By John Meyer, consultant in finance – Eurasia Business News, May 22, 2023

The U.S. President Joe Biden said on May 21 that he ruled out declaring a default on the U.S. federal debt, calling on U.S. Congress to work on resolving the issue of raising the national debt limit.

The U.S. federal debt now stands at $31.4 trillion.

“Default is unacceptable. America has never defaulted on debt obligations and never will,” Joe Biden said at a press conference in Hiroshima. At the same time, he admitted that there is no consensus with the Republicans on a number of key issues related to these problems.

The U.S. President also called on the Congress to continue to work on the issue of raising the country’s debt limit. In particular, he appealed to Republicans in Congress to retreat “from their extreme position.”

“It’s time for Republicans to recognize that a bipartisan deal can’t be made solely on their party’s terms,” Joe Biden said.

He added that later on Sunday, on his way to Washington, he will once again discuss with the speaker of the House of Representatives, Republican Kevin McCarthy, the issue of the debt limit.

Earlier on Sunday, White House press secretary Karine Jean-Pierre said that the demands put forward by representatives of the Republican Party on the national debt issues have become an obstacle to reaching an agreement between Congress and the administration and threaten default.

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White House communications director Ben LaBolt, for his part, said that “Republicans are taking the economy hostage and pushing it to the brink of default, which could cost millions of jobs and plunge the country into recession.” He added that it was still possible to reach “a reasonable bipartisan agreement if Republicans return to the negotiating table in good faith.“

Earlier, Republican Louisiana Congressman Garrett Graves said that negotiations on raising the US national debt limit were on pause.

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Negotiators are trying to make a deal to increase the limit on government borrowing, which could receive support in both the House of Representatives and the Senate, before June 1. As the head of the US Treasury Department, Janet Yellen, warned earlier, by this date, the U.S. Treasury may run out of funds if the debt ceiling is not lifted, due to weakening tax revenues and an accelerated rise in interest expenses tied to higher interest rates and outsized debt. Such a lack of funds could threaten a default on the national debt.

The debt ceiling has been raised 78 times since 1960, under both Democrat and Republican presidents. At times, the ceiling was briefly suspended and then reinstated at a higher limit, essentially a retroactive raising of the debt ceiling.

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