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President Biden and President Kevin McCarthy agreed Sunday to meet Monday afternoon to try to start talks to avoid a national debt default. demands spending cuts in exchange for raising the debt limit.
McCarthy announced the meeting, his third with Biden this month, scheduled after the president's return from the Group of 7 summit in Hiroshima, Japan, after he finished speaking with the president on Sunday and became more optimistic beforehand about prospects for a deal. .
The speaker said the House Republican Party. and White House negotiators will continue talks on Capitol Hill on Sunday to lay the groundwork. White House negotiators left the Capitol Sunday afternoon after 2 1/2 hours of negotiations with their Republican counterparts, but said they planned to continue working before Monday's meeting.
Mr. Biden “went through some of the things that he's still seeing, listening to his constituents. He was going through the things that he was looking at,” McCarthy said. “I felt that this piece was productive. But look, there is no coincidence. We are still apart.
Negotiators work against the clock. The debt ceiling, the legal limit on the government's ability to borrow to pay its obligations, is expected to be reached on June 1.
Biden and McCarthy are negotiating a tax package that would raise the cap, something Republicans have refused to do without cuts. They remain far apart on key issues, including federal spending limits, new work requirements for some federal poverty relief recipients and funds earmarked to help the IRS. action against high wages and tax evading companies.
Biden said Sunday that he believed he had the power to challenge the constitutionality of the nation's debt limit, but that he did not believe such a challenge could be successful in time to settle the federal debt default. limit. soon.
“I think we have the power,” Biden said at a news conference in Hiroshima. "The question is whether it can be made and summoned in time."
Mr. Biden added that after the current crisis is resolved, he hopes to "find some logic and take it to court" to decide whether the debt limitviolates a clause of the 14th Amendmentindicating that the United States must pay its debts. He also said that when he met world leaders, he could not assure them that the United States would default on its debts, an event that economists say could trigger a global financial crisis.
“I can't guarantee they won't force bankruptcy by doing something outrageous,” Biden said, referring to Republicans in Congress who have pushed for deep cuts in federal spending in exchange for raising the borrowing limit.
"Numbers are key here," Rep. Garret Graves, a Louisiana Republican and one of McCarthy's top negotiators, said Sunday. "The speaker was very clear: a red line is spending less money, and unless we get there, the rest is really irrelevant."
Officials from the Ministry of Finance estimate that there arelike two weeksbefore the government loses the ability to pay its bills on time, leading to bankruptcy. Both Biden and McCarthy expressed growing optimism last week that they could reach a deal that would clear the way for Congress to raise the borrowing limit and cut some federal spending.
But on Friday, Republicans abruptly halted the talks, sparking a weekend of "stop-and-go" negotiations that left things deadlocked and pushed McCarthy to reinstate Biden.
Treasury Secretary Janet L. Yellen is expected to report to Congress on the government's cash balance this week. On Sunday, Ms Yellen said her predictions that the United States will not be able to pay all its bills on time as of June 1 have not changed.
"I certainly haven't changed my grade, so I think it's a tough deadline," Yellen said on NBC's "Meet the Press."
Ms. Yellen noted that the government expects to receive significant tax payments by June 15.extend date X calllater in the summer. But he cautioned that the chances of getting that far were "pretty low."
The finance minister, whowarned last weekthat bankruptcy would "create an economic and financial disaster," he said he was not exaggerating the severity of the looming crisis.
"There will be difficult decisions to be made if the debt ceiling is not raised," Yellen said, explaining that if the United States runs out of money to pay all its bills, some will have to go unpaid.
Hope had at least faded a bit in the past few days. Biden aides accused Republicans of backtracking on key areas of the negotiations, and Republicans accused the White House of refusing to budge on top conservative priorities.
Biden criticized Republicans on Sunday for not considering raising additional tax revenue to reduce future budget deficits as part of negotiations. He said that he proposed a discretionary spending cap that would save $1 trillion over a decade compared to baseline projections.
"It's time for Republicans to accept that no budget deal can be done on their party's terms alone," he said.
Rep. Jodey C. Arrington, Republican of Texas and chairman of the Budget Committee, flatly ruled out on Sunday that Republicans would accept any tax increase as part of a debt reduction deal.
