The Situation

Republican Speaker of the US House of Representatives Kevin McCarthy said on Thursday that he had spoken briefly in recent days with former President Donald Trump on debt ceiling negotiations as the deadline to reach a deal to avert the debt crisis country’s default is shrinking.

Trump, who is seeking re-election in 2024 amid a series of legal challenges, is downplaying the impact of the default and has urged Republican lawmakers to take a tougher line in the talks.

“Republicans shouldn’t make a debt ceiling deal unless they get everything they want,” Trump wrote on Truth Social a few days ago.

The Implications

Economists say a default would be economically devastating, shake financial markets around the world, drive up borrowing costs and lead to a deep recession in the US with high unemployment.

“I spoke to President Trump one day and we discussed it, but briefly,” McCarthy told reporters in front of the Capitol.

McCarthy added that Trump told him to “make sure we get a good deal going forward.”

Trump’s representatives could not be reached to comment on his conversations with McCarthy.

And the US Treasury warns that if Congress doesn’t reach a deal, the funds it has available to cover all of its obligations will run out by June 1, which will lead to a catastrophic economic downturn.