2023-05-21 23:50:23
There are only ten days left for the White House and the Republican opposition to reach an agreement on the debt ceiling, and allow the United States to continue paying its bills. But negotiations appeared to be deadlocked on Sunday. The Republicans refuse to raise this famous “ceiling” without conditions and indeed demand drastic budget cuts before giving the green light. The Democrats refuse. And each camp accuses the other of being responsible for this situation.
Joe Biden, who is returning from Japan where he was attending the G7 leaders’ summit, is due to meet Republican leader Kevin McCarthy on Monday to continue their very tough negotiations on the US debt ceiling. The Democratic President of the United States slammed the Republican proposals on Sunday: “It is time for the other side to abandon its extreme positions, because much of what it has already proposed is simply, frankly, unacceptable”, he said. he said, believing however that a solution could still be found.
“I don’t think (these proposals) are extreme, I don’t think they are draconian,” Kevin McCarthy retorted on Fox News on Sunday. Joe Biden warned him, in a tweet, that he would refuse a deal “that protects billions (of dollars) in subsidies for big oil companies while jeopardizing the health care of 21 million Americans. Or who protects wealthy tax evaders while jeopardizing food aid for 1 million Americans”.
Potentially catastrophic consequences
Time is running out to prevent the United States from defaulting on payment, an unprecedented situation with potentially catastrophic consequences for the American and even global economy. The first economy in the world would then be unable to repay its creditors, but also to pay certain salaries of civil servants or pensions of veterans. That could happen as early as June 1, according to the Treasury Department. “My assessment is that the chances of reaching June 15 while being able to pay all our bills are quite low,” Treasury Secretary Janet Yellen said in an interview with NBC on Sunday.
She also ruled out the possibility of recourse to the 14th amendment to the American Constitution, which could theoretically make it possible to circumvent the obligation to raise the ceiling. The article indeed stipulates that “the validity of the public debt of the United States (…) must not be called into question”. It doesn’t seem like it can “be used appropriately in these circumstances, given the legal uncertainty surrounding it and given the tight deadline”, according to Janet Yellen. Joe Biden had, a little earlier, indicated that he was studying this possibility, noting however that the question was whether he “can be done and invoked in time”.
“Extreme” claims
Almost all major economies live on credit. But, it is an American peculiarity, it is the prerogative of Congress to vote to raise the maximum amount of public debt that the world’s largest economy is authorized to accumulate. They have already raised it many times. However, optimism was in order in the middle of the week, after a meeting between Democratic and Republican congressional officials with Joe Biden at the White House.
But the proposal made Friday evening by the Republican team “was a big step backwards”, according to White House spokeswoman Karine Jean-Pierre, deploring “a set of extreme partisan demands”. She pointed the finger at Republican officials, under the thumb of those close to Donald Trump, “who (threaten) to put our nation in default for the first time in our history”. Kevin McCarthy had also mentioned Saturday evening “a step backwards in the negotiations”, but on the part of the White House, accusing “the left wing of the Democratic Party” of being “in control”.
The sticking point: the Republicans’ demand to cut federal spending, to bring it back to 2022 levels. That is, cut $130 billion in spending. A red line for the Democrats. The Biden administration is proposing to cut spending while raising taxes for the wealthy and corporations that today benefit from generous tax rebates. What the Republicans refuse.
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