US Debt ceiling: Joe Biden 'confident' an agreement can be reached

A default on its debt would plunge the US economy into a recession

President Joe Biden discussing the debt limit in the White House. AP
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President Joe Biden said on Wednesday that he was confident about the prospects of reaching a budget agreement with top Republican legislators to avert a US default on its debt for the first time in the nation's history.

Before a trip to Japan to attend a G7 meeting, Mr Biden said negotiators would meet later on Wednesday, and that he would remain up to date on developments during his travels.

“I’m confident that we’ll get the agreement on the budget and that America will not default,” Mr Biden said from the White House.

“We’re going to continue these discussions with congressional leaders in the coming days until we reach an agreement.”

Mr Biden said he would hold another press conference on Sunday after his return.

“Default is not an option,” he said. “America is not a deadbeat nation, we pay our bills and avoiding default is a basic duty of the United States Congress.”

Mr Biden cancelled planned visits to Australia and Papua New Guinea, which were part of his Asia tour, in an effort to reach a deal before a June 1 deadline, when the Treasury Department says the US could begin defaulting on its own debt.

He has met House Speaker Kevin McCarthy and other congressional leaders for talks on the debt ceiling over the past two weeks to try to ensure the US can continue to meet its financial obligations.

Mr McCarthy appeared to be optimistic that a deal could be reached.

"I think at the end of the day we do not have a debt default," he told CNBC on Wednesday.

Meanwhile, Senate majority leader Chuck Schumer held a meeting with banking executives from JPMorgan Chase, Citigroup and other major lenders on the debt limit.

Any deal would probably be passed in the House before it moves to the Senate.

“I asked them to make sure that they tell everybody that default should not be an option.” said Mr Schumer, who added that bipartisanship was needed to reach an agreement on the debt limit.

A debt default would plunge the US economy into a recession, leave millions in the US unemployed and cause great damage to the global economy.

Updated: May 18, 2023, 6:36 AM