US Debt Ceiling Crisis: Bipartisan Deal Making Progress As Deadline Nears, Biden Says Default Not An Option

The US Department of Treasury has said that the US government could run out of money to pay its bills as soon as the first week of June.

US President Joe Biden has said that default is not an option

Republican leader Kevin McCarthy on Wednesday said that the bipartisan efforts to come to deal to lift the US debt ceiling has made progress.

However, no deal has yet been reached and both Republicans in the House of Representatives have been allowed to go on a recess over the weekend, indicating that a deal is not imminent. 

President Joe Biden has said that default is not an option and has appeared hopeful a deal will be reached in time.

"There will be no default," Biden said, as per AFP, and added that his negotiations with McCarthy had been "productive".

McCarthy, as the Republican leader in House of Representatives and as the House Speaker, is leading the efforts from the Republican side. 

We've been working all day: McCarthy

Republican leader McCarthy has said that his team has been working with the Biden administration "all day" to come to an agreement.

McCarthy said he had directed his negotiating team "to work 24/7 to solve this problem".

At the Capitol, McCarthy said "every hour matters" in talks with Biden's team as they try to work out a budget agreement. Republican are demanding spending cuts the Democrats oppose as their price for raising the legal debt limit.

He said, "We've been taking to the White House all day. We're working hard to make it happen."

Debt ceiling talks productive: White House

The White House said discussions with the Republicans have been productive, including by video conference Thursday, though serious disagreements remained as the president fights for his priorities. 

In remarks at the White House, Biden said, "It's about competing versions of America." 

Yet both Biden and McCarthy expressed optimism that the gulf between their positions could be bridged.

Biden saisd, "The only way to move forward is with a bipartisan agreement. And I believe we'll come to an agreement that allows us to move forward and protects the hardworking Americans of this country."

The tussle over debt ceiling

Weeks of negotiations between Republicans and the White House have failed to produce a deal — in part because the Biden administration has resisted negotiating with McCarthy over the debt limit, arguing that the country's full faith and credit should not be used as leverage to extract other partisan priorities.

McCarthy is holding out for steep spending cuts that Republicans are demanding in exchange for their vote to raise the nation's borrowing limit. The White House has offered to freeze next year's 2024 spending at current levels and restrict 2025 spending, but the Republican leader says that's not enough. 

One idea is to set those topline budget numbers but then add a "snap-back" provision that enforces the cuts if Congress is unable during its annual appropriations process to meet the new goals. 

"We have to spend less than we spent last year. That is the starting point," said McCarthy. 

Pressure on McCarthy over debt celing

As the deadline nears, it's clear McCarthy —who leads a Donald Trump-aligned party whose hard-right flank lifted him to power, and who spoke to the former president this week— is now staring down a potential crisis.

Pressure is bearing down on McCarthy from the House's right flank not to give in to any deal, even if it means blowing past the June 1 deadline.

"Don't take an exit ramp five exits too early. Let's hold the line," said Rep. Chip Roy, R-Texas, a Freedom Caucus member. 

Trump, the former president who is again running for office, has encouraged Republicans to “do a default” if they don't get the deal they want from the White House. 

McCarthy said Trump told him, "Make sure you get a good agreement."

(With AP inputs)