President Joe Biden and House Speaker Kevin McCarthy seemed to be reasonably close to reaching a deal over raising the debt ceiling.
That’s good news, since the point where the U.S. can no longer pay its bills is projected to arrive on Thursday. In between, there’s a long weekend for Memorial Day.
An outline of a deal has emerged that would raise the debt ceiling for the next two years and that would cap overall federal spending. It may possibly claw back some of the $80 billion that Congress had approved to strengthen tax collection by the Internal Revenue Service, The Wall Street Journal reported, citing unidentified people familiar with the talks.
McCarthy and Biden said Thursday that the two sides are making progress. “There’s still some outstanding issues, and I’ve directed our teams to work 24/7,” McCarthy told reporters. Another Republican representative, Kevin Hern of Oklahoma, told Reuters a deal could happen Friday afternoon.
Treasury Secretary Janet Yellen says that June 1 is the key date for an agreement. After that, the Treasury’s “extraordinary measures,” which it has been doing since early this year, won’t be able to cover the government’s bills. That date might be a little flexible, depending on how the Treasury manages.
Goldman Sachs
economists on Friday said that June 1 nevertheless looks “very accurate.” They predict that a deal will be announced Friday or Saturday.
The uncertainty over an agreement has created jitters for the $4 trillion municipal bond market, since cities rely on the federal government for funding.
Write to Brian Swint at [email protected]
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