Deal on US Debt Ceiling Close as Default Looms
- May, 26, 2023 - 14:14
- Other Media news
TEHRAN (Tasnim) - US President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal that would raise the government’s $31.4 trillion debt ceiling for two years while capping spending on most programs.
A default could upend global financial markets and push the United States into a major recession. Credit rating agency DBRS Morningstar put the US on review for a possible downgrade on Thursday, echoing similar warnings by Fitch, Moody’s and Scope Ratings.
Fitch warned it could downgrade the US’s triple A rating because of the “brinkmanship” over the debt limit. Another agency, S&P Global, downgraded US debt following a similar debt-ceiling standoff in 2011, Al Jazeera reported.
The months-long standoff has spooked Wall Street, weighing on US stocks and pushing the nation’s cost of borrowing higher. Deputy Treasury Secretary Wally Adeyemo said concerns about the debt ceiling had pushed up the government’s interest costs by $80 million so far.
The potential agreement would increase funding for discretionary spending on military and veterans while essentially holding non-defense discretionary spending at current year levels, an official, who requested anonymity, told Reuters news agency.
Representative Kevin Hern, who leads the powerful Republican Study Committee, told Reuters a deal was likely by Friday afternoon.
The White House is considering scaling back its plan to boost funding at the Internal Revenue Service to hire more auditors and target wealthy Americans, the official said.
The final deal would specify the total amount the government could spend on discretionary programs such as housing and education, according to a person familiar with the talks, but not break that down into individual categories. The two sides are just $70 billion apart on a total figure that would be well over $1 trillion, according to another source.