World News | Yellen said the debt ceiling will be extended to June 5, later than previously estimated

WASHINGTON, May 27 (AP) — U.S. Treasury Secretary Janet Yellen said Friday that the debt ceiling is expected to be extended until June 5, four days later than previously expected.

However, Yellen again warned in a letter to Congress that failure to take action to raise the lending limit would “cause serious hardship.”

Read also | Pakistan: Alcohol and cocaine were detected in Imran Khan’s urine sample, Health Minister Abdul Kadir Patel said.

Yellen’s latest letter to lawmakers on “X-date” came as Congress recessed over the Memorial Day long weekend. She said the Treasury Department had taken an extraordinary measure not used since 2015 to bring the U.S. financial situation to this point.

The X-date comes when the government no longer has enough financial buffers to pay all its bills, as it has exhausted the measures it has been using since January to expand existing funds.

Read also | US traffic accident: School bus carrying 36 passengers collides with fuel tanker in South Carolina; 18 injured.

Earlier on Friday, House Speaker Kevin McCarthy said his Republican debt negotiators and the White House had reached a “breakdown” as they worked to reach a deal with President Joe Biden to curb federal debt ahead of a looming deadline. Spend and raise the country’s borrowing limit.

They had hoped to end weeks of frustrating talks and reach an agreement by the end of the week. The Treasury Department now says the government could start running out of money as soon as a week starting Monday, sending the U.S. into a potentially catastrophic default and spillover into the global economy.

As lawmakers leave town for the long holiday weekend, anxious retirees and social service groups are also making default contingency plans. The next batch of Social Security checks will be sent out next week.

“The whole world is watching,” IMF Managing Director Kristalina Georgieva said after her meeting with Yellen on Friday. “Let’s remember that we are now in the 12th hour.”

Democrat Joe Biden and the Republican Speaker of the House are narrowing differences as they work to hammer out details of a two-year deal that would cap federal spending and raise legal borrowing limits after next year’s presidential election.

Any deal would require political compromise and support from both Democrats and Republicans to pass through a divided Congress.

“We know this is a crunch,” McCarthy said as he arrived at the empty Capitol, acknowledging that more progress was needed.

As the White House honored LSU’s championship women’s basketball team, Biden yelled at a top negotiator, saying she “wanted to make a deal.”

He was referring to Shalanda Young, director of the Office of Management and Budget, who attended the event along with Rep. Garret Graves of Louisiana, the top Republican negotiator.

While the outlines of a deal have been formed to cut spending through 2024 and cap spending growth at 1% in 2025, the two sides are sticking to several terms. The debt ceiling, currently at $31 trillion, would be lifted for two years to pay the bills incurred by the state.

A person familiar with the talks said the two sides were discussing “in depth” whether to agree to Republican demands to impose stricter work requirements for those receiving government food stamps, cash assistance and health care assistance.

House Democrats have called such demands for health care and food assistance unworkable.

Asked whether Republicans would back down on job demands, Graves bristled: “Hell, absolutely not.”

House Republicans have pushed the issue to the brink, displaying risky political bravado as they leave town for the Memorial Day holiday. Lawmakers are tentatively not expected to return to work until Tuesday, just two days before “Date X” on June 1, when Treasury Secretary Janet Yellen said the U.S. could face a default.

Biden is also away this weekend, heading to the presidential retreat at Camp David, Maryland, on Friday and his home in Wilmington, Delaware, on Sunday. The Senate is on recess and will return after Memorial Day.

“Every time progress is made, the remaining issues become more difficult and more challenging,” Negotiator Patrick McHenry (RN.C.) said midday Friday.

Weeks of talks between Republicans and the White House have failed to produce a deal — in part because the Biden administration has refused to negotiate the debt ceiling with McCarthy, arguing that the country’s full trust and credit should not be used as leverage for other partisan priorities.

“We’ve got to spend less money than we did last year. That’s the starting point,” McCarthy said.

One idea is to set top-line budget numbers and then add a “snapback” provision to force budget cuts if Congress fails to meet new goals in its annual appropriations process.

When it comes to work requirements for recipients, the White House is particularly opposed to measures that could push more people into poverty or access to health care, said the people, who were asked to remain anonymous to describe the closed-door discussions.

It remains an “open question” whether the two sides will compromise on Republican demands to defund the IRS and allow the funds to be used for other domestic programs, the person said.

In one potential development, Republicans could relax a requirement to increase defense spending beyond what Biden proposed in his budget, according to another person familiar with the matter, rather than offering to keep defense spending at his proposed level. level.

The teams are also eyeing a proposal by Sen. John Hickenlooper of Colorado to boost the development of transmission lines to facilitate the construction of an interregional grid.

Meanwhile, McCarthy is feeling pressure from the right in the House not to bow to any deal, even if it means exceeding the June 1 deadline.

“Let’s hold our ground,” said Rep. Chip Roy, R-Texas, a member of the Freedom Caucus.

McCarthy said former President Donald Trump, who is running for office again, told him, “Make sure you get a good deal.”

Still, wary Democrats are also pressuring Biden. Three House Democratic leaders, led by Rep. Hakeem Jeffries, spoke with the White House late Thursday.

Even if negotiators strike a deal in the coming days, McCarthy has pledged to lawmakers that he will abide by the 72-hour rule to release any bill before a vote — which could now be Tuesday or even Wednesday. The Democratic-controlled Senate has vowed to move quickly to get the package to Biden’s desk ahead of a possible deadline next Thursday.

Meanwhile, Fitch Ratings put the US’ AAA credit rating on “Rating Watch Negative,” warning of a possible downgrade.

The White House continued to argue that the deficit could be reduced by ending tax breaks for wealthy households and some corporations, but McCarthy said he told the president as early as a meeting in February that raising revenues through tax increases was out of the question.

While Biden has temporarily ruled out invoking the 14th Amendment to raise the debt ceiling on its own, Democrats in the House of Representatives have announced that they have all signed on to a legislative “lift” process that would force a vote on the debt ceiling. But they need five Republicans to break with their party and get a majority to move forward with the plan.

Now that the pandemic emergency has officially lifted, they will almost certainly be recouping some $30 billion in unspent COVID-19 funding. (Associated Press)

(This is an unedited and auto-generated story from a Syndicated News feed, the content body may not have been modified or edited by LatestLY staff)