2023-05-20 12:22:00
The race against time is on. The Democratic administration and the Republican opposition have a dozen days ahead of them to avoid a payment default by the United States. This could happen from June 1, with potentially catastrophic consequences for the US economy, and even the world.
From the G7 in Japan, President Joe Biden warned this Saturday, May 20 that he would not give in to demands “extreme” Republicans, but he also said he was optimistic about the ability to reach an agreement in the coming days, he assured reporters on the sidelines of the G7 summit in Hiroshima. What is this threat hanging over the American economy, the repercussions of which could upset the world economy? Freed make the point.
Why is it crucial that these discussions succeed?
The White House has been increasing warnings of a possible default of payment lately. If such a scenario were to occur, the federal state would then be unable to pay a single penny, whether to pay salaries, pay social benefits, repay its creditors. It would be “catastrophic” et “devastating for America and, to put it bluntly, the whole world”Joe Biden said in a video released before the G7 meeting.
This scenario threatens from June 1 if no agreement is reached in Congress to raise the authorized public debt ceiling. The parliamentary calendar further complicates the matter. The House of Representatives and the Senate, which together make up Congress, and which must likewise vote on the debt, only sit at the same time, until June 1, for four days.
Where are the talks?
They move very slowly. “The differences are great on many subjects”lamented Friday Patrick McHenry, quoted by the site NewsNation. A few moments earlier, it was the White House which had admitted to stumbling upon “real differences” with the Republican opposition and indicated that the discussions were “difficult”. On Friday, House Republican Leader Kevin McCarthy left the negotiating table with Republican Representatives Garret Graves and Patrick McHenry.
The discussions then resumed shortly after this «pause». This recovery makes the Democrats “optimists”, wanted to reassure the spokeswoman for the White House Karine Jean-Pierre on the night of Friday to Saturday. The negotiations are taking place in the absence of President Joe Biden, who is in Japan for the G7 meeting. He cut short his Asia-Pacific tour due to the US debt crisis and is due to return to Washington on Sunday after the Hiroshima summit ends. “He is informed daily” of the state of debt negotiations, and “several times a day”said the spokeswoman for the White House.
Why are negotiations stuck?
The sticking point between the two camps is this: the Republicans’ demand to reduce federal spending, to bring it back to 2022 levels. That is, to cut $130 billion in spending. “We can’t spend more money next year”, said Kevin McCarthy. A red line that the Democrats refuse to cross.
The Biden administration, meanwhile, is pushing to extend the borrowing limit through 2025, according to US media citing officials involved in the talks. The Democrats want to believe that an agreement remains possible if the two parties agree not to obtain satisfaction on all the demands, according to a source close to the discussions.
Both sides blame each other. “It is long past time for the White House to get serious. Hurry up”tweeted Mitch McConnell, Senate Republican Minority Leader, accusing Joe Biden of waiting months before agreeing to negotiate with Kevin McCarthy.
Congressional Democrats, meanwhile, are expressing growing concern over demands from Republicans to impose tougher work requirements on recipients of certain welfare benefits. “Republicans are threatening to crash our economy unless we cut Medicare, evict thousands of people from their public housing, and put nearly ONE MILLION Americans out of worklamented in a tweet the elected Democrat Nanette Barragan. Their plan puts politics before human beings.”
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