"It's not on the table," Arrington said on ABC's "This Week." "Now is not the time to tax our economy or our working families."
Some of the spikes that the parts exchanged seemed to be to reinforce their bases. Hardline funders in the House have urged McCarthy to demand far greater concessions from Biden. Some progressive Democrats have urged Biden to break off negotiations and instead act unilaterally to challenge the debt limit on constitutional grounds.
A provision of the 14th Amendment, passed after the Civil War, states that "the validity of the national debt" issued by the US government "shall not be questioned." Some lawyers say the limit is constitutional. But others argue that the clause requires the government to continue issuing new debt to pay bondholders, effectively raising the country's legal debt limit, which is overseen by Congress.
The two sides reached an agreement in talks last week, including recovering some wasted funds from previously passed legislation to deal with Covid. They also broadly agreed to some sort of cap on federal discretionary spending for at least the next two years. But they're stuck on the details of those limits, including the total amount they'll spend next fiscal year on discretionary programs, and how that spending will be shared among the military and other programs.
The latest White House offer would keep military spending, as well as other spending, including education, scientific research and environmental protection, stable from the current fiscal year to the next fiscal year, according to a person familiar with the proposals. and from both sides. This measure would not reduce nominal spending until it adjusts for inflation, which Republicans are working hard to achieve. When asked by a reporter on Sunday, Biden said the cuts he had proposed would not trigger a recession.
A bill passed by Republicans last month that combines spending cuts with a debt limit increase would generate net savings of about $5 trillion over a decade compared to current projections.
The latest Republican proposal includes a nominal reduction in general discretionary spending next year. But this discount is not evenly distributed. In his plan, military spending would continue to increase, while other programs would see deeper cuts.
Biden's offer would set a two-year spending cap. The Republicans would house them for six years.
Republicans have also made several attempts to cut money that have been opposed by White House officials. They include new work requirements for recipients of Medicaid and the Temporary Assistance for Needy Families program. They would also make it more difficult for states to request waivers from work requirements for some federal food assistance recipients who live in areas with persistently high unemployment, a proposal that was not included in the Republican debt limit bill that passed the House.
Republicans also continue to push for reduced IRS enforcement funds, a move the Congressional Budget Office estimates will increase the budget deficit by reducing future federal tax revenue. And they tried to include some provisions of astrict immigration lawsthat recently passed the House, said a person familiar with the proposal.
"We're all concerned about deficits and fiscal responsibility, but deficits can be addressed through spending and revenue changes," Yellen said, adding that she was "deeply concerned" about Republican proposals to cut funding to reduce the IRS. .
Biden insisted Sunday that he was willing to make cuts. He also suggested that some Republicans were trying to crash the economy by not raising the debt limit to hurt Biden's re-election hopes.
If the nation were to declare bankruptcy, Biden said he would "be above reproach," meaning Republicans would be to blame. But, he said, "by his policy, no one would be innocent."
“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am the president and the president is responsible for everything, Biden will take responsibility,” he said.
Alan Rapport, Carl Hulse and Chris Cameron contributed to the report.
