Finally a deal in sight? The White House and negotiators continued to work on Friday to craft a compromise full of political ulterior motives to avoid a US default, but which could come on June 5 instead of June 1.umwhich introduces a short additional delay.
• Also read: American debt: Biden assures there will be ‘no default’
“We’re closer [d’un accord] But it’s not ready yet,” said a source close to the discussions and skeptical of the possibility of an announcement on Friday.
“We made progress yesterday, I want to make progress again today,” said the main Republican protagonist of this political-financial soap opera, House Speaker Kevin McCarthy.
But “nothing is certain until everything is settled,” he added, in order to keep the pressure on Democratic President Joe Biden.
There is no lack of pressure on this issue, which is difficult to understand outside of the United States and, more generally, outside of the Washington bubble.
However, the date by which the US Treasury will be unable to meet its financial obligations has been clarified and is now set for June 5 (up from June 1), giving a few days of respite.
“Based on the latest available data, we now believe that unless Congress increases or suspends the debt ceiling by June 5, the Treasury Department will not have sufficient resources to meet the government’s commitments.” US Treasury Secretary Janet Yellen on Friday, in a letter to the elected representatives of Congress.
In the first two days of June, more than $130 billion in payments for pensions, health care and especially veterans is planned, which “will leave the Treasury Department with extremely little resources,” she clarified.
“Hostage”
The challenge is to get Congress – the Republican House of Representatives and the Democratic Senate – to vote quickly to raise the federal debt ceiling, otherwise the United States could default, an unprecedented situation with economic consequences, potentially catastrophic financial and social consequences.
This parliamentary maneuver has long been a formality for both parties. But this time, Republicans are asking for a cut in public spending in return for their green light.
Officially, Joe Biden refuses to negotiate on the grounds that he is being held “hostage”. In reality, the advisors from both camps have been talking non-stop for days and, according to several American media outlets, have already agreed on some main lines.
The agreement would freeze certain spending without touching defense and veterans budgets, reports the New York Times and the Washington Post, for example.
The risk of a default would be postponed by two years until after the next presidential election.
reduce debt
Each camp wants to limit the damage at the political level.
Kevin McCarthy, who has to maintain his position as Speaker of the House, could claim to have enforced fiscal discipline while Democrats would claim to have protected welfare payments or major capital projects.
The US president, who is running for re-election, said Thursday that “two opposing visions” are at work in these discussions.
He posed as an advocate of social and financial justice. But according to the press, the 80-year-old Democrat would have refrained from increasing the funds for the fight against tax evasion as much as he wanted in negotiations with the Republicans.
If an agreement is reached, it still has to be approved by the Senate, which is narrowly controlled by Democrats, and the House of Representatives, over which Conservatives hold a fragile majority.
The parliamentary calendar is constrained, with many elected officials returning to their strongholds for a multi-day break over the Memorial Day long weekend.
In addition, some progressives within the Democratic Party, like some Republican elected officials, have threatened not to ratify or delay as long as possible a text that would make too many concessions for the opposing camp.
Joe Biden and McCarthy must therefore act in the middle to win the most MPs from each party, an extremely difficult task in a country where political divisions have widened significantly in recent years.
IMF Managing Director Kristalina Georgieva also called on Friday for “a solution as soon as possible,” saying that finding a solution is “a priority” for the global economy, but also stressed that the United States “needs to do more.” to reduce the national debt”. .