Joe Biden during a press conference after the G7 summit in Hiroshima on May 21, 2023 (AFP/Brendan Smialowski)
D-10. With an American default looming, on Monday Joe Biden is again trying to find a compromise with Kevin McCarthy, his main opponent in a showdown that is both political and fiscal.
Receiving the Speaker of the House of Representatives in the Oval Office, the US President assured that he was “optimistic” about the possibility of a “breakthrough” at the end of the meeting.
“We can find common ground,” said Kevin McCarthy in a short speech to the journalists present.
Treasury Secretary Janet Yellen recalled the challenges of the meeting and reiterated Monday that it was “very likely” that the United States would be short of public funds after June 1st.
The two men, who have already met twice with other group leaders within two weeks, are meeting in person this time.
This summit is intended to reignite discussions at the Advisory Team level, which frankly got in trouble this weekend in Joe Biden’s absence.
The 80-year-old Democrat, who returned from the G7 summit in Japan on Sunday, originally planned to extend his diplomatic trip through Oceania, but political and budgetary chaos in Washington forced him to cut short his trip.
– hostage –
To eliminate the risk of bankruptcy, Congress – the Democrat-Republican-majority Senate – must vote to raise the maximum allowable debt ceiling.
US debt ceiling chart since October 2005 (AFP/)
To give the green light, Republicans are demanding a drastic cut in public spending. Joe Biden, who is running for re-election in 2024 on the promise of social justice, is against it.
Asked on CNN before the meeting, Kevin McCarthy wanted to be more optimistic, assuring that “what we negotiated is viewed by a majority of Republicans as the right solution to get us back on track.”
The US President told him on Monday that while he was in favor of reducing the deficit, it was necessary “to take an interest in the tax loopholes and to ensure that the rich pay their fair share” of taxes.
-Trump card-
A sign in Washington on May 19, 2023 (AFP/Mandel NGAN)
The “debt ceiling” of more than $31 trillion – a world record – was reached a few months ago, but the federal government has so far gotten the situation under control through accounting arbitration proceedings.
In the event of a default, the United States would be unable to repay the debts of government bondholders, the investment king of global finance. Among other things, the government could no longer pay certain salaries of civil servants and pensions for veterans.
Many economists warn that the consequences for the US and global economy would be catastrophic.
– Constitution –
So who will give in first? The American president who knows full well that a recession, whatever its political cause, would hurt his chances of re-election? Or Kevin McCarthy, whose position depends on a handful of radical elected officials who – like former President Donald Trump – are telling him not to “bend”?
Kevin McCarthy during a press conference outside the White House, May 16, 2023 (AFP / Mandel NGAN)
The left wing of the Democratic Party is pushing Joe Biden to get his way, invoking the 14th Amendment to the US Constitution, which prohibits challenging the solvency of the world’s first power.
In this case, the state would issue new loans as if the debt ceiling did not exist.
However, there are legal dangers to this strategy, especially when faced with a far-right Supreme Court like Joe Biden.