Democrats and Republicans appeared close to an agreement on Saturday to avoid a US default before a new June 5 deadline, but negotiations are still running up to final points.
June 5 deadline
As of the close of business on Friday, May 26, US Treasury Secretary Janet Yellen had given the country a few days’ respite by pushing back the deadline to raise the US federal debt ceiling. until Monday, June 5, reports Reuters. This date was previously set at the beginning of June, or even as early as June 1.
“Based on the most recent data available, we now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress does not raise or suspend the debt ceiling by June 5,” said the Secretary of the Treasury in a letter to elected members of Congress on Friday.
Thus, the White House and the negotiators were able to obtain a short additional period of time to avoid a US default. The day before, President Joe Biden had been quite “optimistic” about closing a future deal, reassuring Wall Street, which ended in the green.
“Hostage”
Beyond this June 5 deadline, the US Treasury could find itself unable to meet its financial commitments. More than $130 billion in pension, healthcare and veterans payments in particular are expected in the first two days of June, which will “leave the Treasury with an extremely low level of resources,” Janet Yellen said Friday.
Asked Saturday morning if there would be a deal before the deadline, House Speaker Kevin McCarthy, the main Republican star of this political-financial soap opera, replied: “yes.” “I think we can really get there,” he told reporters, warning that there were sticking points.
The United States, which entered the long weekend of “Memorial Day” on Monday, Veterans Day, remains suspended in an agreement to raise the debt ceiling, essential to avoid default that would have catastrophic consequences for the economy. world.
This parliamentary maneuver has long been a formality for both parties. But this time the Republicans demand, in exchange for their green light, a reduction in public spending.
Officially, Joe Biden refuses to negotiate, believing that he is being held “hostage.” In reality, the advisers of the two sides have been talking non-stop for days and, according to several US media, they have already agreed on some main lines.
The agreement would freeze certain expenses but without touching the budgets dedicated to defense and veterans, report for example the New York Times and the Washington Post. It would postpone the risk of default for two years, until after the next presidential elections.
Among the points of disagreement between the two camps is the requirement of the Republicans to condition certain social benefits.
“I don’t think it’s right to borrow money from China to pay people who are healthy and don’t have dependents to hang out on their couch,” McCarthy lashed out as an uncompromising advocate of fiscal discipline, in a video shared on Saturday.
White House spokesman Andrew Bates criticized him for wanting to hold the economy hostage and endangering “more than eight million jobs” while trying to “take bread out of people’s mouths.”
Joe Biden, campaigning for re-election, positions himself as a champion of social and fiscal justice and has repeatedly said he opposes massive budget cuts that would hit the most precarious workers and households.
One of the Republican negotiators, Patrick McHenry, referred to a “short list of disagreements” that remain between the two camps. “It’s a matter of hours or days,” he said Saturday.
The pressure around the negotiations is all the greater since the compromise, once obtained, must be validated by the Senate and the House of Representatives. However, many elected officials returned to their strongholds for a few days over the “Memorial Day” holiday weekend and could be urgently recalled to Washington.
There is also the threat of seeing the deal shunned in Congress by elected progressives from the Democratic Party, as well as certain elected officials from the Republican Party, having threatened not to ratify or delay as long as possible a text that would make too many concessions. to the opposite field.
On Friday, IMF Managing Director Kristalina Georgieva said a deal was “critical” for the global economy, while stressing that the United States needed to do “more to reduce public debt.”
Source: BFM TV
