Joe Biden has claimed that White House officials are “making progress” in budget negotiations with Republicans to avoid a devastating debt default, even as time runs out to enact any deal before the government runs out of money to pay all its bills as soon as next week.
The US president struck a relatively optimistic tone when he gave an update on talks to avert the financial crisis gripping Washington at an event in the White House Rose Garden on Thursday afternoon.
“Loudspeaker [Kevin] “McCarthy and I have had many productive conversations, and our staff is still meeting as we actually speak — and they’re making progress,” Biden said. “I believe we will come to an agreement that allows us to move forward and protects the hardworking Americans in this country.”
His comments came a day after ratings agency Fitch warned it could downgrade the US notch due to a “brinkmanship policy” on the US debt limit, amid growing fears that financial pressures could mount in the coming days in the absence of a compromise.
Both Biden and McCarthy, the Republican House speaker, have faced calls from rank-and-file members of their parties not to compromise on concessions in the final phase of negotiations.
McCarthy even spoke on the phone Thursday with former President Donald Trump, who has called on Republicans to accept a default if Biden does not agree to deep spending cuts. Then he met with top Republican lawmakers in his office. “Every hour counts,” McCarthy told ABC News.
House members are heading home for the Memorial Day long weekend, but have been told they may need to return to Washington at short notice.
The US Treasury has warned that the world’s largest economy could run out of money to pay all its bills as early as June 1, risking its first government debt default.
Congressional aides say the path to getting a deal through both houses of the legislature and to Biden to sign it in time is becoming increasingly narrow. “The hourglass for a potential debt ceiling deal has almost run out of sand,” Chris Krueger, an analyst at TD Cowen’s Washington Research Group, wrote in a note Thursday.
If a deal is reached by Friday, he said, the earliest a bill the House could pass would be Tuesday, after which it would be fast-tracked through the Senate the next day.
He added, “This schedule certainly leans towards optimism and assumes a very high level of execution skill with everything in place.”
Business groups in Washington are urging both sides to reach a compromise as quickly as possible to avoid a potentially devastating economic and financial blow.
“It starts to feel really nauseating if there’s no deal in the next 24 hours,” said Neil Bradley, chief policy officer at the American Chamber of Commerce. “We’re in that window where you need things to go right.”
Speaking at an event organized by the Investment Company Institute earlier in the day, Wali Adeyou, Deputy Secretary of the Treasury, lamented that the standoff had come to a backwards.
“I think everyone’s goal is to make sure we raise the debt limit. But the most important thing is, as you all know in this room [and] What the American people know, though, is that we shouldn’t be here,” he said. “This is a manufactured crisis.”