A WHITE House official said today “steady progress” is being made in talks on raising the US debt ceiling while President Joe Biden is in Japan for the G7 summit.

The US government is expecting to hit the legal borrowing limit by as soon as June 1 – raising the possibility of the world’s largest economy defaulting on debt repayments for the first time.

A default on the country’s US$31.8 trillion (RM144.8 trillion) debt would unleash turmoil for global markets if an agreement is not reached between Democrats and Republicans, who are demanding deep spending cuts before the debt limit can be raised.

Biden “requested and received an update this morning from his designated negotiating team” informing him that “steady progress is being made”, the official said.

“The president directed his team to continue pressing forward for a bipartisan agreement,” they added.

“He remains confident that Congress will take necessary action to avoid default.”

Yesterday, top US Republican Kevin McCarthy said he saw “the path” to a breakthrough in talks to avert a default, despite signals from his party’s hard right that they would not soften their spending-cut demands.

“We’re not there – we haven’t agreed to anything yet – but I see the path (where) we could come to an agreement,” the House speaker said in his most upbeat assessment yet of the high-stakes standoff between Republicans in Congress and Biden.

“I think we have the structure now and everybody’s working hard.”

Democrats point out the debt limit has been raised dozens of times without budget negotiations, and accuse the Republicans of holding the US economy “hostage”.

Congressional leaders have held two rounds of talks with Biden, but time is running out for legislation to move through Congress before the coffers run dry.

Any deal would need to pass the Republican-led House and the Senate ahead of the deadline, and McCarthy said it would need 11 days to get through both chambers of Congress. – AFP, May 19, 2023.