Talks between the White House and Republicans over raising the US debt ceiling have ground to a halt, with both sides yet to bridge deep divisions over spending cuts and revenue-raising. Republican congressional leader Kevin McCarthy is said to have held sporadic communication with US President Joe Biden, and the two sides remain far apart on key issues. Republicans are calling for cuts to non-defense spending, including education and healthcare, while insisting on increased funding for the military. Democrats are suggesting tax hikes for the wealthy, and an increase in revenue by enabling Medicare to pay less for prescription drugs and closing tax loopholes.
The stakes are high, with a failure to reach a deal potentially causing severe damage to the US economy. Observers are warning that even without default, the continued impasse could have serious economic consequences. Talks are set to resume, but with just days left until the borrowing limit needs to be raised, time is running out.
President Biden has also called on Republicans to cooperate on a proposed infrastructure spending package, worth more than $1tn in new proposals and cuts. However, negotiations have stalled, with Republicans balking at Democratic proposals to increase revenue through higher taxes on the wealthiest Americans and corporations. The White House hopes a spending deal can be agreed before Republicans in Congress agree to raise the US’s debt ceiling to prevent a default later this year.
The GOP is also calling for deep cuts to non-defense programs and work requirements on Medicaid. Democrats are insisting on tax increases on the wealthy, alongside spending reductions, in order to close the deficit. The two sides remain divided, with neither willing to back down on their positions.
Negotiators are now looking at a more narrow budget cap deal of a few years, rather than the decade-long caps Republicans initially wanted. Democrats are seeking to claw back $30 billion of unspent COVID-19 funds, while Republicans are demanding steeper cuts to future spending.
Meanwhile, the clock is ticking, with Congress needing to raise the borrowing limit before 1 June to ensure the US government can keep paying its bills. Failure to do so risks triggering a catastrophic default, with experts warning that even the threat of a debt default could spark a recession.
In conclusion, both sides need to be willing to compromise in order to strike a deal that benefits the American people and the economy. A failure to do so could have far-reaching consequences, with ordinary Americans bearing the brunt of reduced services and rising costs. As the deadline approaches, it is imperative that both sides work together in good faith to reach a deal that works for everyone.
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