A tough battle is looming this week in the US Congress, which will examine the debt agreement, sealed over the weekend by President Joe Biden and Republican leader Kevin McCarthy to avoid a cataclysmic default in the United States.
“We’ve reached a bipartisan budget deal that we’re ready to take to the full Congress,” Biden said during a brief media appearance Sunday night at the White House.
“The agreement averts the worst possible crisis: a default for the first time in the history of our country, an economic recession, devastated retirement savings accounts, millions of lost jobs,” continued the president. “This agreement is now going to the House of Representatives and the Senate. I strongly urge both chambers to adopt it,” he added.
Mr. Biden and the Republican leader in Congress Kevin McCarthy put the finishing touches on Sunday to this agreement in principle on the raising of the ceiling of the American debt, announced the day before after marathon negotiations, and which makes it possible to remove the threat of a payment default from June 5th.
But the agreement must receive the approval of a divided Congress and is already the subject of a revolt of elected progressives and conservatives, some speaking of a “capitulation”.
“He may not satisfy everyone, but it’s a step in the right direction that no one expected,” the Republican leader defended on Fox News on Sunday.
He predicted that a “majority” of elected Republicans would vote for the text.
The House of Representatives, where Republicans have a fragile majority of 222 to 213, will vote on Wednesday. Next will come the Senate, narrowly controlled by the Democrats (51-49).
The leader of the Senate Democrats Charles Schumer, who controls the parliamentary agenda, has already warned to expect votes next Friday and Saturday, two days before the deadline for a default.
“Let’s continue to move forward, delivering on our obligations and building the strongest economy in the history of the world,” Biden said, though he admitted to having “no idea” whether Mr. McCarthy had enough votes to pass the text through Parliament.
Kevin McCarthy said the deal was “completely worthy of the American people”.
Markets reacted with relief on Monday to news of the deal. At the Tokyo Stock Exchange, the Nikkei index gained 1.53% at the open
The text of the agreement was published on Sunday evening. In broad outline, it raises for two years, so until after the presidential election of 2024, the public debt ceiling of the United States. This is currently set at $31.4 trillion.
Non-defence spending will remain unchanged next year and only nominally increase in 2025.
It also provides for a $10 billion cut in funds allocated to tax services to modernize and strengthen controls, as well as the recovery of funds allocated to the fight against Covid-19 and not yet spent.
The compromise also includes new conditions imposed to benefit from certain social aids, including food stamps.
“Overall, the deal is more of a victory for Biden and the Democrats because it contains relatively limited budget cuts and avoids another showdown for the president for the remainder of his term,” political scientist Nicholas Creel said, predicting ” in fine” its adoption by Congress.
MM. Biden and McCarthy are playing their political credit in this case.
The first, who is a candidate for re-election, must avoid a bankruptcy with potentially catastrophic consequences. The second seeks to establish his authority after being poorly elected to the perch at the start of the year.
President Biden had long refused to come to the negotiating table, accusing the opposition of taking the American economy “hostage”, but finally resolved to do so.
Still, an alliance of circumstance between elected progressives and conservatives could derail everything.
Conservative Republicans have already announced their opposition to the text, such as Representative Dan Bishop who vilified Mr. McCarthy for having “got almost nothing”.
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.
This has long been routine legislative procedure. The Republicans have made it an instrument of political pressure.
29/05/2023 04:04:59 – Washington (AFP) – © 2023 AFP