Debt ceiling talks heat up between Biden and Republicans

WASHINGTON — A stern new warning from credit rating agency Fitch about U.S. debt added new urgency to ongoing debt ceiling negotiations between the White House and congressional Republicans on Thursday, with just seven days to go before that the United States faces an imminent threat of default.

Fitch Ratings, one of the big three rating agencies, announced on Wednesday night that it had placed the United States’ triple A status on “negative watch”.

“The impasse over the debt ceiling, the failure of U.S. authorities to meaningfully address medium-term fiscal challenges that will lead to growing budget deficits and a growing debt burden signal risks to the decline for US solvency,” Fitch said in a statement on the decision.

The agency also strongly implied that if Congress did not reach an agreement by the June 1 deadline set by the Treasury Department to raise or suspend the debt limit, Fitch would lower the company’s credit rating. America.

Such a failure “would be a negative signal of broader governance and the willingness of the United States to meet its obligations in a timely manner, which would be unlikely to be consistent with a ‘AAA’ rating, according to Fitch.”

The warning came just hours after House Speaker Kevin McCarthy sought to calm nervous financial markets.

“I wouldn’t scare the markets in any form,” the California Republican said on Fox Business on Wednesday. “We will come to an agreement…and there should be no fear.”

On Thursday, negotiators appeared to have made little discernible progress in more than a week of nearly round-the-clock talks.

The decision by House leaders to send members home for a week’s vacation, albeit with instructions to stand ready to return to DC if their votes were needed to pass a compromise bill resulting from a agreement reached by President Joe Biden, added to concerns about the delay. and McCarthy.

“I don’t know if we have a deal today,” McCarthy said Thursday morning as he walked into the Capitol.

“We have already spoken at the White House today, we will continue to work,” he said as he left, after the only round of votes for the day. “They work on the numbers, we work on the numbers and we will work together.”

An influential Republican said he was optimistic a deal could be reached before the holiday weekend. Rep. Kevin Hern of Oklahoma, who chairs the 156-member Republican study committee, said Thursday he thought it was “likely” that a deal would be reached by Friday afternoon.

“We’re getting closer to an agreement. I think those are some of the tougher things they’re working on right now,” Hern told Reuters. “You’re likely to see a deal by tomorrow afternoon.”

Democrats, meanwhile, have become increasingly critical this week of the White House’s apparent choice not to regularly release details of the talks. It’s a tactic in stark contrast to McCarthy’s PR press, which chats with reporters several times a day about the talks and appears on television almost daily.

The White House has sought to deflect criticism, arguing that Biden has been talking about the debt ceiling for months.

“We have been very clear over the past five months,” White House press secretary Karine Jean-Pierre said earlier this week. “I wouldn’t just watch the last two days. Over the last five months, you’ve constantly heard about this president.”

On Thursday, White House Chief of Staff Jeff Zients released a rare Tweeter on the debt ceiling.

“Even now, Republicans want to add $3.5 trillion to the debt by extending Trump’s tax giveaways for the wealthy,” he wrote. What Zients didn’t say is that Biden also wants to expand those cuts, but only for households earning less than $400,000, and offset the cost by raising other taxes.

This is a developing story. Please check for updates.