Where does the debt come from?
The American debt is the largest in the world with a maximum threshold of 31,000 billion dollars, ie the ceiling beyond which the country can no longer issue new loans to finance itself. In recent months, the federal government has managed to come to terms with having exceeded it thanks to accounting manoeuvres. But the Treasury repeated Monday that the United States could be in default as of June 1, if no agreement is reached to raise the ceiling.
Since the 1960s, this ceiling has already been raised 78 times by Congress, but this time, the teams of each other are negotiating and opinions differ on the progress of the discussions.
Why is the deal a contentious issue?
The exchanges have become a real showdown between the two American parties. Republicans refuse, for the moment, to increase the ceiling without massive cuts in the budget, which Joe Biden categorically dismisses.
On Tuesday, the president will again receive the four leaders in Congress, including Republican Kevin McCarthy, leader of the House of Representatives. Much of the short-term financial destiny of the United States depends on him. “I think our positions are still very far apart,” he said on Monday. It doesn’t seem to me that (the White House and the Democrats) want a deal. »
Former President Donald Trump has urged Republicans, over whom he retains immense influence, to “cause a default” if Democrats do not agree to their terms.
Officially, the White House wants to be intractable and Joe Biden does not intend to politicize the subject since the debt has been accumulated by governments on both sides over the years.
What are the consequences in case of failure?
If no agreement is reached in the coming weeks, the United States risks finding itself unable to meet its financial obligations and maturities. And in the event that such a situation continues, the country will no longer be able to pay salaries or pensions, repay creditors, or service the debt: it would then be, for the first time, a default in payment of the debt. world’s leading economic power.
2023-05-16 10:45:52
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