The US is heading close to the brink of a self-imposed economic disaster with the Republican-led House refusing to pay the countrys debts unless President Joe Biden agrees on cuts to current and future spending and new curbs on social programs.
Unless a compromise to raise the government's borrowing authority is reached within days, the US could lose its reputation as the stable anchor of the global economy, CNN reported.
Millions of people could see retirement and veterans benefits put on hold once the government exhausted its ability to pay its debts due to the borrowing cap set by congress.
A US default would reverberate through the financial market, likely triggering a recession that would cause serious job losses and shatter an already fragile sense of economic security for many families.
After a weekend of acrimony between negotiators for House Republicans and the White House, Biden will meet House Speaker Kevin McCarthy on Monday for critical talks on pulling the economy back from the precipice.
The President just returned to the US from Japan, where he was put in the stunning position of being unable to reassure fellow world leaders that Washington will not tip the global economy into chaos, CNN reported.
Pressure on the meeting is immense, since Treasury Secretary Janet Yellen has warned that the government will be unable to meet its obligations unless Congress raises the debt ceiling by June 1.
But serious damage could occur before then because the mere suggestion that the crisis cannot be solved could send panic through financial markets and damage confidence in US credit-worthiness.
Biden has already backed down from his position that he will not negotiate over the debt limit -- which needs to be raised to pay for spending already authorized by Congress and authored by him and previous Presidents.
His officials says it's irresponsible for the Republican to hold the country "hostage" on such a critical issue, CNN reported.
Republicans, however, say that the government is spending too much money and see the threat of financial calamity as their premier leverage against Biden.
Also Read | El Nino on the way, could wipe out $3 trillion of world economy
Also Read | Epstein threatened Bill Gates over his affair with Russian bridge player: Report