Joe Biden and Kevin McCarthy negotiate to avoid US default

2023-05-28 00:19:00

Last straight line for crucial negotiations for the financial future of the United States. President Joe Biden and Kevin McCarthy held a meeting Saturday night to discuss the looming crisis. The United States is headed for default, which could have disastrous consequences for the global economy. The meeting aimed to find a compromise to avoid this situation and guarantee the financial stability of the country.

The issue of US default is of paramount importance. If the United States fails to meet its financial obligations, it could lead to panic in global markets, a collapse of the dollar and general economic instability. The consequences would be felt globally, affecting stock markets, exchange rates and investments.

Joe Biden and Kevin McCarthy join forces

Faced with this imminent threat, President Joe Biden and Speaker of the House of Representatives Kevin McCarthy decided to work together to find a solution. Their joint efforts are aimed at overcoming political differences and reaching a compromise that will avoid a default. Saturday’s meeting was a crucial step in this process.

In addition to his meeting with Kevin McCarthy, President Biden also spoke with other key political players. He held discussions with Hakeem Jeffries, the Democratic leader in the House of Representatives, as well as with Chuck Schumer, the Democratic majority leader in the Senate. These meetings bear witness to the importance attached to the resolution of the crisis and the search for a political consensus.

Towards a compromise to avoid the shutdown

The main objective of these discussions is to reach a compromise that would avoid a payment default. The negotiations focus on key issues such as raising the debt ceiling, cutting spending and finding new sources of revenue. Both parties need to show flexibility and good will to reach a balanced agreement.

The economic stability of the United States is closely linked to that of the world economy. As the world’s leading economic power, a US default would have significant repercussions on international markets.

The United States, which entered the long weekend of Memorial Day, Veterans Day on Monday, remains suspended on an agreement to raise the debt ceiling, essential to avoid the default that would have consequences. catastrophic consequences for the global economy.

The date on which the US Treasury will find itself unable to honor its financial commitments is now set for June 5, against June 1 previously, offering a few days of respite to the country. This concerns the salaries of civil servants, pensions or reimbursements of creditors.

A “short list” of disagreements

Among the points of disagreement between the two camps is the requirement of the Republicans to limit the obtaining of certain social benefits, such as food aid, to a number of hours worked.

“I don’t think it’s right to borrow money from China to pay people who are healthy and don’t have dependents to hang out on their couch,” said McCarthy, who poses as an uncompromising defender of fiscal discipline, in a video shared on Saturday.

White House spokesman Andrew Bates criticized Republicans for wanting to hold the economy hostage and jeopardize ” more than eight million jobs “while wanting” take bread out of the mouths of hungry Americans ».

Joe Biden, campaigning for his re-election, positions himself as a champion of social and fiscal justice and has repeatedly said he is opposed to massive budget cuts which would impact the most precarious workers and households.

One of the Republican negotiators, Patrick McHenry, spoke of a ” short list of disagreements remaining between the two camps.

“It’s a matter of hours or days,” he said on Saturday.

The pressure surrounding the negotiations is all the stronger as the compromise, once obtained, will have to be validated by the Democratic-majority Senate and the Republican-dominated House of Representatives. However, the parliamentary calendar is tight, the number of elected officials having returned to their strongholds for a few days on the occasion of the holiday weekend of “Memorial Day”. They were instructed to be ready to return to Washington within 24 hours if an agreement was reached.

And Republican Leader Kevin McCarthy promised he would give everyone 72 hours to review the compromise before considering any votes.

A vote which remains uncertain, progressive elected officials within the Democratic Party, as well as Republican elected officials, having threatened not to ratify or to delay as much as possible a text which would make too many concessions to the opposing camp.

On Friday, IMF Managing Director Kristalina Georgieva said a deal was critical for the global economy, while stressing that the United States needed to “do more to reduce public debt ».

(with AFP)