The speaker of the United States House of Representatives, Kevin McCarthy, has expressed optimism that a deal can be reached with the White House on raising the amounts the country can borrow to avoid a debt default as early as next month.
Speaking on Thursday, he said the talks on the issue were “in a much better place” compared with the situation last week.
“I see the path that we can come to an agreement,” Mr McCarthy told reporters in the US Capitol on Thursday.
“And, I think, we have a structure now and everybody’s working hard and, I mean, we’re working two or three times a day, then going back getting more numbers.”
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US president Joe Biden on Wednesday said he was confident a deal could be reached with Republicans, who control the House of Representatives, on a budget.
He insisted, however, the current negotiations were “about the outlines of what the budget will look like, not about whether or not we’re going to, in fact, pay our debts”.
“The leaders have all agreed we will not default. Every leader has said that,” he said. “The nation has never defaulted on its debt and it never will.”
[ What to expect as US nears ‘unthinkable’ debt defaultOpens in new window ]
Mr Biden said that every political leader who was in the room for the talks on the debt ceiling earlier this week understood it would be “catastrophic for the American economy and the American people if we did not pay our bills”.
At present, the US government is limited by law to borrowing no more than $31.4 trillion (€28.5 trillion). The US is coming perilously close to reaching that limit.
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US treasury secretary, Janet Yellen, told Congress in recent weeks that the federal government could run out of money as early as the beginning of June if the official debt limit was not raised. The White House has argued that a US debt default would “threaten eight million jobs, a recession, retirement accounts and social security and Medicare payments”.
Republicans have passed a bill that would raise the debt limit in return for significant spending cuts. These cuts are unacceptable to Democrats, however.
Some Democrats are fearful that the president could concede too much to the Republicans as part of the current talks, especially on issues such as work requirements for access to some social programmes such as those providing healthcare or food vouchers.
[ US debt default would be the lunatics taking over the asylumOpens in new window ]
Some Democrat senators this week circulated a letter urging that the president use his authority under the 14th amendment to continue paying the US government’s bills, even if the debt ceiling was not raised.
The letter claimed that Republicans were prepared “to hold our entire economy hostage unless you accede to their demands to reduce the deficit on the backs of working families”.
The 14th Amendment, which dates back to the US Civil War era states that “the validity of the public debt of the United States shall not be questioned.”
The president has warned invoking the 14th Amendment it would inevitably end up in litigation.
