Australia cancels the Quad Summit following Biden's cancellation due to the debt crisis.
United States, Washington Although the president was forced to cut short a planned Asia-Pacific visit for additional crisis negotiations, Joe Biden and opposition GOP leaders on Tuesday expressed hope of an agreement that might prevent a catastrophic US debt default.
Republican House Speaker Kevin McCarthy told reporters that there was still "a lot of work to do" to end the high-stakes impasse with Democrat Biden over the borrowing ceiling after the most recent talks concluded without a compromise.
Biden was "optimistic that there is a route to a sensible, bipartisan budget compromise if both sides negotiate in good faith," the White House said, despite the fact that there were still significant disagreements.
McCarthy also said that even though "nothing has been resolved" thus far, he expected an agreement in the end.
"The world's largest economy is that of America. And after these negotiations are over, the American economy will be stronger "added he.
The US president skipped trips in Papua New Guinea and Australia in favour of returning to Washington on Sunday after travelling to Japan on Wednesday for a G7 conference.
Biden was scheduled to meet with the presidents of Japan, India, and Australia in Sydney as part of a "Quad" alliance that is regarded as a rival to China.
Anthony Albanese, the prime minister of Australia, announced that Japan will host the Quad discussions in its place.
The Treasury has warned of dire repercussions if the US runs out of money to pay its obligations, including the inability to pay government employees and the likelihood of an increase in interest rates with repercussions for businesses, mortgages, and global markets.
Treasury Secretary Janet Yellen stated on Monday that the United States might start defaulting on its obligations "possibly as early as June 1," while the Congressional Budget Office predicted June 15.
Biden had instructed his staff to "continue to engage daily on lingering concerns," according to the White House, and he will consult with Republican leaders after his return from the G7 summit.
Republicans have persisted in demanding that Biden agree to substantial expenditure cutbacks in exchange for their backing to lift the debt ceiling, despite Democratic pleas for a "clean" rise in the borrowing limit with no conditions.
Republicans have been accused by Democrats of employing extreme measures to advance their agenda before the so-called "X-date," when the United States begins to default on its debts.
More than 140 top US chief executives wrote to Biden and congressional leaders emphasising the need for an agreement as an indication of growing concern over what would be the first-ever American debt default.
In a letter that was signed by the CEOs of Pfizer and Morgan Stanley among others, it was said that "we strongly urge that an agreement be made swiftly so that the country can avoid this potentially terrible outcome."
In exchange for support for raising the debt ceiling, Republicans, who took back control of the House in the 2022 midterm elections, are demanding cutbacks of $130 billion from federal agencies and programmes.
This would keep spending in the 2024 fiscal year within the bounds of 2022.
Additionally, they seek to speed up initiatives for domestic energy production, make it easier to secure permissions for pipelines and refineries, and recover unused Covid relief money.
Before June 1 — the day the Treasury estimates the US may run out of money — the House and Senate will be in session for just three more days.
In order to reach a settlement, several senators have recognised that they could have to postpone the holiday break that begins on Thursday for Memorial Day.
Democrats in Congress are starting to evaluate a number of options as the X-date approaches, including employing a mysterious congressional procedure to get around McCarthy.
They've also considered asking Biden to unilaterally raise the debt ceiling by using the 14th Amendment, which some legal experts say would allow the Treasury to just disregard the debt limitation.
Yet Biden has urged Republicans to back a clear rise in the debt ceiling and has warned that such a move might be legally challenged.