US debt ceiling: Republicans hit ‘pause’ on negotiations for now

  • By Sam Cabral
  • BBC News, Washington

Image source, Getty Images

Congressional Republicans have paused negotiations to raise the US debt ceiling, casting doubt over talks to avoid a default.

Garret Graves, the lead Republican negotiator, left a closed-door meeting with White House representatives on Friday morning.

Mr Graves told reporters as he left that Joe Biden’s administration was making “unreasonable” requests.

The White House confirmed talks have been suspended for now.

Without a deal, the US risks losing the ability to borrow any more money, triggering a default.

The Treasury Department has warned that unless the debt limit is raised the government will be unable to pay all of its bills after 1 June.

Failure to raise the debt ceiling from its current $31.4tn (£25.2tn) limit could see the US suspend its social insurance payments and the salaries of its federal and military employees. Default also threatens to wreak havoc on the global economy, affecting prices and mortgage rates in other countries.

The pause is widely regarded as a negotiating ploy on Capitol Hill, but US financial markets flinched at the development, closing in negative territory on Friday. The Dow ended down 0.3%, the S&P 500 dipped 0.1% and the Nasdaq slipped 0.2%.

In exchange for support for raising the debt ceiling, Republicans are demanding budget cuts to the tune of $4.5tn, which includes scuppering several of Mr Biden’s legislative priorities.

The White House has called the Republican proposal “a blueprint to devastate hard-working American families”, although it has indicated in recent days that it may make some budgetary concessions.

Both President Biden and House Speaker Kevin McCarthy are under pressure from the left and right flanks of their respective parties to hold the line. With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House of Representatives, a deal has so far proven elusive.

And with the clock ticking, the two parties remain far apart.

“It’s time to press pause because it’s just not productive,” said Mr Graves, a Louisiana congressman, as he walked out. “Until people are willing to have difficult conversations about how you can actually move forward and do the right thing, we’re not going to sit here and talk to ourselves.”

Patrick McHenry, a North Carolina Republican who is involved in the talks, told the Wall Street Journal negotiations were at “a hard stop. We’re at a very bad moment.”

Mr McCarthy, who was not present in the meeting, told reporters at the US Capitol: “We’ve got to get movement from the White House and we don’t have any movement yet.”

He added that the only path forward for Republicans in these talks was a commitment for the US to spend less money next year than the year before.

Mr Biden has argued that raising the debt limit and reducing the budget deficit should be two separate issues, but about six in 10 Americans disagree, according to a new Associated Press-NORC poll.

The president hopes to close a deal after he returns to the US from a G7 summit in Japan on Sunday.

“If both sides negotiate in good faith and recognise they won’t get everything they want, a deal is still possible,” a White House official said.

“There are real differences between the parties on budget issues and talks will be difficult. The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”

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