Critical meeting over debt ceiling ends with no deal
Today between President Biden and congressional leaders ended with no deal on the debt ceiling deadlock. The United States is on course to run out of borrowing power in June if Congress doesn't find a way to come up with enough money. KTVU's Jana Katsuyama joins us now with today's update and some perspective from a former federal economist about why this could impact every American. Jana. And it certainly is broad reaching if it does get to that default. One line is that if the U.S.
can't find the funds to make good on its payments, that could impact everything from people's retirement funds to social security checks and paychecks for government contractors and employees. At the White House Tuesday, President Biden's meeting with the top four congressional leaders lasted more than one hour. I made clear during our meeting that default is not an option. President Biden said if the U.S. does not raise the debt limit, it will run out of funds. Let's discuss what we need to cut, what we need to protect, what new revenue we can raise and how to lower the deficit to put our fiscal house in order.
But in the meantime, in the meantime, we need to take the threat of default off the table. House Speaker Kevin McCarthy says he wants immediate spending cuts before agreeing to raise the debt ceiling. I didn't find progress in this meeting. Half will continue to meet and we'll get back together on Friday. The solution to this problem lies with two people, President of the United States and the Speaker of the House. The nation has a $31.4 trillion debt limit, but it's set to run out of money in June, something that should worry every American, according to former Fed economist and UC Berkeley finance professor Jim Wilcox.
If we do hit the ceiling, they're going to have to decide who gets paid and more importantly, who does not get paid. Wilcox says that includes payments to government employees, the military, social security and welfare recipients and government contractors, which all could be in jeopardy. If they're not getting their checks, they're not going to be spending as much in restaurants or clothing stores or anyplace else and that will ripple through the economy with great force. And Wilcox says there could be long-term impacts if the U.S. defaults on its treasury bonds that could impact people's money market funds and retirement accounts as well as the U.S.
credit worldwide and make it even more expensive to borrow in the future. If we don't make our mortgage payments on time, the next time we go to get a loan, almost certainly we're going to have to pay a higher interest rate. And the same thing is true for businesses, for individuals and governments. And today following the meeting, President Biden did not rule out a short-term increase until September 30th. But again, Mike and Julie, the staff are working, continued working today, will be working this week and they are hoping to have another meeting between the president and those four congressional leaders on Friday. All right, that deadline fast approaching. And Janna, thank you.
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