NY Today News
NY Today News: Your Daily Dose of Local and Global Headlines

US debt ceiling talks continue into weekend amid signs deal is close

Negotiations over America’s looming debt crisis pushed into Saturday amid signs that a deal between Joe Biden’s administration and Republicans was close to being struck even as the deadline for a potentially catastrophic US default was nudged by a few days.

The Associated Press reported that work requirements for federal food aid recipients have emerged as a final sticking point in talks, even as Biden said on Friday that a deal on raising the debt ceiling was “very close”.

Biden’s optimism came after the deadline when the US government would run short of funds to pay all its bills was pushed back to 5 June, giving both sides more breathing room but also raising the prospects that talks – which had seemed almost at a deal on Friday evening – could now stretch into next week.

Biden and Republican House speaker Kevin McCarthy have seemed to be narrowing on a two-year budget-slashing deal that would also extend the US debt limit into 2025 past the next presidential election.

Both sides have suggested one of the main holdups is a Republican effort to boost work requirements for recipients of food stamps and other federal aid programs, a longtime Republican goal that many Democrats have strenuously opposed.

The White House spokesman Andrew Bates said Republican proposals on the issue were “cruel and senseless” and said Biden and Democrats would oppose them. But at the same time the Louisiana congressman Garret Graves, one of McCarthy’s negotiators, was blunt when asked if Republicans might relent, saying: “Hell no, not a chance.”

Americans and the world have watched with growing fear and and anger as the negotiating brinkmanship that could throw the US economy into chaos has dragged on in yet another repeat of the regular political theater that always seems to surround the issue in Washington.

Yet Biden was upbeat as he left for the Memorial Day weekend at Camp David, declaring: “It’s very close, and I’m optimistic.”

In a blunt warning, the Treasury secretary, Janet Yellen, said on Friday that failure to act by the new date for default would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests”.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Any deal struck by the White House and Republican negotiators would need to be a political compromise, with support from both Democrats and Republicans needed to pass the divided US Congress.

Focus would especially be on the reaction to rightwing Republicans in the House, especially those in the Freedom Caucus mostly aligned with former US president Donald Trump.

Several credit-rating agencies have said they have put the US on review for a possible downgrade, which would push up borrowing costs and undercut its standing as the backbone of the global financial system.

A similar 2011 standoff led Standard & Poor’s to downgrade its rating on US debt, hammering markets and sending the government’s borrowing costs higher.

News Source