“There will be no default” on the debt, Biden said, referring to “productive” negotiations he is conducting with Republican House Speaker Kevin McCarthy, the narrow majority leader in the House.
This comes seven days before the first of June, which is the day from which the government treasury may empty funds to service its debts in the event that an agreement is not reached with the Republicans on raising the debt ceiling.
In turn, White House spokeswoman Karen Jean-Pierre confirmed that the negotiations between the US presidency and the Republican opposition are “fruitful.”
“Obviously, that means there is still room to move forward,” she added.
The spokeswoman said the latest round of talks was held virtually early Thursday, but she did not give details of the content of the negotiations.
“Both sides will have to understand that neither of them will get everything they want,” she said.
Republicans are pressing for massive cuts in public spending to raise the government’s borrowing cap.
But Biden rejected that, accusing Republicans of taking the world’s largest economy hostage and pushing it to the brink of default.
“Default is not an option,” Jean-Pierre stressed, warning that the shock of debt default could lead to the loss of eight million jobs and “destroy retirement accounts”.
When asked if Biden was preparing a contingency plan in case the talks fail, the spokeswoman replied that “the only option now is for Congress to do its job.”
For his part, the US Army Chief of Staff, General Mark Milley, considered that default would harm the army’s morale and readiness.
“There will be a very significant negative impact on the readiness, morale and capabilities of the United States military if we default,” he told reporters at the Pentagon Thursday, as well as “international reputational damage.”
“If we default, it will have … significant economic consequences, which will then translate into repercussions for national security – paying soldiers’ salaries, troop morale, weapons systems, contracts, all of that will be affected,” he added.
“The readiness of course will be affected. So it is possible that the large-scale training that we are conducting in the various training centers will slow down or stop in many cases,” he added.
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