Yellen finds ‘some agreement’ in debt ceiling fight.

Negotiators Make Headway in Debt Ceiling Deadlock

Treasury Secretary Janet Yellen has reported progress in the debt ceiling fight.”>ongoing debt ceiling negotiations, indicating that both sides have found some common ground in recent days. Despite the postponement of President Joe Biden’s follow-up meeting with congressional leaders, Yellen remains optimistic that negotiators are making headway.

Debt Ceiling Deadline Raises Eyebrows Over Biden’s Negotiation Strategy

Yellen stated that the meeting with leadership was postponed because negotiators are making progress and want to have something concrete to discuss with the leadership when they meet again. Biden and the “big four” congressional leaders are set to hold their postponed talks next week.

House Speaker Kevin McCarthy (R-CA) has demanded any hike in the nation’s $31.4 trillion borrowing limit be paired with spending cuts. Meanwhile, Biden and the Democrats have been adamant that the debt ceiling be lifted without any strings attached and have accused the GOP of holding the nation’s economy hostage. Democrats have publicly left the door open to separate negotiations on spending.

Details of the Progress Made

Yellen did not elaborate on the specifics of the progress made. However, multiple reports have indicated that Biden’s team is privately talking about a two-year debt limit deal that would impose some caps on discretionary spending and rescind unused COVID-19 funds. Republicans’ Limit, Save, Grow Act debt ceiling proposal, which cleared the House without a vote to spare last month, would raise the borrowing authority by $1.5 trillion or until March 25, 2024 — whichever comes first.

The Consequences of Default

Yellen recently bumped up the timetable to that the U.S. could default on its debt as soon as June 1. The Treasury Department has been undertaking “extraordinary” measures of moving money around in hopes of postponing that outcome. Default would erase millions of jobs, trigger a recession, hit retirement accounts, and increase borrowing costs. It’s not an option,” Biden tweeted Saturday.

The Way Forward

Senate Majority Leader Mitch McConnell (R-KY) has been resolute that the United States will not default despite the impasse. Biden and Yellen have publicly declined to rule out the possibility of circumventing the debt limit via the 14th Amendment, while warning of its pitfalls if used. Many Republicans in Congress have soured on the prospect of backing a short-term debt limit hike if negotiations fail to reach a breakthrough in time.

Conclusion

The ongoing debt ceiling negotiations have raised eyebrows over Biden’s negotiation strategy. However, negotiators have made some headway, and both sides have found some common ground in recent days. The consequences of default are dire, and it’s essential that a breakthrough is reached before the June 1 deadline.

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