Agreement in principle in dispute over US debt limit

2023-05-28 01:21:59

According to media reports, the negotiators have achieved a breakthrough in the negotiations to raise the debt ceiling in the USA and are likely to have averted a default in the world’s largest economy. The US government and leading representatives from Congress reached a preliminary agreement on Saturday (local time). The project still has to be approved by Congress.

According to CNN, the provisional agreement on the debt ceiling will now be reviewed by both sides overnight. The leading Republican in the US Congress, Kevin McCarthy, wants to address the media on Sunday at 9:10 p.m. (local time), the New York Times reports on Twitter. US President Joe Biden had phoned McCarthy, among others, on Saturday evening.

The final agreement would have to be passed in both chambers of Congress and signed by the President as soon as possible in order to actually avert an impending US government default. This was preceded by an intense argument that even prompted US President Joe Biden to cancel trips abroad.

In the United States, parliament sets a debt ceiling at irregular intervals and determines how much money the state can borrow. In the meantime, this debt ceiling of around 31.4 trillion US dollars has been reached and the Treasury must tap into the capital reserves. Biden and his Democrats need the Republicans in Congress to raise the debt ceiling.

US Treasury Secretary Janet Yellen recently warned that the world’s largest economy might default on June 5. This might trigger a global financial crisis and a sharp economic downturn. The US would then no longer be able to pay most of its bills – millions of people might lose their jobs as a result.

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The dispute had dragged on for months. Senior officials from Biden’s team continued to negotiate during his trip to Japan for the G7 summit. Biden had previously emphasized that he had managed to prevent a default 78 times in US history. However, both Republicans and Democrats would have to be prepared to cut corners.

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