Joe Biden warns of „catastrophic” economic consequences if America fails

Washington:

President Joe Biden’s administration warned again on Sunday that a default on the US economy would have „catastrophic” consequences, as talks with Republicans on a debt deal are expected to resume next week.

With uncertainty over the actual date the government will stop paying its bills, alarm bells are ringing over the possibility of a first-ever US default.

Congressional Republicans are demanding budget cuts in exchange for the so-called debt ceiling, while the White House has insisted for months that the nation’s debt is not up for negotiation.

The two sides remain deadlocked despite government officials and bankers warning for weeks that a default could unleash dire consequences, including recession and global financial contagion.

Treasury Secretary Janet Yellen has warned that a default could occur as early as June 1, while the nonpartisan Congressional Budget Office is predicting a default on Friday, June 15.

„We shouldn’t be here,” Deputy Treasury Secretary Wally Adeyemo said Sunday on CNN’s „State of the Union.”

„If Congress fails to raise the debt ceiling, we will go into a recession, and that will be catastrophic,” he warned.

„America has never paid back its debt — and we can’t.”

Biden has said he wants a „clean” increase in the debt ceiling, but Republicans insist on extending the nation’s borrowing authority to its current $31.4 trillion.

Rep. Byron Donalds, a Republican from Florida, told Fox News on Sunday that „it’s time to get spending back to pre-Covid levels and then talk about raising the debt ceiling.”

„If Joe Biden brings nothing to the table and all he does is sit there on his hands… he’s the one leading our nation back to normal.”

Former President Donald Trump has encouraged Republican lawmakers to hold back on default if Biden doesn’t agree to „massive cuts.”

– 'Constructive’ negotiations –

A highly anticipated new round of debt ceiling talks between Biden and Republican leaders, including House Speaker Kevin McCarthy, was postponed until next week.

Adeyemo acknowledged that „constructive” negotiations were taking place at the staff level, while Biden insisted that he did not want to address the ballooning US debt.

„The president has laid out a plan that includes $3 trillion in debt relief over 10 years,” Adeyemo said, referring to Biden’s budget request released in March, which included tax increases on the wealthy and businesses.

Congressional leaders should outline ways to reach an agreement on fiscal policy, „but because we’re having that conversation, there’s no reason to raise the debt ceiling and stop paying the debt in this country, which will lead to a major recession. It’s going to cost us millions of jobs,” he said.

Loyal Brainard, director of the White House’s National Economic Council, said a deal would be reached.

Our expectation is that „Congress will do what is necessary,” Brainard, a former Federal Reserve vice chairman, told CBS Sunday’s „Face the Nation.”

Biden addressed the issue in Delaware on Saturday, where he spoke briefly to reporters.

„They’re moving together,” he said of the negotiations. But when there was a „real debate”, the two sides were „not there yet”, he said.

(Other than the headline, this story was not edited by NDTV staff and was published from a syndicated feed.)