“Joe Biden and Republicans Reach Agreement to Raise US Debt Ceiling and Avoid Default”

UNITED STATES – A few days before the deadline, US President Joe Biden and Republican leader Kevin McCarthy found a ” agreement in principle “ to avoid a default of payment by the United States, which will however still have to be validated by Congress.

The House of Representatives, with a Republican majority, will vote on Wednesday, its boss said. Next will come the Senate, with a Democratic majority.

Kevin McCarthy estimated in a short speech that the budgetary compromise found, of which he did not give the details, was “quite worthy of the American people”.

The Conservative leader only welcomed the “historic reductions” of the public expenditure that the agreement envisages according to him, which was the main demand of the Republicans.

“This agreement is a compromise, which means that everyone does not get everything they want”reacted for his part Joe Biden, assuring that the text “reduces spending while protecting essential public programs”.

The Democratic president said the deal with the Conservatives was “good news, because it avoids what would have been a catastrophic (payment) default”.

Kevin McCarthy has indicated that he will meet again this Sunday with Joe Biden and will publish the same day the text, the result of difficult negotiations, and that the House of Representatives “will then vote on this text on Wednesday”.

According to a source familiar with the negotiations, the agreement reached between the executive and the opposition raises for two years, so until after the presidential election of 2024, the public debt ceiling of the United States.

Deal protects Inflation Reduction Act

There aren’t the deep cuts Republicans want, though non-defense spending will remain virtually unchanged next year and only nominally increase in 2025, the same source said.

In addition, new rules will apply to access to some federal aid programs, but the source clarified that the agreement protects the Inflation Reduction Act and the student debt relief plan. , signed by Joe Biden.

Without raising this limit, the first world power risked being in default of payment on June 5, unable to honor its financial commitments: salaries, pensions or reimbursements to its creditors.

Like almost all major economies, the United States lives on credit. But unlike other developed countries, America regularly comes up against a legal constraint: the debt ceiling, the maximum amount of indebtedness of the United States, which must be formally raised by Congress.

From this routine legislative procedure, the Republicans, in the majority in the House of Representatives since January, have made an instrument of political pressure.

Refusing to make a pretend “blank check” to the Democratic President, they have conditioned any increase in this ceiling, currently set at 31.4 trillion dollars, on budget cuts.

Joe Biden, candidate for his re-election, has long refused to come to the negotiating table, accusing the opposition of taking the American economy by storm. “hostage” by demanding such cuts.

The AAA rating of the United States placed ” under surveillance “ par Fitch

After several meetings at the White House between the two men, the teams of the president and the « speaker » Republican finally got down to endless negotiating sessions – all amply commented on by the whole of Washington.

The agreement in principle found on Saturday evening gives a little air to the financial markets, which have never really panicked but that this paralysis was starting to get impatient.

It is in fact very common for last-minute compromises to be reached on this type of file.

The rating agency Fitch had placed on Thursday “ under surveillance “ the AAA rating of the United States, believing that the failure to reach an agreement “would be a negative sign in terms of governance”.

The global economy, already in the grip of a “high uncertainty”could have ” happen “ of these tense negotiations, had also criticized the director of the International Monetary Fund Kristalina Georgieva.

However, this compromise must now be validated by the Senate, controlled by the Democrats, and by the House of Representatives, on which the Conservatives have a fragile majority.

Some progressives within the Democratic Party, as well as elected members 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.

Republican elected officials in the House of Representatives have already announced their opposition to the text, such as Bob Good or Lauren Boebert. “No elected official claiming to be from the conservative camp could justify a positive vote”estimated first, and “our voters deserve better than this, you can count me as a NO to the deal”tweeted the second.

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