Republican says US debt-ceiling talks paused

Lead Republican negotiator on deb cap negotiations said talks have paused but White House said deal still possible.

Talks between US House of Representatives Republicans and President Joe Biden’s administration about raising the debt ceiling paused on Friday, the lead Republican negotiator said while the White House said a deal remains possible.

The two sides have little time to agree on a deal to raise the federal government’s $31.4 trillion borrowing limit or risk a catastrophic default. The Department of the Treasury has warned that the government could be unable to pay all its bills by June 1.

“Until people are willing to have difficult conversations about how you can actually move forward and do the right thing we’re not going to sit here and talk,” Representative Garret Graves, House Speaker Kevin McCarthy’s designated lead negotiator in talks, told reporters as he walked out of talks on Friday.

White House negotiators Shalanda Young and Steve Ricchetti told reporters they were going to play it “by ear” as they departed the negotiating sessions, according to reporters for NBC News and ABC News.

A White House official said a deal remained possible.

“If both sides negotiate in good faith and recognise they won’t get everything they want, a deal is still possible,” the official said.

Republicans have taken a hard line in negotiations, with the House Freedom Caucus on Thursday urging the Senate to vote on a previously passed House bill that would raise the limit through March in exchange for 10 years of sharp spending cuts.

House and Senate Democrats have raised concern about the inclusion in the talks of new work requirements for some federal benefit programmes for low-income Americans.

US stocks, Treasury yields and the dollar all moved lower on Friday following the pause and after comments from Federal Reserve Chairperson Jerome Powell on monetary policy saying it was still unclear if interest rates would be hiked further or not.

“It could be for theatrics. It could be to put more pressure on the Democratic caucus and also take advantage of the fact that Biden is overseas. But this headline on a Friday afternoon is definitely not a positive,” Quincy Krosby, chief global strategist at LPL Financial, said in an interview.

Biden was in Japan attending a meeting of the Group of Seven wealthy nations. Republicans have criticised his decision to go forward with his trip at a sensitive time in the talks.

“@POTUS waited months before agreeing to negotiate with @SpeakerMcCarthy on a spending deal,” top Senate Republican Mitch McConnell said on Twitter. “They are the only two who can reach an agreement. It is past time for the president to get serious. Time is of the essence.”

Republicans, who control the House by a 222-213 majority, for months had been insisting that Democrats agree to spending cuts in exchange for a deal to raise Congress’s self-imposed debt limit. The limit needs to be lifted regularly because the government spends more than it takes in taxes.

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