McCarthy, who is a republican, sounded positive that an opportunity existed to reach an agreement – potentially to run for two years.Ultimately, the devil will be in the detail of any agreement the republican leadership and the White House could hammer out. And given McCarthy’s fractious Republican Party with its small majority in the House, it remains to be see if he could bring everyone on his side along with him.
Biden on the other hand has insisted repeatedly he expects Congress to raise the borrowing cap with no strings attached – and that he will not negotiate on conditions for an increase. Democrat and White House strategists suggest that given McCarthy’s small majority and the deals he had to make with his right wing to secure the position of speaker, it will be difficult for him to design a budget programme that could keep all his members on board.
On January 19th, the Government reached the statutory $31.4 trillion limit on the amount it could legally borrow to meet its day-to-day obligations. The US treasury in the meantime is using a series of “extraordinary measures” – essentially accounting manoeuvres – to continue to pay its bills. Yellen told congressional leaders it was critical they either raised or suspended the official debt ceiling.