San Francisco Frontiers - Debt ceiling talks postponed until next week: W.House

A source familiar with the meetings between Democratic and Republican leaders said this was a positive development and that talks between the two sides were progressing, making Friday not the right moment for the leaders to meet.

But the Republican speaker of the House of Representatives, Kevin McCarthy, accused Democrats, including Senate Minority Leader Chuck Schumer, of holding up the deal.

"President Biden and Senator Schumer are stuck on no, they have no plan, no proposed savings and no clue," he told reporters shortly after the White House announced the talks had been postponed.

"The staff has met the last two days, we think it's productive for the staff to meet again," McCarthy said, adding he expected there would be another meeting between senior Republican and Democratic leaders next week.

- Averting the 'X-date' -

The two sides remain sharply divided over the debt ceiling, with Republicans in Congress insisting that Biden agree to significant budget cuts in exchange for support to lift the limit before the country runs out of money to pay its existing bills.

Democrats have been calling for a "clean" increase of the borrowing limit, accusing Republicans of using extreme tactics to push their political agenda ahead of the so-called "X-date" -- the point at which the US will be unable to meet its financial obligations.

The planned talks between Biden and McCarthy were the second scheduled for this week, as both sides look to avoid the X-date, which US Treasury Secretary Janet Yellen has warned could come as soon as June 1.

President Biden suggested earlier this week that he may cancel a planned trip to Asia if talks do not yield a breakthrough on the debt ceiling.

Earlier this week, former president Donald Trump suggested at a CNN event that Republicans should trigger a default if Biden fails to agree to spending cuts.

"I say that the Republicans out there, congressmen, senators, if they don't give you massive cuts, you're gonna have to do a default," said Trump, who is the current frontrunner for the 2024 Republican nomination.

- 'Serious repercussions' -

Calls for the US to avert a debt default have been growing as the X-date approaches.

"The debt ceiling is potentially catastrophic," JPMorgan's chief executive Jamie Dimon said in interview with Bloomberg TV on Thursday.

"People should remember the American financial system is the foundation to the global economic system," he said, adding he hoped a debt default could be avoided.

Earlier Thursday, the International Monetary Fund also warned of severe consequences if the US didn't pay its debts.

"Our assessment is that there would be very serious repercussions not only for the US but also for the global economy should there be a US debt default," IMF communications director Julie Kozack told reporters, encouraging all parties to urgently resolve the matter.

U.Lee--SFF