May 17, 2023 - Economy & Business

Biden, McCarthy confident U.S. will avoid default

US President Joe Biden and Vice President Kamala Harris sit with House Speaker Kevin McCarthy, Minority Leader Mitch McConnell, and Senate Majority Leader Chuck Schumer in the Oval Office of the White House.

President Biden and Vice President Kamala Harris meet with House Speaker Kevin McCarthy, Senate Minority Leader Mitch McConnell and Majority Leader Chuck Schumer in the Oval Office on Tuesday. Photo: Demetrius Freeman/The Washington Post via Getty Images

President Biden Wednesday said he was confident the U.S. government would avoid a debt default, expressing a dose of optimism for a deal with Republicans as the U.S. closes in on its self-imposed debt ceiling.

Why it matters: The down-to-the-wire negotiations are unsettling investors already struggling to grapple with higher interest rates and an economic slowdown. An actual default could hammer sentiment and raise the risks to the global economy.

State of play: No agreement is expected before Sunday when Biden plans to return early from a previously scheduled trip abroad. That would be less than two weeks from the so-called "X-date," when the government could run out of money, currently forecast for June 1.

Zoom in: The president met Tuesday with leaders of both the House and the Senate, which Biden characterized as "productive, civil and respectful."

  • "This negotiation is about the outlines of what a budget will look like, not about whether or not we're going to, in fact, pay our debts," Biden said at a White House briefing Wednesday.

What others are saying: “I think at the end of the day, we do not have a debt default,” Republican House Speaker Kevin McCarthy told CNBC Wednesday morning.

The latest: Biden and McCarthy have appointed senior staff to continue talks over the next several days.

  • "We narrowed the group to meet and hammer out our differences," Biden said.

Zoom out: Stocks traded up following the remarks, with the S&P 500 up over 1% in afternoon trading.

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