A government default would threaten to disrupt Social Security payments to retirees, destabilize global markets and tilt the nation into a potentially debilitating recession, experts say.
WASHINGTON — House Speaker Kevin McCarthy said Tuesday after meeting with President Joe Biden and Democratic congressional leaders that he “didn’t see any new movement” toward ending a months-long impasse over raising the nation’s borrowing limit. But he said they would reconvene Friday in hopes of averting a potential U.S. default by the federal government.
Republicans came to the White House hoping to negotiate sweeping cuts to federal spending in exchange for allowing new borrowing to avoid default. Biden, on the other hand, reinforced his opposition to allowing the country’s full faith and credit to be held “hostage” to negotiations — while affirming his willingness to hold talks on the budget only after default is no longer a threat.
Democrats said there is room to “come together” on spending cuts as part of the budget process, but quickly jumped on McCarthy’s refusal to rule out the possibility of default, with Schumer saying the Republican is “greatly endangering America.” The chasm between these opposite postures is fomenting uncertainty that is roiling financial markets and threatens to turn into a tidal wave that swamps the country’s economy. The meeting was timed to begin after U.S. financial markets closed for the day.
Already looking past the meeting, Biden on Wednesday is to go to Westchester County, New York, where he plans to deliver a speech on how proposed spending cuts approved by House Republicans could hurt teachers, older adults needing food aid and veterans seeking health care. “Securing a bipartisan path forward to raise the debt ceiling could not be more urgent,” said Josh Bolten, the head of the Business Roundtable, a group that represents CEOs. “The cost of a default, or even the threat of a default, is simply too high.”
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