Debt ceiling explained: White House and Republicans are scrambling for a deal as default looms

Gift this article Share this article paywall-free. Email Copy Link Copied to clipboard By MARY CLARE JALONICK, LISA MASCARO and COLLEEN LONG Associated Press WASHINGTON — House Speaker Kevin McCarthy said Thursday that"every hour matters" as his team scrambles to finalize a budget deal with the White House that would enable the government to avoid a potentially catastrophic default.

People are also reading… On Wednesday night, the rating agency Fitch put the nation's credit on"Rating Watch Negative,"which amounts to a warning that it might downgrade the U.S. credit as a result of the impasse.

Biden had insisted on approving the debt ceiling with no strings attached, saying the U.S. always pays its bills and defaulting on debt is non-negotiable. But he launched negotiations after House Republicans passed their own legislation and made clear they would not pass a clean debt ceiling increase.

And the repercussions would be global. Mark Zandi, chief economist at Moody's Analytics, said that"no corner of the global economy will be spared." Biden wants to increase some taxes on the wealthiest Americans and some big companies, but McCarthy said early on that that is out of the question. There are also policy priorities under consideration, including steps that could help speed the construction and development of energy projects that both Republicans and some Democrats want.

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