Debt ceiling impasse puts Joe Biden Australia trip at risk

A congressional impasse over the debt ceiling, paving the way for a potentially catastrophic US default, could see Joe Biden cancel his upcoming trip.

Joe Biden and Anthony Albanese shake hands over the AUKUS deal. Picture: Getty Images.

A congressional impasse over the US government’s debt ceiling, paving the way for a potentially catastrophic US default on 1st June, could see president Joe Biden cancel his upcoming trip to Asia, including Australia, unless it is resolved by 19th May.

The failure of the four top Republican and Democrat congressional leaders and Mr Biden to reach an agreement on how to increase the debt ceiling on Tuesday (Wednesday AEST) meant the US President may need to stay in Washington to oversee last minute negotiations.

Mr Biden, speaking to reporters on Tuesday (Wednesday AEST) after meeting House of Representatives Speaker Kevin McCarthy and Senate leader Chuck Schumer said, for the first time, that it was “possible but not likely” he would have to cancel or postpone his trip to Japan, Australia and Papua New Guinea.

Mr Biden is due to arrive in Australia on 24th May, where he will visit Canberra including giving an address to a joint sitting of parliament, and then attend a Quad leaders meeting in Sydney along with the Japanese, Indian an Australian prime ministers.

“I’m still committed, but obviously this is the single most important thing that’s on the agenda,” the President said.

“If somehow we got down to the wire and we still hadn’t resolved this, and the — the due date was in a matter of — when I was supposed to be away, I would not go. I would stay until this gets finished”.

The US Treasury has warned the US government could default on its obligations as early as 1st June, with unknown but potentially disastrous consequences, unless the prevailing US$31.4 trillion debt ceiling is lifted.

Richard Fontaine, chief executive of the Centre for New American Security, said it would be “disappointing and unfortunate” if the president couldn’t travel but it “made sense” given the potential gravity of the situation.

“Avoiding a debt default is about as important as domestic policy gets, and Biden is intrinsic to the negotiations,” he told The Australian. “President Obama missed APEC and the East Asia Summit in 2013 to stay home and deal with the government shutdown,” he added, referring to a similar potential default situation faced by the former president.

Republicans, who have a slim majority in the US lower house, have insisted the Biden administration cut spending to 2022 levels in return for congressional support to lift the ceiling. Democrats insist the ceiling be lifted independently of any discussions over spending levels.

Mr Biden said he and the four leaders would meet again on Friday 12th May.

Charles Edel, an Australia expert at the Centre for Strategic and International Studies, told The Australian Mr Biden’s potential missing out on what would be his first trip to Australia as president would “not be disaster, but suboptimal”.

“Most all of the major announcements have already been negotiated — they just wait to announce them until the leaders are gathered together,” he explained.

Mr Biden’s visit to Australia, which would be his first as president, is expected to cost taxpayers around $23 million according to October budget papers.

The leaders are expected to discuss mounting economic and security challenges, in particular how to co-ordinate their response to China’s more aggressive posture in the Indo-Pacific region, where the US has sought to increase its military and diplomatic presence in recent years.