WASHINGTON: Kevin McCarthy, the new Republican speaker of the House of Representatives, said talks with President Joe Biden are going well - even if no deal has yet been reached - as the US took a small step back from the threat of a devastating debt default on Wednesday.

After meeting with Biden at the White House for about an hour, McCarthy told reporters, "The President and I tried to find a way that we could work together."

"I believe we can come to some kind of agreement at the end of the day." Although it was a "good discussion", McCarthy cautioned that "no agreement, no promise, except that we're going to keep this conversation going" was made.

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The White House said in a statement that Biden and McCarthy "agreed to continue talking" after having a "frank and direct" discussion as well as being optimistic.

The stability of the largest economy on Earth is at risk.
Republicans are threatening to block what is typically rubber-stamp approval for raising the nation's credit limit if Democrats don't first agree to significant cuts in future budgets.

According to the White House, Republicans are allegedly "hostage" the economy in order to appear fiscally responsible.

According to the Treasury, if the debt ceiling is not raised around June, the US will be forced to default on its $31.4 trillion debt. It would be a historic first that would leave the government unable to pay its bills, damage the reputation of the US economy, and probably spook investors.

McCarthy said Republicans and Democrats have about five months to negotiate before the debt cliff is reached, but "hopefully it won't take that long."

Over the years, there have been other demonstrations as Republicans oppose allowing the US debt to continue to grow. But on most occasions, the disagreement was resolved quickly, Congress raised the ceiling, and the economy continued to function as normal. This time, things are very risky due to political fervor.

Biden is two years into his first term and is widely expected to be close to announcing his candidacy for re-election in 2024. And Republicans, who recently took control of the House, are eager to make a show of their strength.

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Even though McCarthy wants to be flexible, his ability to influence Congress depends largely on the wishes of a far-right group of Republicans who are more likely to play chicken regardless of the impact on the world economy.

The White House claims that because Congress has already approved $31.4 trillion in spending, it will not allow the current debt ceiling to be brought up in discussions about upcoming government spending.

In other words, refusing to increase the loan limit would be tantamount to refusing to pay the credit card bill that has already been incurred. There may be scope for bargaining on adjustments in the upcoming budget.

McCarthy recalled Biden saying "we can't keep on the current path we're on," adding that he was against defaulting on the existing debt, but wanted to see spending cuts in the future.

When it comes down to it, however, neither party has been able to identify specific areas where they can make significant savings unless they address politically sensitive programs such as Social Security, Medicare, Medicaid or government-funded health care. Do not target other forms of care.

By demanding that Republicans outline exactly where they would cut, Biden gave the impression that he wanted to call McCarthy's bluff.

His bet is that as more right-wing members demand cuts to popular spending programs, internal party conflicts will come to the fore.

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What Cover-Up Do House Republicans Have? said deputy press secretary Andrew Bates. Brian Dees of the National Economic Council and Shalanda Young of the Office of Management and Budget urged McCarthy to release the draft budget in a memo Tuesday. According to reports, on March 9 the White House will release its own.