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Republican Debt-Ceiling Negotiators Walk Out of Meeting, Say White House ‘Unreasonable’

Republican Debt-Ceiling Negotiators Walk Out of Meeting, Say White House ‘Unreasonable’
WASHINGTON, DC - MARCH 30: U.S. Rep. Garret Graves (R-LA) speaks to members of the press as other House Republicans listen during a news conference after the vote for H.R.1 – Lower Energy Costs Act at the U.S. Capitol on March 30, 2023 in Washington, DC. The House passed the bill by the vote of 225 to 204, with four Democrats joining Republicans voting for the passage and one Republican voting against. (Photo by Alex Wong/Getty Images)

House Speaker Kevin McCarthy’s top debt-ceiling negotiators abruptly left a closed-door meeting with White House representatives soon after it began Friday morning, throwing the status of talks to avoid a US default into doubt. 

“Look, they’re just unreasonable,” Republican Representative Garret Graves said, adding that the talks were on a “pause.”

See reaction: Treasuries Pare Losses After Report on Debt Negotiations

Graves said he did not know if the negotiators would meet again Friday or over the weekend.

Stocks dropped on the news, with the S&P 500 Index down 0.2% as of 11:30 a.m. in New York. That’s despite Federal Reserve Chair Jerome Powell having said, at a separate event, that the central bank might not need to raise interest rates as high —thanks to potential credit tightening after recent issues in the banking sector.

“Unless they are willing to have reasonable conversations about how you can actually move forward and do the right thing, we’re not going to sit here and talk to ourselves,” Graves said, as House Financial Services Committee Chairman Patrick McHenry stood near him.

Graves’ comments come a day after McCarthy said he could see a deal coming together with a House vote next week.

McCarthy’s comments Thursday were his most positive take yet on the negotiations to avoid a default, which Treasury Secretary Janet Yellen has signaled could become a risk as soon as June 1.

Republicans have been pressing for sweeping spending cuts, along with regulatory changes that Democrats have opposed. The months-long impasse between the two sides since the Treasury hit the debt limit in January has prompted increasing warnings from economists of a damaging recession if the brinkmanship continues to escalate.

Investors have in recent weeks been incorporating the risk of the Treasury running out of sufficient cash, demanding higher premiums on Treasury securities maturing in early June. Market participants have warned of a surge in borrowing costs and blow to equities in the event of any default, with reverberations to the global economy that could rival the 2008 crash.

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