US debt ceiling talks get closer to a deal

The US debt ceiling talks are nearing agreement as the default deadline looms, with Wall Street and European shares rising as the White House and congressional Republicans work on the final touches of a package to present to Congress.

House speaker Kevin McCarthy arrived at the US Capitol on Friday morning saying he “will work until we get it done”. Democrats representing Joe Biden indicated the US president was willing to consider spending cuts, including to planned extra funding for the Internal Revenue Service.

The imminent deal would raise the ceiling for two years while capping spending on everything but military and veterans. The White House press secretary warned that a US default would cast the global economy into market chaos and probable recession.

This week, the US treasury cash balance dropped to $49.5bn, prompting Bloomberg TV to report that there are 24 individuals on the Billionaires list who have more money than the treasury does right now. Some analysts have downgraded the US credit rating in 2011 due to the political polarization in the country and the rising trajectory of debt.

Some House Democrats are upset at being kept out of negotiations and how Biden has trusted advisers to conduct talks. Rosa DeLauro, from Connecticut, said the scale of the cuts is staggering and the president should be out there. Biden was due to meet winning basketball teams at the White House on Friday, then travel to the presidential retreat at Camp David in Maryland.

Democrats need to use the power of the presidency to reach an agreement to avoid a default. However, Biden has not been silent, saying Republicans wanted “huge cuts” that would hurt ordinary Americans.

Biden and Speaker McCarthy still have a different view of who should bear the burden of additional efforts to get the fiscal house in order.