US President Joe Biden and the Speaker of the House of Representatives, Kevin McCarthy, have reached an agreement in principle related to the thorny issue of the debt, according to the Republican leader, a crucial step to avoid an insolvency of the world’s main economic power, AFP notes.
This compromise, the result of very tough negotiations, is to be voted on Wednesday in the Chamber, announced Kevin McCarthy. Otherwise, the United States could find itself from June 5 insolvent, that is, unable to honor its financial commitments, whether they are salaries, pensions or repayments to creditors.
No details were made public regarding the content of the agreement, but the Republican leader announced that he will have another meeting with President Biden on Sunday. Like almost all major economies, the United States lives on credit.
But unlike other developed countries, America regularly faces a legal constraint: the debt ceiling, the maximum amount of US debt that must be officially raised by Congress. From this routine legislative procedure, the Republicans, the majority in the House of Representatives since January, have made an instrument of political pressure.
Refusing to give a so-called “blank check” to the Democratic president, they have conditioned any increase in this cap, currently set at $31.4 trillion, on budget cuts. And they placed Kevin McCarthy, who presents himself as an uncompromising defender of budgetary rigor, with the responsibility of negotiating with the octogenarian president.
Joe Biden, candidate for his re-election, refused for a long time to come to the negotiation table, accusing the opposition of holding the American economy “hostage” by demanding such reductions. After several meetings at the White House between the two, the teams of the president and the Republican “speaker” finally buckled down for endless negotiation sessions – all of which were widely commented on by all of Washington.
According to Agerpres, the agreement in principle found on Saturday evening gives a breath of fresh air to the American markets, which were beginning to see this paralysis in the American capital with a bad eye.
The financial evaluation agency Fitch Ratings decided on Wednesday to put the AAA rating of the United States “under watch”, estimating that “the failure to reach an agreement (…) would be a negative sign in terms of governance”.
The world economy, already prey to a “strong uncertainty”, could have “missed out” on these tense negotiations, criticized the director of the International Monetary Fund, Kristalina Georgieva. The compromise must now be validated by the Senate, controlled to the limit by Democrats, and the House of Representatives, where conservatives have a fragile majority.
The parliamentary calendar has constraints: many elected officials have returned to their homes in the four corners of the United States for a break of a few days, on the occasion of the long “Memorial Day” weekend. They were instructed to be ready to return to Washington immediately.
In addition, some progressives within the Democratic Party, as well as elected representatives of the Republican Party, have threatened not to ratify or to delay as much as possible a text that would make too many concessions to the opposing camp. In fact, it is very common to reach last-minute compromises on this type of file, concludes AFP.
“This deal is a compromise, which means nobody gets everything they want,” President Biden said. According to several American media, the agreement reached between the executive and the opposition raises for two years, so until after the presidential elections in 2024, the ceiling of the public debt of the United States.
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Editor : M.D.B.
