Elisha Pulivarti/Washington DC
US President Joe Biden can breathe easy. A congressional agreement on US debt ceiling limit increase is likely very soon. This will save the US from debt default on its official bonds and securities repayment within a few weeks. If the US defaults on debut repayment, it would not just create a massive financial crisis in America, but will have ripple effects across the globe, which is just recovering from a series of crises now.
Republican and White House negotiators are moving closer to an agreement to raise the debt limit and cap federal spending for two years, according to people familiar with the matter, as time grows short to avert a catastrophic US default.
The two sides have narrowed differences in talks over recent days, according to the people, though the details agreed to are tentative and a final accord is still not in hand. The two sides have yet to agree on the amount of the cap. Under the terms of the emerging agreement, defense spending would be permitted to rise 3% next year in line with President Joe Biden’s budget request.
The accord would also include a measure to upgrade the nation’s electric grid to accommodate renewable energy, a key climate goal, while speeding permits for pipelines and other fossil fuel projects that the GOP favors, people familiar with the deal said.
The deal would cut $10 billion from an $80 billion budget increase for the Internal Revenue Service that Biden won as part of his Inflation Reduction Act. Republicans have warned of a wave of agents and audits while Democrats said the increase would pay for itself through less tax cheating.
What is taking shape would be far more limited than the opening offer from Republicans, who called for raising the debt ceiling through next March in exchange for 10 years of spending caps. House conservatives were already balking Thursday at the notion of a small deal, with the House Freedom Caucus sending a letter to McCarthy demanding he hold firm.
An adviser to the House Democratic leadership said the White House had not shared any word about agreements on spending caps or IRS funding.
Kevin McCarthy: “We’re working on a deal”
The New York Times reported earlier that negotiators were closing in on a debt-limit deal. “We know where our differences lie,” House Speaker Kevin McCarthy told reporters at the Capitol, adding that he planned to work through the holiday weekend there. We do not have an agreement yet. We knew this would not be easy. It’s hard, but we’re working. And we’re gonna continue to work till we get this done,” he said.
US Treasury yields across the board edged higher. Shares opened marginally higher in Japan and South Korea, with Australia’s benchmark little changed. Hong Kong’s market is closed for a public holiday.
(Elisha Pulivarti is CEO of US India SME Council, Washington DC, regularly write for Excel India)
