Democrats also want to include defense spending limits in any agreement.
That sets up a key tension for hawkish Republicans, who want to increase the Pentagon budget at the expense of deeper cuts in social spending.
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McCarthy told reporters earlier in the day that a meeting of White House and Republican negotiating teams in the morning was “productive.” But he said the two sides would need to strike a bargain on the debt ceiling this week for Congress to act in time.
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