WASHINGTON — Negotiators for the White House and House Republicans resumed talks on lifting the U.S. debt ceiling amid an impasse just days before a potentially catastrophic default, according to a person familiar with the matter.
Talks between President Joe Biden’s team and representatives of House Speaker Kevin McCarthy had been at a standstill since White House negotiators left the Capitol on Tuesday.
“I firmly believe we’ll be able to get there,” McCarthy said of prospects for a deal to avert default, speaking to reporters as his negotiating team was on its way to the session.
Representatives for Biden and House Republicans began meeting about noon Eastern time in White House Budget Director Shalanda Young’s office suite. The change in locale comes a day after Republican Patrick McHenry, one of McCarthy’s negotiators, bragged that the talks have all been held in the Capitol because, in his view, the GOP has the upper hand.
U.S. stocks are showing increasing signs of concern over the standoff, with the S&P 500 index down 0.9% early Wednesday afternoon, after a 1.1% slump on Tuesday. In the Treasuries market, investors are demanding ever-higher premiums on bills that mature when the government is seen most at risk of default. Rates on Treasury bills due June 1 surpassed 7% early Wednesday afternoon.
Treasury Secretary Janet Yellen said Wednesday that the world is just seeing the beginnings of the potential market stress if the crisis continues.
JPMorgan Chase & Co. chief U.S. economist Michael Feroli wrote to clients Wednesday warning that his team now puts the odds of hitting the June 1 “X-date” without a deal “at around 25% and rising.”
House Republicans have escalated their accusations that Biden lacks urgency in negotiations, while a Democratic aide called McCarthy unwilling to compromise across a wide spectrum of disputed points, threatening the legislative prospects of a deal.
If a default did occur, economists project it could send the U.S. into a recession, with widespread job losses and higher consumer borrowing costs spilling into election year.
“The current standoff over the U.S. debt ceiling has the potential to wreak more havoc on the economy than any previous go-around,” wrote Bloomberg Economics chief economist Anna Wong.
As an Amazon Associate I earn from qualifying purchases.
Welcome to the discussion.
Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.