Biden said in Delaware the day before that he hoped to reach a meeting point with the Republican majority in the House of Representatives to raise the debt ceiling and prevent the feared “default” (non-payment) with unforeseeable consequences for global markets.
The Hill newspaper recalled that the scenario is similar to that of 12 years ago, when a Democratic President (Barack Obama) faced a month-long struggle against a Republican House of Representatives, bringing the country to the brink of default and causing the first debt reduction creditworthiness in national history.
Biden and House Speaker Kevin McCarthy (R-California) are trying to find common ground on the issue, but they are operating in a far more difficult environment than that faced by senior negotiators more than a decade ago.
Legislators, economists and political observers of all currents agree that, among other things, strong polarization and the inflexibility of the representatives of the two major parties play a role.
Thomas Kahn, senior adviser to the Democrats on that legislature’s Budget Committee, gave three reasons why alarm bells were ringing.
Republicans have skewed further to the right over the past decade and the cuts they are demanding are much steeper than they were in 2011; House Conservatives, promoted by former President Donald Trump, appear more willing to accept a default, stressing the thorny position of McCarthy, hostage to concessions to his bank’s hardest wing, he said.
It wasn’t just Republicans who ramped up their tactics this year, however, as Biden himself, unlike Obama in 2011, said he was unwilling to negotiate massive spending cuts to raise the debt ceiling, which was set at $31 trillion. Dollar is reached on January 19th.
Obama clashed that year with then-House Speaker John Boehner (Republican of Ohio), who came to power the same year on the basis of the Tea Party movement and called for a deficit reduction while opposing any increase in the Budget ceiling rejected . Public debt without drastic federal spending cuts.
Although a last-minute default was averted at the time, distrust in the markets persisted, prompting Standard & Poor’s to downgrade the United States’ triple-A credit rating for the first time in its history.
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