Joe Biden said he was “confident” of reaching a deal with Congress to avoid an unprecedented default on US debt, as he left the door open to meeting a central Republican demand and adding new work requirements to anti-poverty programmes.
The US president spoke from the White House on Wednesday as he prepared to travel to Japan for the G7 leaders summit, with the fiscal stand-off in Washington emerging a huge risk to the global economy and financial system.
Biden said a meeting on Tuesday with congressional leaders including Republican speaker Kevin McCarthy had been “civil and respectful”, and all parties understood “the consequences of the failure to pay our bills”.
“I’m confident we’ll get the agreement on the budget and America will not default,” Biden said. “We’re going to come together because there’s no alternative way to do the right thing for the country. We have to move on.”
Biden will be back in Washington on Sunday to oversee the debt limit negotiations after cutting short the rest of his international trip, which was supposed to include stops in Papua New Guinea and Australia. Janet Yellen, the Treasury secretary, has warned that a default could come as early as June 1 if Congress does not act to raise the borrowing limit.
The White House and Republicans in Congress have been discussing a fiscal deal that would set limits to discretionary spending over the next few years. McCarthy has advocated for deeper budget cuts while Biden is seeking to contain them.
Republicans are also pushing for the addition of new work requirements for Americans to qualify for the government’s big anti-poverty schemes, from healthcare to nutritional aid and cash assistance for needy families. That demand has triggered a backlash among Democrats on Capitol Hill.
Biden said he would not accept stricter eligibility for social safety net programmes that would effect people’s “medical health”, but said it was “possible there could be a few others”, even if they did not go “much beyond” what already exists — suggesting a compromise might be possible.
The two sides have also been debating attaching a proposal to speed up permitting for big industrial projects. It is unclear for how long the debt limit will be extended, but the goal is to raise it for long enough to avoid a new stand-off before 2025.
The relatively upbeat tone from Biden came as the White House and Republicans narrowed the number of negotiators who will be trying to reach a deal in the coming days, a move that was welcomed by congressional leaders.
“I’m optimistic that now we have a structure that can work. The timeframe is what’s difficult,” McCarthy told Fox Business Network on Wednesday. “We’ve got to spend less than we spent before to curb inflation, we’ve got to become less dependent on China, make our supply chain better, get more people into the workforce.”
US markets held on to their gains after the remarks, with the S&P 500, Nasdaq and Dow Jones all up more than 0.5 per cent on the day.
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