Time is running out for the US government to avoid defaulting on its trillions of dollars of debt.
Pressure to either address the debt ceiling or risk default has prompted president Joe Biden to cut his upcoming international trip short. Biden is leaving today to meet with G7 leaders in Japan. He was also planning to visit Papua New Guinea and Australia, but those visits have been cancelled so he can return to the US.
House speaker Kevin McCarthy and other republicans have criticized Biden’s plans to go abroad as lawmakers face a possible June 1st default deadline. According to McCarthy, the two sides were still far apart but also said it’s “possible” a deal could soon be reached in a matter of a few days. Treasury Secretary Janet Yellen continues to sound the alarm bells when it comes to the country’s financial responsibilities.
She said the economic shock that would result from an unprecedented default “could lead to a recession.” On Monday, Yellen wrote a letter to McCarthy saying the treasury was already seeing adverse impacts on the economy as negotiations continue including increased borrowing costs and more harm could come if lawmakers wait until the final hour to strike a deal.
Biden and democrats had insisted republicans take default off the table, and separate the debt ceiling from the 2024 budget. Republicans, on the other hand, said they’d done their job by passing the Limit, Save, Grow Act last month to raise the debt ceiling and enact deep spending cuts.