‘Time’s up’: US debt ceiling deal closes as default looms | Political news

US President Joe Biden and Republican top congressman Kevin McCarthy strike a deal that would raise the $31.4 trillion government debt ceiling for two years while limiting spending on most programs, news reports say.

Bankruptcy could rock global financial markets and plunge the United States into a major recession. Credit rating agency DBRS Morningstar on Thursday assessed the US for a possible downgrade, following similar warnings from Fitch, Moody’s and Scope Ratings.

Fitch warned it could downgrade the US’s triple-A rating because of brinkmanship over the debt limit. Another agency, S&P Global, downgraded US debt after a similar impasse in 2011.

The months-long deadlock has terrified Wall Street, weighing on US stocks and driving up the cost of borrowing the country. Deputy Treasury Secretary Wally Adeyemo said concerns about the debt ceiling have pushed up the government’s interest costs by $80 million so far.

The potential agreement would increase funding for discretionary spending on military and veterans while keeping essentially non-defense discretionary spending at current year levels, an official, who asked for anonymity, told Reuters news agency.

“The time has passed for all these games here,” Democratic Representative Don Davis, a veteran of the United States Air Force, said at a news conference.

Representative Kevin Hern, who heads the powerful Republican Study Committee, told Reuters a deal was likely Friday afternoon.

The White House is considering scaling back its plan to increase funding at the Internal Revenue Service to hire more auditors and target wealthy Americans, the official said.

A second US official said IRS funding is an open issue, but the main driver is to make sure the agency is executing on the president’s priorities, even if there’s a minor haircut or money moving.

The final deal would specify the total amount the government could spend on discretionary programs such as housing and education, according to a person familiar with the talks, but not break that down into individual categories. According to another source, the two sides are only $70 billion apart, which according to another source would be more than $1 trillion in total.

‘Not easy’

The two sides met virtually on Thursday, the White House said. Biden said they still disagreed on where the cuts should fall.

“I don’t believe the whole burden should fall on middle-class and working-class Americans,” he told reporters.

House Speaker McCarthy said the two sides have not reached a deal. “We knew this wasn’t going to be easy.”

It is unclear how much time Congress has left to act. The Treasury Department was warned it may not be able to meet all of its obligations by June 1, but said on Thursday it would sell $119 billion worth of debt due on that date. – dressed deadline.

“They’ve suggested in the past that they wouldn’t announce actions they didn’t believe they had the resources to settle,” said Gennadiy Goldberg, senior interest rate strategist at TD Securities in New York. “So I think that’s a positive note.”

Any deal will have to pass the Republican-controlled House of Representatives and the Democrat-controlled Senate. That could be tricky, as some right-wing Republicans and many liberal Democrats said they were upset by the prospect of a compromise.

“I don’t think everyone will be happy at the end of the day. That’s not how the system works,” McCarthy said.

Biden has opposed Republican proposals to tighten job requirements for anti-poverty programs and relax oil and gas drilling regulations, Democratic Representative Mark Takano said.

Democrats focused their attacks on what they say would be devastating cuts to federal aid for veterans — ranging from health care and food aid to housing aid — if Republicans had their way in the negotiations.