WASHINGTON (TND) — Republicans and Democrats are continuing to dig their heels in, remaining deeply divided on how to reach a deal to raise the debt ceiling and avoid a potentially devastating federal default.
House Speaker Kevin McCarthy said Wednesday that he and President Joe Biden are not any closer to reaching a deal.
There’s a number of places that we are still far apart. I mean, it didn’t seem like it would be this hard," McCarthy told reporters.
Much of the stall comes as Republicans continue to push for spending cuts and future caps while the Biden administration has said that it is looking to keep spending levels flat and instead increase taxes for the wealthiest Americans and some companies. It’s a persistent sticking point for the two sides.
The White House, meanwhile, insists that a deal will be made in time, saying America pays its bills.
“Everyone understands that the consequences of a first-ever default would be severe for the American people and the American economy. It would wipe out as many as 8 million jobs, trigger a recession, devastate retirement accounts, increase costs, damage our international reputation,” press secretary Karine Jean-Pierre said.
America is not a deadbeat nation. We pay our bills. We have never defaulted in our history, and we will never,” she continued.
While a number of Republicans are accusing the White House of having a lack of urgency, many are also casting doubt on the Treasury Department's June 1 deadline to avoid a default.
Multiple House members are now calling on Treasury Secretary Janet Yellen to explain how she determined the country's so-called “X-date.”
“I don't believe that the first of the month is a real deadline,” Rep. Matt Gaetz, R-Fla., told CNN. “I don't understand why we're not making Janet Yellen show her work.”
I don't buy June 1. Tax revenues are coming in from California and other states,” Rep. Ralph Norman, R-S.C. echoed. “We need to subpoena her and get her plan."
And several financial institutions agree that June 1 is not the hard deadline. The estimates range from weeks to even months.
Goldman Sachs projects that the U.S. has until June 8. Oxford Economics believes the date is June 14 and Wells Fargo says it's June 15.
But a new report out Tuesday from the independent think tank Bipartisan Policy Center, which tracks federal spending, says the X-date could be as early as June 2 or as late as August. They say it all depends on tax revenue.
However, in a Monday letter to Congress, Yellen restated that “while it is impossible to predict with certainty the exact date when Treasury will be unable to pay all the government’s bills,” the agencies analysis still indicates that it is “highly likely” that U.S. will default “by early June, and potentially as early as June 1.”
Yellen — along with many Democrats — say casting doubt on the timeline is a dangerous gamble.
“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm,” her letter continued. “I continue to urge Congress to protect the full faith and credit of the United States by acting as soon as possible.”
As the negotiations continue the U.S. markets are already being impacted. Financial markets turned down last week when lawmakers hit a pause on the talks and stocks once again closed down Wednesday.
Officials say staffers from the White House and speaker's have been in meetings throughout the night and will continue to work towards a solution.