United States: Senate temporarily rules out threat of Washington default

They narrowly avoided the catastrophe.

After weeks of economic tension, the United States, almost cash-strapped and threatened with insolvency on October 18, escaped this ax.

The US Senate on Thursday removed the threat of a catastrophic default from Washington, by approving a text that will raise the debt ceiling of the world's leading power ... Until December.

This project would raise the country's debt limit to 480 billion dollars and allow it to honor its payments until the beginning of December.

It was only approved by Democratic senators.

From now on, the House of Representatives - with a Democratic majority - must give the green light.

The vote will take place on Tuesday and the text will be passed on to President Biden, who should be quick to sign it.

Read also "Liquidity will be exhausted in October": the United States at the limit of default

The president will sign the text immediately, White House spokeswoman Jen Psaki said.

"We cannot allow partisan politics to hold our economy hostage, and we cannot allow the routine of paying our bills to turn into the political spectacle that shakes our confidence every two years or every two months," he said. -she declared in a press release.

The need for a more sustainable measure

If the temporary agreement reassures Wall Street, which ended up, it does not really calm the climate on Capitol Hill.

"The Republicans have played a dangerous and risky game," storms the leader of the Democrats in the Senate, Chuck Schumer, denouncing the opposition's categorical refusal to approve a more lasting measure with them.

"What we need now is a long-term solution, so that we don't go through this risky drama on a regular basis, and hopefully the Republicans will join us," Chuck Schumer continued.

The Senate has passed an extension of the debt limit avoiding a first-ever, Republican-manufactured default on the national debt.

- Chuck Schumer (@SenSchumer) October 8, 2021

His wrathful tone outraged some of the 11 Republicans who had just voted with the Democrats in a crucial procedural step in reaching the final vote.

Among them was Republican leader Mitch McConnell, who proposed the deal to avoid "a crisis caused" by the Democrats, he said.

With this proposal, this veteran of Congress offered a temporary way out for the two camps, encysted in diametrically opposed positions.

But this advance has also enraged several Republicans, on the same line as Donald Trump, for whom Mitch McConnell "folded" in front of the Biden camp.

"Republican senators: do not vote for this terrible agreement," had launched the former president just before the procedural vote.

"A short deadline"

The Biden administration has also expressed its distrust of this temporary solution. December 3 "is a short time" and "the uncertainty remains in the longer term", warns Treasury Secretary Janet Yellen on CNN. Republicans are refusing to endorse any long-term measures to raise the debt ceiling, arguing it would amount to giving Joe Biden a blank check to fund his sweeping investment plans.

These plans have yet to be passed by Congress, however, so raising the debt limit serves to repay sums already borrowed, including trillions of dollars spent under the Trump presidency.

By offering temporary respite to avoid a debt crisis, Mitch McConnell urged Democrats - on their own - to reach a lasting solution by December through a complex legislative path.

But President Joe Biden's camp has so far refused to use this "too risky" maneuver for the debt.

The pressure of a weakened Joe Biden

The agreement reached on Thursday therefore only postpones until the end of November a parliamentary battle that promises to be epic over the finances of the United States.

The Democrats hope, however, to take advantage of this respite on the financial front to focus in the coming weeks on the difficult negotiations within their party and adopt the two major investment plans wanted by Joe Biden, in infrastructure and social reforms.

The pressure on Congress had risen sharply for several days, notably from Joe Biden.

The American president, weakened by the chaotic withdrawal from Afghanistan, and who is also struggling to get his major economic and social reforms through, did not want a financial cataclysm in addition.