“US Debt Crisis: Biden Faces Opposition and Possible June 1 Default”

Joe Biden will meet with parliamentary opposition leaders, including House of Representatives boss Kevin McCarthy, on Tuesday to try to avoid a US default, which could occur as soon as June 1, the Treasury Department confirmed on Monday.

The American president, at the end of a family lunch in Philadelphia (northeast), answered in the affirmative to the journalists who questioned him on the holding of this meeting.

Joe Biden, Kevin McCarthy and three other parliamentary leaders had originally planned to meet last Friday, after a first round of talks without much progress on May 9. But the meeting was postponed, and the teams of the various protagonists have been negotiating ever since.

The world’s largest economy could find itself unable to honor its financial commitments as of June 1. The Treasury Department indeed confirmed on Monday the estimate published at the beginning of May, and updated with the “additional information now available”.

In a letter sent to Kevin McCarthy, the Secretary of the Treasury, Janet Yellen, thus indicates that “the Treasury will probably no longer be able to meet all the obligations of the government if Congress has not acted to raise or suspend the limit of the debt in early June, and potentially as early as June 1”. She said the Treasury Department will release an update to that date next week.

Biden “optimistic”

Joe Biden’s Minister of Economy and Finance also, in this letter, urged Congress to quickly seal a deal, stating that “waiting until the last minute … can cause serious damage to businesses and to consumer confidence, increase short-term borrowing costs for taxpayers, and hurt America’s credit rating.

Joe Biden said he was “optimistic” on Sunday. But Kevin McCarthy spoke to him on Monday of “positions (which) are still very distant. It doesn’t seem to me that (the White House and the Democrats) want a deal.” The White House has also said that for the moment the American president still plans to fly away on Wednesday for a diplomatic tour of Asia and the Pacific.

The US Congress must vote quickly to raise the maximum ceiling on public debt, failing which the United States risks finding itself unable to meet its financial obligations and maturities. The Republicans refuse to do so as long as Joe Biden does not agree to make significant budget cuts.

Former President Donald Trump has urged Republicans, over whom he retains immense influence, to “cause a default” if Democrats do not agree to “massive cuts” in spending.

The Congressional Budget Service (CBO) also referred to the beginning of June for a potential default.

(AFP)Show comments