In a critical juncture for the U.S. economy, President Joe Biden and top congressional Republican Kevin McCarthy are reportedly nearing a deal to cut spending and raise the government’s $31.4 trillion debt ceiling. This comes at a time when the risk of default is looming large, with little time to spare.

The U.S. debt ceiling, a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, has been the subject of intense negotiations in recent weeks. The current ceiling of $31.4 trillion is set to be breached soon, and failure to raise it could lead to a default on U.S. government debt, a scenario that could have catastrophic consequences for the global economy.

The negotiations have been marked by a significant divide between the Democratic and Republican parties. While Democrats have been pushing for an increase in the debt ceiling to fund their ambitious spending plans, Republicans have been advocating for significant spending cuts as a condition for their support.

House Speaker Kevin McCarthy has been leading the Republican negotiators, who have been sent to the White House to finalize the debt limit talks. Despite the urgency of the situation, McCarthy has warned that the two sides are still “far apart” in their views. However, he remains optimistic that progress can be made in hopes of an agreement before the deadline.

The potential deal would represent a significant compromise for both parties. For President Biden, it would mean scaling back some of his ambitious spending plans. For McCarthy and the Republicans, it would mean agreeing to an increase in the debt ceiling, something they have been reluctant to do without significant concessions from the Democrats.

The negotiations are being closely watched by financial markets around the world. A failure to raise the debt ceiling could lead to a default on U.S. government debt, which could trigger a global financial crisis. As such, the stakes in these negotiations could not be higher.

As the clock ticks down to the deadline, it remains to be seen whether Biden and McCarthy can bridge their differences and reach a deal. The outcome of these negotiations will have significant implications for the U.S. economy and the global financial system.