US debt limit talks in standstill as parties face 'real differences'

Debt limit talks have come to an abrupt standstill after Republican House Speaker Kevin McCarthy said it's time to "pause" negotiations, and a White House official acknowledged there are "real differences" making further discussions difficult.

McCarthy said on Friday resolution to the standoff is "easy," if only Democratic President Joe Biden's team would agree to some spending cuts Republicans are demanding.

Democrats staunchly oppose the steep reductions Republicans have put on the table as potentially harmful to Americans. It is unclear when negotiations would resume, though talks could pick up again over the weekend.

"We’ve got to get movement by the White House and we don’t have any movement yet," McCarthy, R-Calif., told reporters at the Capitol. "So, yeah, we’ve got to pause."

A White House official who was granted anonymity on Friday to discuss the private conversations said there are "real differences" between the parties on the budget issues and further "talks will be difficult."

The official added that the president's team is working hard towards a "reasonable bipartisan solution" that can pass both the House a nd the Senate.

Biden's administration is racing to strike a deal with Republicans led by McCarthy as the nation careens toward a potentially catastrophic debt default if the government fails to increase the borrowing limit, now at $31 trillion, to keep paying the nation's bills.

Looming deadline

Wall Street turned lower as negotiations on raising the nation's debt limit came to a sudden halt, raising worries that the country could edge closer to risking a highly damaging default on US government debt.

Negotiators met on Friday for a third day behind closed doors at the Capitol with hopes of settling on an agreement this weekend before possible House votes next week.

They face a looming deadline as soon as June 1 when the Treasury Department has said it will run out of cash to pay the government’s incurred debt.

Republicans want to extract steep spending cuts arguing the nation's deficit spending needs to get under control.

But Biden's team is countering that the caps Republicans proposed in their House-passed bill would amount to 30 percent reductions in some programmes if defence and veterans are spared, according to a memo from the Office of Management and Budget.

Any deal would need the support of both Republicans and Democrats to find approval in a divided Congress and be passed into law.