Biden, McCarthy divided over debt ceiling but talks continue

US President Joe Biden and top lawmakers failed to break a deadlock on Tuesday in face-to-face talks over raising the $31.4 trillion US debt limit but vowed to meet again with just three weeks before the country may be forced into an unprecedented default.

Biden called the meeting “productive” and reported that House Speaker Kevin McCarthy said during the meeting that the US would not default on its debt.

“Everyone in the meeting understood the risks of default,” US President Biden additionally mentioned.

Biden also noted “When we get by this, I’m thinking about taking a look at months down the road to see what the court would say”. “I have been considering the 14th amendment.” But, he added, “It would have to be litigated”, he added.

The news also quotes US House Speaker McCarthy saying that the two sides agreed for their staff to get together this week, and for the principals to meet again on Friday to continue talking.

Apart from the Biden-McCarthy comments, the US Treasury Borrowing Advisory Committee (TBAC) also released its comments on the debt ceiling talks after initially saying, “Deeply concerned about the lack of resolution of the statutory debt limit.”

There will be a direct impact on any issuer whose credit relies on backing from the US government.

With financial markets on edge, continuing to debate raising the debt limit is reckless and irresponsible.

Protracted standoff over debt limit will dramatically increase taxpayer costs and exacerbate market stress.

It is imperative that debt limit be increased with all due haste, but a more permanent fix is also required.

Delay in making interest or principal payment by treasury would not only for financial markets but also the real economy.

Time to introduce alternative method of enforcing fiscal responsibility, by either requiring limits to be raised simultaneously with appropriations.

Time to introduce alternative method of enforcing fiscal responsibility, by repealing debt limit altogether.