WASHINGTON – In the face of a looming financial catastrophe, Democrats and Republicans made incremental progress on Friday towards a deal to extend the US debt ceiling, thus averting a potential default that could cripple the world’s largest economy within days.
As the Treasury’s projected deadline of next Thursday for the government running out of funds approached, cautious optimism emerged in Washington regarding the possibility of a long-awaited compromise between the two sides.
Unconfirmed reports from US media outlets suggest that the deal would encompass a two-year extension to cover the ever-increasing $31 trillion US debt, effectively preventing a recurrence of the current high-stakes drama before the 2024 presidential election.
In order to secure this agreement, Democrats would need to yield to Republican demands for broad spending constraints on social safety net programs and other domestic initiatives.
The mounting pressure to reach a resolution and authorize additional borrowing to meet existing obligations has intensified. According to the Treasury, the government’s coffers could potentially run dry by next Thursday, resulting in unpaid domestic bills and disgruntled international creditors.
Although more optimistic assessments suggest a mere couple of additional weeks before the catastrophic consequences take hold, such an outcome is expected to trigger stock market downturns, substantial job losses, and an economic recession.
With Memorial Day being observed on Monday, members of Congress are departing from Washington for a 10-day recess. President Joe Biden himself, despite facing criticism from some within his own party, is retreating to his Camp David retreat and private residence in Delaware.
Nevertheless, Wally Adeyemo, the deputy Treasury secretary, assured CNN that both President Biden and Republican congressional leader Speaker Kevin McCarthy are committed to preventing catastrophe. “The president has made the decision, the speaker has expressed it, and we must reach an agreement before June,” Adeyemo stated. “The president is dedicated to engaging in good faith negotiations with the Republicans to secure a deal, as the alternative would be catastrophic for all Americans.”
In an attempt to reassure the nation, President Biden declared on Thursday, “There will be no default.”
The annual process of raising the debt ceiling is typically a routine accounting maneuver that garners little attention. It simply allows the government to continue borrowing money to cover expenses already authorized through the budget.
However, this year, the increasingly hardline faction of the Republican Party has opted to exploit the debt ceiling as leverage to compel President Biden to scale back his favored Democratic spending priorities.
Republicans argue that they are taking responsibility for the $31 trillion national debt, while the White House accuses the opposition party, which currently controls the House of Representatives, of holding the economy hostage.
Democratic minority leader Hakeem Jeffries lambasted Republicans from the House floor on Thursday, accusing them of jeopardizing the nation with “a dangerous default in a crisis that they’ve created.”
Economists have long warned of the potential economic catastrophe that would arise from a government default, and top military officials echoed these concerns on Thursday, cautioning that the crisis would have a “significant negative impact” on the military.
General Mark Milley, chairman of the Joint Chiefs of Staff, informed reporters, “Readiness would undoubtedly be affected. Our large-scale exercises conducted at various training centers would likely either slow down or come to a halt in many cases.”
While Congress members are dispersing for a 10-day recess, Speaker McCarthy has stated that lawmakers will receive 24 hours’ notice if their presence is required for a vote during the break.
McCarthy pointed to a recent CNN poll, which revealed that 60 percent of respondents supported a debt ceiling increase if accompanied by spending cuts. However, a new survey from Monmouth University indicated that 51 percent of respondents preferred the two issues to be addressed separately.
