WASHINGTON – Democrats and Republicans inched towards a deal on Friday, ahead of a long weekend, to extend the US debt ceiling and avoid a crippling default that could hit the world’s biggest economy within days.
The Treasury estimates that the government will run out of money by next Thursday.
Ahead of that deadline, there are glimmers of hope in Washington that the two sides will finally compromise.
According to unconfirmed US media reports, this would include agreement to cover the US$31 trillion (S$42 trillion) – and growing – US debt for two years.
That would mean no repeat of the current drama before the 2024 presidential election.
To get this, Democrats would give in to Republican demands for sweeping spending limits on social safety and other domestic programmes.
Pressure to reach some sort of arrangement and authorise the government to borrow more money needed for existing commitments is deepening.
According to the Treasury, next Thursday is when the government coffers could run dry – leaving some domestic bills, and international creditors, unpaid.
More optimistic assessments give little more than a couple extra weeks before the cataclysm which would likely trigger stock market selloffs, huge job losses and recession.
With the country marking Memorial Day on Monday, members of Congress are leaving Washington on a 10-day recess.
Even US President Joe Biden – to the consternation of some in his own party – is heading to his Camp David retreat and his private home in Delaware.
Yet Mr Wally Adeyemo, the deputy Treasury secretary, told CNN that both Mr Biden and Republican congressional leader, Speaker Kevin McCarthy, were focused on avoiding catastrophe.
“The president decided, the speaker has said it, and we have to get something done before June,” Mr Adeyemo said. “The president is committed to making sure that we have good faith negotiations with the Republicans to reach a deal because the alternative is catastrophic for all Americans.”
On Thursday, Mr Biden had also tried to reassure the country, saying: “There will be no default.”