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WASHINGTON: President Joe Biden and House Speaker Kevin McCarthy failed to reach a deal on Monday on how to raise the U.S. government’s $31.4 trillion debt ceiling, just 10 days before a default that could weigh on the U.S. economy, but vowed to continue talks, according to called Reuters.

The Democratic president and Republican leaders in Congress have struggled to reach an agreement, as McCarthy pressured the White House to agree to cuts to federal budget spending that Biden deemed “extreme,” while Republicans rejected the president’s new taxes.

Both sides, however, emphasized the need to avoid a breach of the bipartisan agreement after Monday night’s meeting and said they would meet regularly in the coming days.

A source familiar with the situation said White House negotiators will return to Capitol Hill on Monday night to resume talks.

“We reiterate once again that default is out of the question and that the only way forward is to reach a bipartisan agreement in good faith,” Biden said in a statement after the meeting, calling it “productive.”

McCarthy told reporters after meeting with Biden for more than an hour that negotiators would “get together and work through the night” trying to find common ground.

“I believe we can still get there,” McCarthy said. He said he was reluctant to consider Biden’s plan to cut the deficit by raising taxes on the wealthy and closing tax loopholes in the oil and pharmaceutical industries, focusing on reducing spending in the 2024 federal budget.

Democrats and Republicans have until June 1 to raise the government’s self-borrowing ceiling or trigger an unprecedented debt default that economists warn could lead to a recession.

Treasury Secretary Janet Yellen on Monday issued a sobering reminder that time is running out, saying that the earliest estimated default date is still June 1 and that it is “highly likely” that the Treasury will not be able to pay all of the government’s debt by early June Without raising the debt ceiling.

Republican Representative Patrick McHenry, who attended the White House meeting, ruled out any partial budget deal that would raise the debt ceiling. “No one is going to agree to anything until we have a final agreement,” he said.

He said the tone of the Biden meeting was the most positive yet.

Any deal to raise the cap would have to pass both houses of Congress and thus depend on bipartisan support. McCarthy’s Republicans control the House of Representatives 222-213, while Biden’s Democrats control the Senate 51-49.

Failure to raise the debt ceiling would trigger a default that would rattle financial markets and drive up interest rates on everything from car payments to credit cards.

U.S. stocks rose on Monday as investors awaited the latest news on the talks.

If Biden and McCarthy reach a deal, it will take several days for Congress to pass legislation. McCarthy said a deal must be reached this week to pass Congress and be signed into law by Biden in time to avoid default.

cut and dial back

Republicans want cuts to discretionary spending, new job requirements for some programs for low-income Americans and a rollback of COVID-19 aid approved by Congress but not yet spent in exchange for raising the debt ceiling, which pays lawmakers. previously approved spending and tax breaks necessary for the cost.

Democrats want to stabilize spending at this year’s level in 2024, while Republicans want to return to 2022 levels next year and limit spending growth in future years.

A plan passed by the House of Representatives last month would cut massive government spending by 8% next year.

Biden, who has made the economy central to his domestic agenda and is seeking re-election, has said he would consider cutting spending while tweaking taxes, but the latest proposal from Republicans is “unacceptable.”

The president tweeted that he would not support “Big Oil” subsidies and “wealthy tax fraud” while putting health care and food aid for millions of Americans at risk.

Both sides will also have to weigh any concessions under pressure from hardliners in their respective parties.

Some members of the far-right House Freedom Caucus have urged a halt to the talks, calling for the Senate to pass the House-passed legislation, which has been rejected by Democrats.

McCarthy has made plenty of concessions to right-wing hardliners to secure the speaker’s seat, and he could risk being ousted by members of his own party if they don’t like the deal he strikes.

Republican former President Donald Trump, who is seeking re-election after losing to Biden in the 2020 election, has urged Republicans to force a default if they fail to achieve all their goals, downplaying any economic fallout.

Liberal Democrats oppose any cuts that would hurt families and low-income Americans. House Democratic leader Hakeem Jeffries accused Republicans of “hostage negotiation” in the talks and said he was seeking Republicans to vote for a debt relief petition that could itself raise the debt ceiling.

Republicans rejected Biden’s offer to freeze spending at this year’s levels, Jeffries said.