US debt ceiling: Joe Biden urges Republicans to compromise as talks resume

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Joe Biden told reporters on Sunday that he was willing to cut spending to reach a deal

President Joe Biden and top Republican Kevin McCarthy are set to meet at the White House on Monday for talks on raising the US debt ceiling.

The two spoke on the phone on Sunday as the president returned from the G7 summit in Japan.

The two sides are at odds over budget cuts that Republicans have demanded as a condition for raising the cap.

Failure to do so by June could put the US in default on its debt.

This means that the government cannot borrow or pay all its bills. This would wreak havoc on the global economy, affecting prices and mortgage rates in other countries.

As he left Japan on Sunday, Mr Biden told reporters that the Republicans – who control the House of Representatives – were “simply, quite frankly, unacceptable”.

He added: “It’s time for Republicans to accept that no bipartisan deal is being made solely on their party terms. They need to move as well.”

But Mr Biden has said he is willing to cut costs to reach a deal.

Following a three-day summit in Hiroshima, the president canceled foreign trips to deal with the impasse over the federal debt.

Mr McCarthy previously described his call with Mr Biden as productive.

On Sunday night, negotiators met in Mr McCarthy’s office on Capitol Hill for a summit that lasted about two and a half hours.

Steve Ricchetti, one of Mr Biden’s representatives and a senior adviser to the president, told reporters that negotiating teams would continue working overnight.

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See: Debt ceiling explained – within 90 seconds

Meanwhile, Treasury Secretary Janet Yellen said Sunday that June 1 is a “hard deadline.” “We expect to not be able to pay all of our bills by the beginning of June” without a deal, he told NBC.

Failure to raise the cap could see the United States freeze its Social Security payments and the salaries of federal and military employees.

The impasse rocked financial markets. On Friday, the Dow fell 0.3%, the S&P 500 fell 0.1% and the Nasdaq fell 0.2%.

In exchange for support for raising the debt ceiling, Republicans are demanding budget cuts of up to $4.5tn (£3.61tn), which include scaling back many of Mr Biden’s legislative priorities. They also seek to increase spending on the military and border security.

Both President Biden and Mr McCarthy are under pressure from the left and right of their respective parties to hold the line.

With a one-seat Democratic majority in the Senate and Republicans in narrow control of the House, a deal has so far proven elusive.

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