May 16 (UPI) — President Joe Biden is holding a second meeting with congressional leaders Tuesday on raising the debt ceiling as negotiations remain deadlocked with a potentially catastrophic default weeks away.
Biden is sitting down again in the Oval Office with House Speaker Kevin McCarthy, R-Calif., House Democratic leader Hakeem Jeffries, D-N.Y., Senate Democratic leader Chuck Schumer, D-N.Y., and Senate Republican leader Mitch McConnell, R-Ky. The group failed to reach common ground during a meeting May 9.
In an urgent letter to McCarthy on Monday, Treasury Secretary Janet Yellen reiterated that the United States was on course to default on its national debt as early as June 1.
“With additional information now available, I am writing to note that we still estimate that Treasury will likely no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by early June, and potentially as early as June 1,” she wrote.
“Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”
Last week, the Congressional Budget Office released a report noting that “if the debt limit remains unchanged, there is significant risk that at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations.”
Millions of people would be affected as government workers and Social Security recipients wouldn’t get paid, while many consumers would find it increasingly difficult to qualify for credit, raising the chances for a recession.
A default could also undermine faith in the U.S. economy given the nation’s ubiquitous standing in global trade.
The latest sit-down with Biden comes after a follow-up meeting scheduled for Friday was postponed to allow more time for McCarthy’s staff to meet with White House aides on a potential compromise. Lawmakers involved in those talks indicated some movement was taking place behind the scenes.
Over the weekend, Biden said he was optimistic about the discussions, telling reporters, “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it.”
McCarthy indicated Monday he was not convinced.
“We’re far apart,” he said outside the Capitol. “It doesn’t seem to me yet that they want a deal.”
On Monday night, Biden posted some tweets to highlight some of the economic dangers ahead if Congress refused to act.
“A default on America’s debt would be catastrophic for working families: 8 million jobs gone. A recession triggered. Retirement accounts devastated. Social Security checks delayed,” Biden wrote. “It’s beyond me why MAGA House Republicans would ever think this is an appropriate threat to make.”
Biden and House Republicans remain split over paying the nation’s debt through spending cuts, which the president has refused to go along with.
The president has said he wants to raise the debt ceiling without any conditions and negotiate spending cuts separately as part of the national budget plan. McCarthy has continued to express frustration with Biden since the House passed a bill in April that would slash federal programs to raise the debt ceiling by $1.5 trillion over the next year.