United States President Joe Biden and legislative leaders, particularly House Speaker Kevin McCarthy, are under pressure to raise the debt ceiling as the deadline approaches, as they hold a critical meeting on Tuesday at the White House.
The afternoon meeting comes after US Treasury Secretary Janet L. Yellen recently said that if Congress does not increase or suspend the US debt ceiling, the United States may experience a serious financial disaster, The New York Times reported.
Yellen stressed that the US debt ceiling issue is already affecting financial markets and people, and the country is on the edge of an "economic and financial catastrophe." The threat of default has compelled individuals and companies to think about its effects while making financial plans.
Investors are wary of retaining government debt that expires in early June due to the prospect of the US running out of funds.
Republican leaders have pushed for significant cutbacks in government spending as a prerequisite for raising the debt limit, including Speaker Kevin McCarthy. This approach prepares the ground for possibly heated negotiations.
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Biden Focused on Finding a Resolution to the US Debt Ceiling Crisis
The US debt ceiling limits the federal government's capacity to borrow money via US Treasury instruments like bills and savings bonds. Fiscal deficits force the US to borrow heavily.
If it exhausts its extraordinary measures and runs out of money, the government can't issue new debt or satisfy its payment obligations. Bondholder nonpayment might cause a global financial crisis.
The US Treasury Department earlier stated that it expects to satisfy the government's financial obligations through June 1 without a US debt limit increase, as per a previous Reuters report.
President Biden prioritizes settling the US debt ceiling deadlock above overseas obligations like the Quad meeting in Sydney and the Group of Seven meeting in Hiroshima. Depending on the talks, Joe Biden may attend these events live or online, according to VOA News.
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