[Asia Economy Reporter Yujin Cho] U.S. President Joe Biden and House Speaker Kevin McCarthy, a Republican, who are at odds over the U.S. national debt ceiling issue, will meet for the first time on the 1st of next month. The Republican Party, the majority party in the House, is pressuring that raising the debt ceiling must be accompanied by government budget cuts, while the White House is standing firm that it will not negotiate raising the ceiling linked to other issues, drawing attention to whether both sides can reach a compromise in this discussion.
On the 29th (local time), Speaker McCarthy appeared on CBS's 'Face the Nation' and announced plans to talk with President Biden on the 1st of next month, saying, "I want to find a reasonable and responsible way to raise the debt ceiling." He also emphasized again that "uncontrollable government spending must be controlled," making large-scale government spending cuts a precondition for this negotiation.
He said, "There will be no default," but criticized, "What is truly irresponsible is that the Democrats are now saying, 'You just raise the ceiling.'"
In the interview that day, Speaker McCarthy did not specify which items in the coalition government's spending need cuts. He stated only that Social Security and Medicare spending should be excluded from the discussion and that all spending, including the defense budget, should be reviewed for wastefulness.
He said, "Strengthening Social Security and Medicare was a Republican midterm election pledge," and added, "We will look into whether there is waste in the government's discretionary budget and defense budget." He also stressed, "We must achieve a balanced budget," and firmly stated, "The U.S. debt and future cannot be used as leverage."
This will be Speaker McCarthy's first meeting with President Biden since being elected speaker on the 7th. A White House official confirmed the schedule for the meeting between President Biden and Speaker McCarthy but did not provide any separate statement regarding it.
Earlier, White House Press Secretary Karine Jean-Pierre pressured the Republicans for cooperation during a briefing on the 20th, saying, "Raising the debt ceiling is not a negotiation but an obligation that must be fulfilled to avoid economic turmoil."
The debt ceiling is set by Congress to limit the amount of money the U.S. government can borrow, and the current debt ceiling is $31.381 trillion.
Previously, the U.S. government requested Congress to raise the debt ceiling, but the Republicans rejected it, linking it to government spending cuts. Ultimately, when the debt ceiling was reached on the 19th, the Treasury Department implemented special measures such as suspending new contributions to the Civil Service Retirement and Disability Fund (CSRDF). Treasury Secretary Janet Yellen explained that these measures could prevent default until June 5.
Last week, Secretary Yellen warned in an interview with Bloomberg News that failing to raise the debt ceiling would be a "disaster." On the 13th, she sent a letter to Congress forecasting that the federal government debt would reach the limit and requested either an increase in the debt ceiling or a suspension of the limit.
On the 21st, she reiterated on Twitter, "Since 1789, the United States has always paid off its debts, and the perception that we are a country that can be trusted and relied upon in that way has supported the global financial system," warning again that "default would cause widespread damage to the U.S. economy."
The U.S. government pays interest on U.S. Treasury bonds with borrowed funds, so if the ceiling is not raised, it could face a default situation. Economic experts predict that if the U.S. Congress fails to raise the national debt ceiling, there is a possibility of default in the early third quarter.
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