American Economy on the brink as Biden meets McCarthy

America is heading close to the brink of a self-imposed economic disaster with the Republican-led House refusing to pay the country’s debts unless President Joe Biden agrees on cuts to current and future spending and new curbs on social programs.

Unless a compromise to raise the government’s borrowing authority is reached within days, the US could lose its reputation as the stable anchor of the global economy. Millions of people could see retirement and veterans benefits put on hold once the government exhausted its ability to pay its debts due to the borrowing cap set by congress.

A US default would reverberate through the financial market, likely triggering a recession that would cause serious job losses and shatter an already fragile sense of economic security for many families.

After a weekend of acrimony between negotiators for House Republicans and the White House, Biden will meet House Speaker Kevin McCarthy Monday for critical talks on pulling the economy back from the precipice. The president just returned to the US from Japan, where he was put in the stunning position of being unable to reassure fellow world leaders that Washington will not tip the global economy into chaos.

Pressure on the meeting is immense, since Treasury Secretary Janet Yellen has warned that the government will be unable to meet its obligations unless Congress raises the debt ceiling by June 1. But serious damage could occur before then because the mere suggestion that the crisis cannot be solved could send panic through financial markets and damage confidence in US creditworthiness.

Biden has already backed down from his position that he will not negotiate over the debt limit — which needs to be raised to pay for spending already authorized by Congress and authored by him and previous presidents. His officials says it’s irresponsible for the GOP to hold the country “hostage” on such a critical issue. Republicans, however, say that the government is spending too much money and see the threat of financial calamity as their premier leverage against Biden.

While Biden was in Japan, the only stop of a longer trip he was forced to cut short, negotiators from both sides appeared to make progress before talks stalled, with each side blaming the other. The president suggested that the pro-Donald Trump extremists in the House were ready to sabotage the economy in a bid to doom his reelection campaign.

“I think there are some MAGA Republicans in the House who know the damage it would do to the economy, and because I am president, and a president is responsible for everything, Biden would take the blame and that’s the one way to make sure Biden’s not reelected,” he said in Japan.

McCarthy said Sunday morning that Biden was shifting positions because of pressure within his own party. “So I think he’s got to get away from the socialist wing of the Democratic Party and represent America,” the speaker told reporters.