The White House remains hopeful about securing a deal with Congress on the trajectory of the nation’s growing debt. President Joe Biden’s remarks were cited by Bloomberg as signaling cautious optimism.
Staff-level discussions between the President and House Speaker Kevin McCarthy occurred late last week. On Tuesday, May 16, Biden and McCarthy were scheduled to meet in direct bilateral talks. In this setting, the president characterized the talks on the debt question as progressing in the most suitable manner.
“Negotiations on options to avert a default are moving forward. I am optimistic because I tend to be hopeful, but I sense a willingness on their side as well as on ours to reach an agreement, and I believe we can accomplish that,” Biden stated.
McCarthy has pushed for reductions in government spending as debt levels rise. Biden had been cautious about that approach until recently. If there is no accord on steps to prevent a debt default, the risk of a financial downturn could emerge within days, with some projections pointing to a potential impact in the middle of the month.
Earlier, the Treasury Secretary emphasized the risk of economic turmoil if the debt limit is not raised. Without action, a default could trigger widespread financial instability. One option some policymakers have discussed involves invoking a constitutional mechanism to bypass the legislature and avoid default, a move that would have far-reaching legal and economic implications.