2023-05-23 05:01:00
The president of United States, Joe Bidenand the speaker of the House of Representatives, the Republican Kevin McCarthy, They held a “productive” meeting on Monday to try to raise the debt ceiling, but still without reaching an agreement. Treasury Secretary Janet Yellen made clear what was at stake when she insisted hours earlier that it is “highly likely” that the US government will run out of money after June 1st.
“We have disagreements”
“I think the tone tonight was better than any time before. I feel like it was productive,” he said. McCarthy leaving the White House. Even so, the Republican leader criticized that each proposal from the Democrats involves increasing public spending and assured that The United States “has a spending problem”. He also said that if necessary, he will hold talks with Biden every day, until the debt impasse is resolved.
Upon receiving the leader of the House of Representatives at the White House, Biden had been “optimistic” about closing the meeting with a breakthrough. “We have disagreements,” he insisted. McCarthy, referring in part to Biden’s push to raise taxes to help reduce the federal budget deficit. But the conservative leader added that he and the president “agree that we need to change course because our debt is too great.”
Both leaders had met twice in a fortnight with other congressmen, but this time they met face to face. The meeting was to put behind last weekend’s acrimonious debates between officials from both sides in the absence of Biden, who was in Japan for the G7 summit. In the midst of those discussions, Biden and McCarthy spoke on Sunday, as the president was flying back.
McCarthy blamed the Biden administration for taking so long to summon him to a White House meeting, pointing to the fact that the Republican-controlled House of Representatives last month passed a bill that would raise the ceiling. debt, in exchange for extensive cuts in public spending. The government, for its part, has always said that budget negotiations should not be linked to the debt ceiling, which should be raised without discussion to prevent the country’s credibility from being undermined in international markets.
Days away from an unprecedented situation
“The United States has never defaulted on its debts. And that will never be the case”insisted Biden. However, there is a risk that this will be the case if no agreement is reached. This unprecedented situation with potentially catastrophic consequences for the economy of the United States and the world could occur as of June 1.
The US may not be able to reimburse US Treasury bondholders or pay some civil servants’ salaries and veterans’ pensions. A decision made at the last minute could also have consequences. In 2011 a similar situation occurred, but there was only the threat of bankruptcy and this caused the US to lose for the first time its precious triple A credit rating, the best rating agency.
trump also plays
The shadow of Donald Trump also rests on the negotiations. The influential former Republican president urged his party on May 10 to refuse to raise the debt limit, which would trigger default if Democrats do not agree to cut spending. White House spokeswoman Marine Jan-Pierre lamented the “extreme partisan demands” put forward by conservatives.
McCarthy, for his part, accused the “left wing of the Democratic Party” of running the party. If disagreements persist, Biden has one recourse left: invoke the 14th Amendment to the US Constitution., which stipulates that “the validity of the public debt of the United States, authorized by law, must not be questioned.” In other words, the expenses already voted must be able to be paid. Despite considering this possibility, Biden was skeptical while the Treasury Secretary, Janet Yellenalso alluded to “legal uncertainty” and a “tight deadline.”
Yellen addressed congressional leaders on Monday to warn that if an agreement is not reached to raise the debt ceiling, the possibility that the country incurs in a suspension of payments would go from probable, to “highly probable”. The official He called on lawmakers not to wait “until the last minute” to reach a solution, because doing so “could cause serious damage to business and consumer confidence.”
Unlike other countries, the United States can only issue debt up to a limit set by Congress, which has the power to suspend that ceiling as it sees fit. The current limit of $31.4 trillion was reached in January. The government is currently drawing on money in its reserves to pay down debts, but the Treasury Department estimates that those reserves will run out on June 1, at which point the US would go into default.
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