Joe Biden claimed White House officials were “making progress” in budget negotiations with Republicans to avert a damaging debt default, even as time was running out for any deal to be enacted before the government runs out of money to pay all its bills as soon as next week.
The US president struck a relatively upbeat tone as he gave an update on talks to head off the fiscal crisis gripping Washington at an event in the White House Rose Garden on Thursday afternoon.
“Speaker [Kevin] McCarthy and I have had several productive conversations and our staff continue to meet as we speak as a matter of fact — and they’re making progress,” Biden said. “I believe we’ll come to an agreement that allows us to move forward and protects the hardworking Americans of this country.”
His comments came a day after Fitch, the credit rating agency, warned that it could downgrade the US’s triple A rating due to the “brinkmanship” over the US debt limit, amid mounting concern that financial stress could escalate in the coming days in the absence of a compromise.
Both Biden and McCarthy, the Republican House Speaker, have been facing calls from rank-and-file members of their respective parties to not give up concessions in the final stretch of the negotiations.
McCarthy even spoke by phone on Thursday with former president Donald Trump, who has called for Republicans to accept a default if Biden did not agree to deep spending cuts. He then gathered with top Republican lawmakers in his office. “Every hour matters,” McCarthy told ABC News.
House members are heading home for the Memorial day long weekend but have been told they may need to return to Washington at short notice.
The US Treasury has warned that the world’s largest economy could run out of money to pay all of its bills as early as June 1, risking its first default on government debt.
Congressional aides say the path to getting a deal through both chambers of the legislature and to Biden for his signature in time is increasingly narrow. “The sand is nearly out of the hourglass for a potential debt ceiling deal,” Chris Krueger, an analyst at TD Cowen’s Washington Research Group, wrote in a note on Thursday.
He said that if a deal was reached by Friday the earliest a bill could pass the House was on Tuesday, after which it would then be fast-tracked through the Senate the following day.
“This timetable definitely leans optimistic and presumes a very high level of execution skill with everything falling into place,” he added.
Business groups in Washington have been urging both sides to strike a compromise as rapidly as possible to avoid a potentially devastating economic and financial blow.
“It starts to get really hairy if there’s no deal in the next 24 hours,” said Neil Bradley, the chief policy officer at the US Chamber of Commerce. “We’re in that window where you need things to go well.”
Speaking at an event organised by the Investment Company Institute earlier in the day, Wally Adeyemo, the deputy Treasury secretary, lamented that the stand-off had gone down to the wire.
“I think everyone’s goal is to make sure that we raise the debt limit. But the most important thing, as all of you in this room know [and] that the American people know, is that we shouldn’t be here,” he said. “This is a manufactured crisis.”