Little immediate progress in crucial talks about US debt ceiling

Crucial talks aimed at resolving an impasse over the US debt ceiling have made little progress, just weeks before the United States government could run out of money.

A meeting on Tuesday between US president Joe Biden and the four top political leaders in the US Congress did not result in any breakthrough.

The speaker of the US House of Representatives Kevin McCarthy said after the meeting: “I didn’t see any new movement.”

Mr Biden said he had made clear during the meeting in the Oval Office that “default is not an option”.

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“I repeated that time and again. United States is not a deadbeat nation. We pay our bills and avoiding default is a basic duty of the United States Congress.”

The president said he was “prepared to begin a separate discussion about my budget and spending priorities but not under the threat of default”.

The senior US political leaders will meet again on Friday in a bid to reach a deal to avoid a default which could cause widespread economic difficulties both in the United States and around the world.

In the meantime their officials will meet on a regular basis over the coming days.

The White House said at a press briefing on Tuesday that a debt default would “threaten eight million jobs, a recession, retirement accounts and social security and Medicare payments”.

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. In a letter to congress last week, treasury secretary Janet Yellen warned the US might not be in a position to pay its bills from as early as the beginning of June.

The US treasury has essentially over recent months been juggling money around to meet its bills. The exact date on which it will no longer have sufficient funds to do that – known as the X date – is likely to be determined by the strength of tax returns in May and June. However, it is generally expected that the existing debt limit will be reached within a few weeks or a couple of months at most.

Republicans who control the House of Representatives have passed a bill that would raise the debt limit in return for significant spending cuts. Mr McCarthy has repeatedly urged the president to come to the negotiating table.

Mr McCarthy has suggested that a deal on the debt ceiling would need to be agreed within the next week or so to leave enough time for legislation to be passed.

The speaker said he had asked Mr. Biden “numerous times” at the meeting on Tuesday if there were places in the federal budget they could find “savings” -- or cuts in spending.

“They wouldn’t give me any,” he said.

Republican minority leader in the US senate Mitch McConnell said the United States would not default on its debts but acknowledged time was running out to find a resolution.

Separately a union representing federal workers has sued the US treasury department and president Biden seeking to declare the debt limit unconstitutional and to try block its enforcement.

Ms Yellen warned this week that a failure to raise the debt ceiling could have dire consequences.

" It is Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making”, she said.