‘US debt ceiling deal very close’: President Joe Biden

A deal to resolve the US government's debt ceiling crisis seemed ‘very close’ even as the deadline for a potentially catastrophic default was pushed back to June 5, said President Joe Biden on Friday. It seemed likely to drag negotiations between the White House and Republicans into another frustrating week.

In a letter from Treasury Secretary Janet Yellen, the later ‘X-date’ set the risk of a devastating default four days beyond an earlier estimate, according to a report published by The Associated Press. 

This came as Americans and the world uneasily watched the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation's leadership.

“There's a negotiation going on. I'm hopeful we'll know by tonight whether we're going to be able to have a deal," the President said. 

In a blunt warning, Yellen said failure to act by the new date would cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests, AP reported. 

It seemed that Biden and Republican House Speaker Kevin McCarthy are narrowing a two-year budget-slashing deal that would also extend the debt limit into 2025 past the next presidential election. 

After frustrating rounds of closed-door talks, a compromise appeared to be nearing on Friday.

Republicans have made some headway in their drive for steep spending cuts that Democrats oppose. However, the sides are particularly divided over McCarthy's demands for tougher work requirements on government food stamp recipients which Democrats say is a nonstarter.

McCarthy has earlier said his Republican debt negotiators and the White House had hit “crunch” time, straining to wrap up an agreement. He left late Friday night without comment.

The Treasury effectively hit the debt limit in January and has since been using emergency accounting measures to stave off a default, which could prove catastrophic for financial markets and the economy, as per Bloomberg reports. 

The Treasury’s cash balance fell to $38.8 billion as of Thursday, according to data published Friday, the lowest since 2017. The Treasury had just $67 billion of extraordinary measures left to help keep the government’s bills paid as of May 24, the department said in a statement Friday.

(With inputs from agencies)