President Joe Biden said Wednesday that he is confident the US will avoid an unprecedented and catastrophic debt default, saying talks with congressional Republicans have been productive as he prepared to leave for a global summit in Japan.

“I’m confident that we’ll get the agreement on the budget and America will not default," Biden said from the Roosevelt Room of the White House. He said he and lawmakers will come together “because there's no alternative.”

Biden’s remarks came just before he departed Washington for the Group of Seven summit in Hiroshima, Japan, and one day after he convened a second Oval Office meeting with congressional leaders to determine how to avert debt default.

The president and House Speaker Kevin McCarthy, R-Calif., tasked a handful of negotiators to try and close out a final deal, with negotiations beginning late Tuesday. Those people include Steve Ricchetti, counselor to the president, legislative affairs director Louisa Terrell and Office of Management and Budget director Shalanda Young for the administration, and Rep. Garret Graves, R-La., a close McCarthy ally, for the Republicans.

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“I think at the end of the day we do not have a debt default,” McCarthy told CNBC’s “Squawk Box” on Wednesday. “The problem is, the timeline is very short.”

Negotiators have been scrambling to strike an agreement that would unlock a path forward for raising the debt limit by June 1, which is when the Treasury Department says the US could begin defaulting on its obligations and trigger financial chaos.

The national debt currently stands at $31.4 trillion. An increase in the debt limit would not authorize new federal spending; it would only allow for borrowing to pay for what Congress has already approved.

(Edited by : Sangam Singh)

First Published:May 17, 2023 9:22 PM IST