US President Joe Biden has postponed his trip to Australia for next week’s Quad summit (Quadrilateral Security Dialogue) as he looks to contain the domestic debt ceiling crisis in the US.
Key Takeaways
- US President Joe Biden has postponed his trip to Australia due to debt ceiling negotiations in Washington.
- Australian Prime Minister Anthony Albanese said the Quad summit would not go ahead without the presence of the US president.
- Albanese said the leaders of Australia, the United States, India and Japan would instead meet at the G7 in Japan this weekend.
- The US Federal Government hit its US$31.4 trillion debt limit on January 12.
- Economists have warned that the federal government experiencing its first-ever default could have catastrophic economic consequences, likely sending the stock market plunging and pushing the nation into a recession.
Australian Prime Minister Anthony Albanese said he had spoken to Biden earlier and confirmed the “unfolding difficulties he is facing” would mean the Quad summit in Sydney could not go ahead.
“The Quad leaders meeting will not be going ahead in Sydney next week. We, though will be having that discussion between Quad leaders in Japan,” Albanese told a news conference on Wednesday.
“The Quad is an important body and we want to make sure that it occurs at leadership level and we‘ll be having that discussion over the weekend.”
US’ growing debt crisis
After the US federal government hit its $31.4 trillion debt limit on January 12, there are fears the country is on the brink of an economic crisis that could have global implications.
Economists have warned that the federal government experiencing its first-ever default could have catastrophic economic consequences, likely sending the stock market plunging and pushing the nation into a recession.
House Republicans had pushed for significant spending cuts in exchange for a debt ceiling increase, but Biden has argued in the past that any negotiations on spending should be part of the government’s annual budget process later this year and shouldn’t be tied to the debt ceiling.
Both President Joe Biden and House Speaker Kevin McCarthy (R-Calif.) emerged with a positive outlook following their latest round of debt ceiling negotiations Tuesday, with McCarthy saying a deal to raise the nation’s borrowing limit could be done “by the end of the week,” even as the two sides appear hung up on a handful of details with little time to negotiate ahead of an estimated June 1 deadline for when the federal government might no longer be able to pay its bills.
What We Don’t Know
It’s not clear if the two sides were able to resolve several sticking points they had heading into Tuesday’s discussions. One of the main holdups appears to be McCarthy’s demand for the federal government to impose stricter work requirements for welfare recipients—specifically raising the maximum age that food stamps and Medicaid beneficiaries are required to work from 49 to 55.
Biden has signalled an openness for some tweaks to work requirements but seemed to rule out adjustments to Medicaid over the weekend, calling it “a different story” compared to other welfare programs. Biden and Republicans also did not have agreements on GOP demands to rescind unspent Covid-19 funding, loosen energy permitting requirements and put new caps on federal spending heading into Tuesday’s meeting.
Chief Critic
Biden is facing pressure from progressives to make no spending concessions in exchange for raising the debt ceiling. Congressional Progressive Caucus Chairman Rep. Pramila Jayapal (D-Wash.) warned of “backlash at the polling booth” if Biden agrees to welfare spending cuts in remarks to Axios.
With additional reporting from Forbes.com
