Anxieties were mounting in Washington ahead of President Joe Biden's Monday meeting with Republican House Speaker Kevin McCarthy over negotiations to raise the US debt ceiling, less than two weeks before a key deadline to avoid a disastrous default.
After a weekend of near deadlock, Biden arrived back in Washington late Sunday, cutting short a trip to Asia to resume talks ahead of the US Treasury's June 1 deadline for Congress to authorise more borrowing.
Ahead of their Monday afternoon meeting, Biden and McCarthy spoke as the president flew back to the US on Air Force One.
"It went well," Biden told reporters of the phone call as he arrived at the White House Sunday night. "We'll talk tomorrow."
And earlier in the day, McCarthy had said the conversation was "productive" – in contrast to the sharp words exchanged in a previous round of negotiations.
Still, the two sides seemed far from a final compromise, as Biden said Sunday that Republicans' latest demands for spending cuts as a condition for raising the US government borrowing authority were "frankly unacceptable."
"It's time for the other side to move from their extreme positions," he said at a press conference before leaving the G7 summit in Hiroshima, Japan.
And in a tweet, Biden maintained that he was categorically opposed to slashing social and healthcare assistance.
"I will not agree to a deal with House Republicans that protects billions in subsidies for Big Oil while putting the healthcare of 21 million Americans at risk," Biden said.
And for his part, McCarthy said his position remained unchanged.
"Washington cannot continue to spend money we do not have at the expense of children and grandchildren," he said on Twitter after talking to Biden.
In his comments in Japan Biden voiced hope that "we can reach an agreement." However, he cautioned he could not "guarantee that they wouldn't force a default by doing something outrageous."
Biden said he was looking into an obscure constitutional clause in the 14th Amendment, which states that the validity of public debt "shall not be questioned" – and potentially authorizing the president to circumvent Congress and raise the debt ceiling himself.
"I think we have the authority. The question is could it be done and invoked in time," he said, noting the likelihood of legal challenges to this and the rapidly approaching debt deadline.
The Treasury Department says the government could run out of money and default on payments on its US$31 trillion (about RM140.7 trillion) debt as early as June 1 if Congress, where Republicans control the House of Representatives, does not authorise more borrowing.
Treasury Secretary Janet Yellen said Sunday on NBC that June 1 remains a "hard deadline," adding: "My assessment is that the odds of reaching June 15th, while being able to pay all of our bills, is quite low."
Biden had planned to travel from Japan to Papua New Guinea and Australia but cut short the Asia trip due to the debt talks.
This added to the impression that he limped into the G7 summit as a weakened leader of a divided country stumbling from one crisis to the next as the world looked on in dismay.
But national security adviser Jake Sullivan dismissed this idea, saying on CNN that Biden had led allies at the G7 summit in dealing with China, the war in Ukraine, the environment and other issues.
"President Biden has been able to lead on the world stage and at the same time stay engaged to ensure that the United States does not default," Sullivan said.
Spending and taxing
The debt ceiling raise is usually an uncontroversial annual procedure but this year the increasingly hard-right Republican Party has turned the threat of default into a powerful lever to try and force Biden to accept spending cuts.
More borrowing is required imminently by the US government just to meet expenditures already agreed to in the current budget.
Failure to strike a debt ceiling deal would leave Washington unable to pay its bills and trigger an array of economic shock waves worldwide – including, the White House says, a US recession.
With the 2024 election campaign underway and Biden potentially facing Donald Trump again, Republicans have seized the opportunity to paint Democrats as responsible for the country's gargantuan debt – which in reality has built up over decades.
Republicans say the debt ceiling can no longer be raised without harsh measures to reduce the deficit. These include slashing social spending and restricting access to Medicaid, the subsidized program providing health care for the poor.
Biden has countered with a plan to reduce some spending but also to raise new revenue by increasing taxes on the richest Americans and corporations currently enjoying huge tax breaks. Republicans refuse to accept tax increases as part of a deal.
"That's what we continue to have a significant disagreement on, on the revenue side," Biden said.