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Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC shares his perspective on US politics.

Will President Biden get a budget deal with Republican lawmakers?

In what's become an almost annual exercise, the US needs to increase its debt limit once again. With over $31 trillion on the national debt, Congress has to authorize the ability for treasury to borrow any more, and the new Republican majority in the House sees this as an opportunity to try to force President Biden into achieving some long-term budget cuts. The house passed a bill last month that would cut spending by about $4 trillion over the next 10 years. President Biden has proposed a budget that would reduce the deficit by over $3 trillion over the next 10 years through a combination of spending cuts and tax increases. The Republicans have no interest whatsoever in those tax increases, however, so what they're negotiating towards is a package of spending cuts over 10 years that would probably cut budget deficits by somewhere between $1-2 trillion. However, President Biden up until about a week ago said that he was not open to negotiating on the debt limit, and instead wanted to keep the discussions focused around the government's annual appropriations process, which is supposed to take place around September 30th. With the debt limit deadline coming up on or around June 1st, the US could potentially default if lawmakers have not achieved a deal well in advance of that deadline, which we're about two weeks away from right now. Negotiations are just starting to heat up between Speaker Kevin McCarthy's staff and the White House staff. President Biden has canceled part of his trip to Asia in order to come back to the United States to finish these negotiations. And this very well could come down to the wire, which is making markets very nervous about the fact that the US may not be able to make payments to certain people starting sometime in early June.