US debt: a “breakthrough” is possible, but political tussles continue

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The Republican boss of the House of Representatives, Kevin McCarthy, said on Thursday that he foresees a “breakthrough” in negotiations with Joe Biden’s White House on raising the debt ceiling. An agreement must be reached before the beginning of June to avoid a payment default by the United States.

A leading Republican leader said on Thursday May 18 that he saw “a breakthrough” in the talks to avoid a default in payment by the United States, but political friction continues, even within the conservative camp and the Democratic Party.

The government expects the federal debt ceiling to be reached as early as June 1, if Congress does not vote, as it has to, to raise it. This is raising fears that the world’s largest economy will default on debt repayments, triggering a global financial storm, and strangling both growth and jobs in the country.

“We haven’t agreed to anything yet — but I see a breakthrough where we could come to an agreement,” said Republican House boss Kevin McCarthy, who has never been heard so confident. .

The Tory won the House Speaker’s gavel in January by promising his party’s most right-wing elected officials that there would be no increase in the borrowing limit without sizeable cuts in public spending.

Period

However, these same Trumpist parliamentarians, gathered in a group called the “Freedom Caucus”, asked him on Thursday not to make any more concessions to Democratic President Joe Biden, and to defend the Republican project of budgetary austerity such as he is. “No more discussions to dilute it. Period,” claimed this fraction on Twitter.

The White House, for its part, points out that the debt ceiling has been raised dozens of times without budget negotiations. She accuses the Republicans of holding the American economy “hostage” and of wanting to sacrifice a number of social benefits.

Joe Biden has been briefed on “steady progress” in talks in Washington to avoid a US default, a White House official said Friday on the sidelines of the G7 summit in Japan attended by the US president. . “The president has asked his team to continue to push for a bipartisan agreement” and “remains confident in the ability of Congress to take the necessary measures to avoid a default” on the American debt, said this official.

“Congress must not trigger this crisis,” repeated Vice President Kamala Harris on Thursday, arguing that this famous debt ceiling had been raised three times during Donald Trump’s presidency.

Joe Biden has named two special negotiators on the file. The American president, who is taking part in the G7 summit in Japan, has also cut short a diplomatic tour planned in the process, in order to return to Washington on Sunday to oversee the discussions. He has already brought together key parliamentary leaders twice in the Oval Office.

Any agreement must be passed by the Republican-led House and the Democratic-majority Senate before the deadline, but the parliamentary calendar is such that session days are rare. Kevin McCarthy judged “important to try to have an agreement – especially on the principle – by this weekend”. To do this, Joe Biden will also have to ensure that his party remains in tight ranks.

Constitution

Some Senate Democrats are pushing him to push through, invoking the Constitution’s 14th Amendment, which would allow him to continue issuing government bonds even without a vote from Congress.

Eleven senators, led by Bernie Sanders, a progressive figure, published a letter on Thursday denouncing the “massive budget cuts” demanded by the Republicans, which “would cause incalculable damage to the lives of workers”.

Believing that an agreement is “apparently impossible at this stage” in view of the demands of the conservatives, they “urge (Joe Biden) to prepare to exercise his prerogatives under the 14th amendment of the Constitution.” This text states that “the validity of the public debt of the United States, authorized by law, (…) must not be questioned”.

To have recourse to it would mean for Joe Biden to engage in a long legal battle with an uncertain outcome. So far the president does not consider it to resolve the current crisis, but has promised to study the feasibility of this constitutional strategy in the longer term.

With AFP

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