The specter of a global financial crisis is disappearing. Days before the deadline, US President Joe Biden and Republican leader Kevin McCarthy reached an “in principle” agreement on Saturday to avoid a US default.
However, this compromise must now be confirmed by Congress. The Republican-majority House of Representatives will vote on Wednesday, his boss said. Next is the Senate with a Democratic majority. Kevin McCarthy also indicated that he would meet with Joe Biden again this Sunday and publish the text that same day, the result of difficult negotiations.
“Good news,” said Biden
In a short speech, the Republican leader assessed that the budget compromise, on which he gave no details, was “completely worthy of the American people”. The Conservative leader said he was merely applauding the “historic cuts” in public spending that the agreement envisages, which is the Republicans’ main demand.
“This agreement is a compromise, meaning not everyone gets everything they want,” Joe Biden responded, assuring that the text “reduces spending while protecting essential public programs.” The Democratic President called the agreement with the Conservatives “good news because it avoids a catastrophic (payment) default”.
Deadline: June 5th
According to several American media outlets, the agreement reached between the executive branch and the opposition increases the US national debt ceiling by two years, i.e. until after the 2024 presidential election. Without raising this limit, the first world power risked defaulting on June 5 and its financial obligations fail to meet: salaries, pensions or refunds to their creditors.
The agreement must therefore now be validated by the Senate and the House of Representatives. Some progressives within the Democratic Party, as well as elected officials in the Republican Party, have threatened not to ratify, or delay as long as possible, a text that would make too many concessions for the opposing camp. For example, Bob Good, a Republican-elect to the House of Representatives, assessed on Saturday that given what he knew about the compromise, “no elected representative claiming to be conservative could justify a positive vote.” The smoke isn’t quite white in Washington yet.