U.S. President Joe Biden rejects a debt ceiling proposal from Republican leaders that would allegedly give an advantage to crypto traders. Biden made his stance clear at a press conference during the Group of Seven (G7) Summit. He said:
“I’m not going to agree to a deal that protects wealth tax cheats and crypto traders while putting food assistance at risk for nearly 1 million Americans.”
The deal that Biden rejects would allow crypto traders to use tax-loss harvesting, a strategy that reduces their tax liabilities by selling cryptocurrencies at a loss and buying similar assets within 30 days. This technique is also used for stocks and other assets.
According to the Washington Post, the White House and Republicans are in talks about banning tax-loss harvesting for crypto transactions. The White House also wants to prevent investors from deferring taxes on real estate swaps. These changes would generate about $40 billion in tax revenue for the U.S. government.
Republicans, however, reject these proposals and argue that the U.S. debt problem is caused by excessive spending, not by insufficient revenue. They blame the Biden administration for its pandemic relief measures and previous administrations for their tax cuts. Republicans propose to cut $4.8 trillion in spending, which would affect the budgets of federal agencies.
The U.S. could face a default as early as June 1 if Congress does not raise the debt ceiling, which is the limit on how much money the federal government can borrow to pay its bills. Biden plans to speak with House Speaker Kevin McCarthy on the phone during his flight from Hiroshima to Washington, D.C.