Jim Tankersley is a White House correspondent who focuses on economic policy. He has written in Washington for more than a decade about shrinking opportunities for American workers and is the author of "The Riches of This Land: The Untold True Story of America's Middle Class." @jimtankersley
Catie Edmondson is a reporter in the Washington bureau that covers Congress. @katie edmondson
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Potential repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for businesses and homeowners alike, and a dropoff in consumer confidence that could shock the United States' financial market and tip its economy—and the world's—into immediate recession.What happens if the US defaults on its debt? ›
So if the U.S. cannot pay its creditors, interest rates on U.S. debt would go up, creating a cascade of higher interest rates. So mortgage rates, credit card rates, car loan rates. All would become more expensive. Finally, there is a real concern about the economy — that a default could spark a recession.What is the deadline for the debt ceiling? ›
Yellen sets new deadline for Congress to raise the debt ceiling: June 5. Treasury Secretary Janet Yellen listens during an open session of the Financial Stability Oversight Council meeting at the Department of the Treasury in Washington, D.C., on April 21, 2023.How much is the US debt limit? ›
WASHINGTON, May 25 (Reuters) - U.S. President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal that would raise the government's $31.4 trillion debt ceiling for two years while capping spending on most items, a U.S. official told Reuters.Who owns the most U.S. debt? ›
The Federal Government Has Borrowed Trillions, But Who Owns All that Debt? At the end of 2022, the nation's gross debt had reached nearly $31.4 trillion. Of that amount, about $24.5 trillion, or 78 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors.Can us ever pay off debt? ›
In modern history, the U.S. has never defaulted on its debt. The debt ceiling is the self-imposed limit on how much debt Congress allows the federal government to have. If Congress does not raise or suspend the debt ceiling, the U.S. could default on its debt, which would also impact financial markets and the economy.How long will it take to pay off the US national debt? ›
To pay back one million dollars, at a rate of one dollar per second, would take you 11.5 days. To pay back one billion dollars, at a rate of one dollar per second, would take you 32 years. To pay back one trillion dollars, at a rate of one dollar per second, would take you 31,688 years.What happens if the debt ceiling isn't raised? ›
If the debt ceiling isn't raised in time, Treasury and the White House will have to make difficult decisions about which bills to pay with the funds that are available. The US has never missed making payments on its bills before. In fact, in the last 45 years, Congress has adjusted the debt ceiling over 60 times.Does the US owe most of its debt to itself? ›
Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S.How many Americans are 100% debt free? ›
Fewer than one quarter of American households live debt-free. Learning ways to tackle debt can help you get a handle on your finances.
Even though household net worth is on the rise in America (at $141 trillion in the summer of 2021)—so is debt. The total personal debt in the U.S. is at an all-time high of $14.96 trillion. The average American debt (per U.S. adult) is $58,604 and 77% of American households have at least some type of debt.What percentage of U.S. debt is owned by China? ›
Overall, foreign countries each make up a relatively small proportion of U.S. debt-holders. Although China's holdings have represented just under 20 percent of foreign-owned U.S. debt in the past several years, this percentage only comprises between 5 and 7 percent of total U.S. debt.What countries owe America money? ›
As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).Does the US owe China money? ›
How much money does the U.S. owe to China? China owns roughly $1.08 trillion worth of U.S. debt. 2 This amount is subject to market fluctuations. The value will change whenever China trades Treasury securities or when the prices of those bonds change.Which countries have no debt? ›
|Characteristic||National debt in relation to GDP|
|Hong Kong SAR||4.26%|
The region's lgfvs have already experienced more than 20 defaults on trust loans and other hidden debts since the start of 2022, many more than in other provinces. As problems have intensified in recent weeks, economists and investors have warned that the central government has few palatable options.How much is China in debt? ›
This value reflects a year-on-year (YoY) increase of $3.81 trillion, or 36.18%, compared to the $10.53 trillion recorded in 2022.What would happen if the US printed enough money to cover all the debts? ›
Unless there is an increase in economic activity commensurate with the amount of money that is created, printing money to pay off the debt would make inflation worse. This would be, as the saying goes, "too much money chasing too few goods."When was the last and only time the US paid off its national debt? ›
Payment of US national debt
On January 8, 1835, president Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished.
America's debt has risen massively since the beginning of the 21st century, as "politicians from both parties have made a habit of borrowing money to finance wars, tax cuts, expanded federal spending, care for baby boomers, and emergency measures to help the nation endure two debilitating recessions," writes Jim ...
Moody's Analytics, a research outfit, estimates that in the immediate aftermath of a default, America's economy would shrink by nearly 1% and its unemployment rate would rise from 3.4% to 5%, putting about 1.5m people out of work.How do I prepare for a US debt default? ›
- Build an emergency fund. ...
- Reduce debt. ...
- Wait to buy a home. ...
- Diversify your investments but don't overdo it. ...
- Review and adjust financial plans.
