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Kevin McCarthy (left), Republican chairman of the House of Representatives, on the debt dispute in the USA: "Yes, we have to pause"

Photo: Manuel Balce Ceneta / dpa

Negotiations between the U.S. government and the opposition Republicans to avoid a default by the country have suffered a setback. The chairman of the House of Representatives, Republican Kevin McCarthy, said in Washington that the negotiations had been put on hold. "Yes, we have to pause." He added, "We need movement from the White House, and we don't have any movement yet."

A representative of the White House confirmed the difficulties in the negotiations. "There are real differences between the parties on budget issues, and the talks will be difficult." However, President Joe Biden's team is working "hard" to find a "reasonable" solution that could pass both the Republican-controlled House of Representatives and the Democratic-controlled Senate.

The Biden administration and the opposition Republicans have been arguing for months about raising the debt ceiling. Without an agreement, the U.S. could default for the first time in its history as early as early June, with potentially devastating economic and financial consequences far beyond the country.

Republicans call for cuts in social spending

Because of the dispute, Biden, who is currently attending the G7 summit in Hiroshima, Japan, had canceled planned visits to Papua New Guinea and Australia. The president will fly back to Washington after the end of the summit.

The U.S. had already reached the statutory debt limit of just under 31.4 trillion dollars (around 29 trillion euros) in January. Since then, the U.S. government has been taking "extraordinary measures" to prevent insolvency, but the possibilities for this are soon exhausted.

The opposition Republicans want to approve an increase in the debt ceiling only in return for billions of dollars in cuts in government spending. They want to roll back key elements of Biden's reform policy, including billions in subsidies for renewable energies and Biden's partial waiver of tuition fees. In addition, the Republicans are calling for spending cuts in the social sector.

Biden rejects this and demands that Republicans agree to raise the debt ceiling without preconditions. The president accuses the opposition of "holding hostage" the country's economy with the threat of default in order to push through its political agenda.

The U.S. debt limit has been suspended or raised dozens of times in recent decades under bipartisan presidents – with bipartisan majorities. This year, however, the Republicans are flexing their muscles with their new majority in the House of Representatives, which was achieved in the midterm congressional elections in autumn 2022.

jso/AFP