WASHINGTON - Joe Biden and Republican leaders readied for high-stakes talks Tuesday to avert a catastrophic debt default, as the White House said the president may cut short an upcoming Asia tour to tackle the crisis.
Biden is "reevaluating" his trip plans due to the ongoing stalemate, a White House spokesperson confirmed, adding he still intended to attend a G7 summit in Tokyo.
The two sides have accused each other of failing to take the default threat seriously ahead of the talks, which are due to get underway at 3:00 pm (1900 GMT) in Washington.
The Treasury has warned of "catastrophic" consequences if the US runs out of cash to pay its bills, which would leave it unable to pay federal workers and trigger a likely surge in interest rates with knock-on effects for businesses and mortgage holders -- and financial markets around the world.
Fresh data reinforces the prospect of default "potentially as early as June 1," Treasury Secretary Janet Yellen warned on Monday in a letter to House speaker Kevin McCarthy.
The two parties remain sharply divided on the issue, with Republicans insisting Biden agree to significant spending cuts in exchange for their support to raise the debt ceiling.
Democrats have been calling for a "clean" increase of the borrowing limit with no strings attached, and have accused Republicans of using extreme tactics to push their political agenda ahead of the so-called "X-date" at which the US starts defaulting on its debts.
In a sign that the threat of default is drawing closer, more than 140 of America's top chief executives sent a letter to Biden and congressional leaders stressing the need for an agreement.
"We strongly urge that an accord be reached quickly so that the country can avert this potentially devastating scenario," the letter signed by the CEOs from Pfizer and Morgan Stanley, among others, said.
The nonpartisan Congressional Budget Office forecasts that the X-date could be reached by June 15.
- Breaking the stalemate -
Little progress was made in the first round of talks between Biden and congressional leaders last week.
On Monday, McCarthy said there had been "no movement" on important issues.
"We're only a couple weeks away, and if you look at the timeline to pass something in the House and pass something in the Senate, you've got to have something done by this weekend -- and we are nowhere near any of that," he said.
On Tuesday morning, President Biden suggested the blame lay squarely with the Republican party.
"If House Republicans push us into default, 8 million jobs could be lost -- destroying our economic progress," he wrote in a tweet, adding: "It's clear: Default is not an option."
Republicans, who regained control of the House in the 2022 midterm elections, are using their newfound clout to demand cuts of $130 billion from federal agencies and programs in exchange for support for lifting the debt ceiling. This would limit spending in the 2024 fiscal year to 2022 levels.
They also want to expedite domestic energy production projects, simplify the process for obtaining permits for pipelines and refineries, claw back unspent Covid relief funding and impose work requirements for social programs.
Biden has rebuffed many of these proposals, accusing Republicans of "holding the economy hostage."
- Little time remaining -
There are now only three days remaining when the House and Senate are both in session before June 1, when the Treasury predicts the US could run out of money.
Some senators have acknowledged that they may have to cancel the Memorial Day recess beginning Thursday to get a deal finalized.
Biden's Asia travel plans drew sharp criticism from moderate Republican congresswoman Nancy Mace on Tuesday morning.
"I think it's deeply problematic, given the trajectory that we're on right now and how close we are to the June 1 deadline, the president is traveling out of country," she told CNN.
"He should be here on the Hill, working with Republicans and Democrats to strike some sort of a compromise."
As the X-date draws closer, Democrats in Congress have begun considering a range of alternatives, including using an arcane congressional procedure to bypass McCarthy.
They've also contemplated asking Biden to invoke the 14th Amendment to raise the debt ceiling unilaterally, which some legal scholars believe would allow the Treasury to simply ignore the debt limit.
But Biden has cautioned that such a move could be challenged in court, and has continued to call on Republicans to support a clean increase to the debt ceiling.
A US default would likely cause a recession, which would be "catastrophic," Deputy Treasury Secretary Wally Adeyemo told CNN over the weekend.
"The United States of America has never defaulted on its debt -- and we can't," he said.