Rising debt reduces business investment and slows economic growth. It also increases expectations of higher rates of inflation and erosion of confidence in the U.S. dollar.Why does the US owe China? ›
U.S. debt to China comes in the form of U.S. Treasuries, largely due to their safety and stability. Although there are worries about China selling off U.S. debt, which would hamper economic growth, doing so in large amounts poses risks for China as well, making it unlikely to happen.What country owes the most debt to the US? ›
According to usafacts.org, as of January 2023, Japan owned $1.1 trillion in US Treasuries, making it the largest foreign holder of the national debt.How much money does France owe the United States? ›
|French obligations received by U. S. treasury under Liberty Loan acts||$2,997,477,800.00|
|Bonds received by Secretary of War in payment for surplus war supplies||407,341,145.01|
|(interest on war-surplus bonds has been regularly paid)|
People between the ages of 35 to 44 typically carry the highest amount of debt, as a result of spending on mortgages and student loans. Debt eases for those between the ages of 45-54 thanks to higher salaries. For those between the ages of 55 to 64, their assets may outweigh their debt.What is the average net worth of an American? ›
Average net worth increased by 2% to $748,800 between 2016 and 2019, the bank reported in September 2020, the most recent year it published the data. Median net worth, however, rose 18% over that same time period to $121,760. You might wonder why the average and median net worth figures are so different.Has the US ever had no debt? ›
1837: Andrew Jackson
(In 1835, the $17.9 million budget surplus was greater than the total government expenses for that year.) By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off.
Credit scores are three-digit numbers that show an important piece of your financial history. Credit scores help lenders decide whether to grant you credit. The average credit score in the United States is 698, based on VantageScore® data from February 2021. It's a myth that you only have one credit score.
Mortgage balances, the largest source of debt for most Americans, rose 5.9 percent between 2020 and 2021. The average mortgage balance is $220,380, according to Experian. Auto loan balances reportedly rose 6.5 percent year-over-year in 2021, and the average auto loan balance is $20,987.What is the average credit card balance in the US? ›
How much credit card debt does the average person owe? On average, each U.S. household has $7,951 in credit card debt, as of this analysis. With an average of 2.6 people per household, according to the U.S. Census Bureau, that's about $3,058 in credit card debt per person.How much debt is the US in 2023? ›
At the end of FY 2023 federal debt is “guesstimated” to amount to $32.69 trillion. Thus far, on 2023-05-24, the federal debt is $31.46 trillion. See Coronavirus Update page. Click for federal debt from 1960 to present.Where does the US borrow money from? ›
The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government. Offered in a wide range of maturities.Why is U.S. debt so high? ›
Flashpoints that greatly contributed to the debt over the past 50 years include the wars in Iraq and Afghanistan, the 2008 financial crisis and the 2020 COVID-19 pandemic -- the latter two prompting sweeping stimulus measures from Congress that cost trillions of dollars.How can I protect my money if US defaults on debt? ›
That means tamping down on excess spending, making a budget, and shoring up emergency savings to cover at least three months of living expenses. Since a debt default would likely send interest rates soaring, any credit card debt you're saddled with may soon cost you more.Which country has the highest debt? ›
Japan's debt-to-GDP ratio is the highest in the world due to a prolonged period of economic stagnation and demographic challenges.What year was the US not in debt? ›
As a result, the U.S. actually did become debt free, for the first and only time, at the beginning of 1835 and stayed that way until 1837. It remains the only time that a major country was without debt.Does the debt ceiling affect Social Security payments? ›
If the US is not able to pay all its bills for the first time ever, senior citizens could quickly feel the pain.Which country has no debt? ›
|Characteristic||National debt in relation to GDP|
|Hong Kong SAR||4.26%|
However, this has declined over time, and as of 2022 they controlled approximately 25% of foreign-owned debt. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).Who owes the US the most money? ›
With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt. Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years.Why does the US owe so much money to China? ›
The US owes so much money to China because of the large trade and investment deficit the US currently has with China. This deficit is the result of a combination of factors, including rising wages and technology costs in the US, slow growth in the US economy, and US policies that favor the import of goods from China.How much credit card debt does the average American household have? ›
|Type of debt||Total owed by an average U.S. household with this debt||Total owed in the U.S.|
|Credit cards (revolving)||$7,876||$488.66 billion|
|Auto loans||$29,107||$1.56 trillion|
|Student loans||$59,461||$1.6 trillion|