With time running out for a potential US default, negotiators for Democratic President Joe Biden and the Republicans are trying to avert it with a budget deal on Tuesday.
White House negotiators and Republican House Speaker Kevin McCarthy plan to resume talks following Monday’s interview between their respective leaders.
Biden and McCarthy called their White House meeting “productive,” and while they didn’t reach an agreement, it at least allowed them to set their respective boundaries.
In nine days, the United States risks falling into an unprecedented situation of defaulting on its debt; A dangerous situation for the first world power.
– panic –
If Congress doesn’t increase the government’s borrowing capacity by then, Biden might not be able to pay civil servants, pay Social Security benefits and repay some creditors.
Such a US bankruptcy would have an impact on the global economy. According to analysts, this would cause panic and recession that would spread to the global economy.
To increase borrowing power — currently over $31 trillion — Republicans are calling for Biden to cut spending.
Democrats are ready to moderate spending but disagree with Republicans on how to do so.
The White House wants to impose higher taxes on the richest and largest corporations without affecting welfare payments or the President’s major investment projects. In short: Increase federal government revenue.
Republicans, on the other hand, prefer to cut public spending.
– 2024 –
According to the US press, the commitment could consist of certain budget items, a reallocation of funds to combat the Covid-19 crisis and a freeze on certain expenditures, the duration of which is the subject of heated debate.
Time is pressing, especially since it is not just about Biden and McCarthy coming to terms with each other. As Biden said, both must “sell” the deal to their respective parties for approval in both houses of Congress.
Democrats narrowly control the Senate and Republicans control the House of Representatives.
Democratic senators belonging to the progressive wing and Republican lawmakers allied with Donald Trump have already demanded maximum determination from their respective leaders.
A US default could change the tone of next year’s presidential campaign.
Biden, who is running for re-election at the age of 80, is fighting for votes with promises of prosperity and social justice. A recession would lower his already weak approval rating.
His predecessor Trump, the Republican primary favorite, is asking his people not to “bow down” to the White House on the debt issue.
Source: AFP