Cautious optimism on the US debt ceiling

US President Joe Biden cuts short trip to Asia as part of US public debt ceiling negotiations. Biden thinks a solution is obvious, even though talks with Republicans have yet to come to anything. The president’s decision is seen as a positive signal, says US correspondent Jan Postma. “There really is something to negotiate.”

According to Postma, the negotiations have entered a new phase. “Negotiations are also taking place in a smaller circle, with far fewer officials.” Republican House Speaker Kevin McCarthy is optimistic he believes a deal could be reached by the end of the week. “It’s very optimistic, the two parties are still far from each other. We’re really not there yet.

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The debt ceiling is the maximum amount of debt the US government can assume under the law. Biden wants Republicans, the majority in the House of Representatives, to agree to raise the debt ceiling without additional conditions. Economists believe the Treasury will run out of cash in August if the ceiling is not raised.

Pain

According to Postma, both sides dug. Biden wants to raise the cap to $31 trillion. Republicans only want to vote if the government makes major cuts, including to Social Security. One of the crown jewels for Biden is the cancellation of student debt, according to Postma he does not want to get rid of it, although Republicans continue to insist on it. “You can see there are changes. Biden initially said he wouldn’t cooperate with this, but at the same time you see now that people are talking about it.

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McCarthy said after the meeting with Biden that there was still “a lot of work to do.” According to Postma, both sides have reached a point where it “must start to hurt.” “There must be a compromise, but no one knows how yet.”

G7

Biden will fly to Japan on Wednesday for a G7 summit. Its itinerary also included stops in Papua New Guinea and Australia, but these are being phased out. Instead, he will return to Washington on Sunday to deal with the debt ceiling crisis.

The aim is to reach an agreement on the debt ceiling before June 1. Postma expects a deal just before then. “At least the last week or even the last few days, so it can go through Congress as well. That’s usually how it goes.