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US debt: a deal soon possible? Biden says he's 'pretty optimistic'

2023-05-27T06:40:32.140Z

Highlights: The US president said he was "quite optimistic" about the possibility of reaching an agreement on the debt in the coming hours. The date by which the US Treasury will be unable to meet its financial commitments has been refined. More than $130 billion in payments for pensions, health and veterans and others are expected in the first two days of June. The challenge is to get Congress to vote quickly to raise the public debt ceiling, otherwise the United States could default, an unprecedented situation with potentially catastrophic economic, financial and social implications.


The US president said he was "quite optimistic" about the possibility of reaching an agreement on the debt in the coming hours. The


An agreement finally in sight? On Friday, the White House and negotiators continued to work out a compromise to avoid a US default. But President Joe Biden was quite "optimistic" in the late afternoon, saying he hoped to know "by tonight if we are able to reach an agreement". "We are closer but it is not yet done," said earlier a source close to the discussions, skeptical about the possibility of an announcement as early as Friday.

The speaker of the House of Representatives Kevin McCarthy, the main Republican protagonist of this politico-financial soap opera, had noted progress. But "nothing is taken for granted until everything has been agreed," he added, just to keep up the pressure on the president. There is no shortage of pressure in this affair difficult to understand outside the United States and more generally outside the Washington bubble.

The date set for June 5

One of the main sticking points is a demand by Republicans who demand that recipients of benefits, such as food aid, work in exchange for obtaining them. Republicans are ready to jeopardize "more than eight million jobs if they can't get the bread out of the mouths of hungry Americans," White House spokesman Andrew Bates said.

The date by which the US Treasury will be unable to meet its financial commitments has been refined. It is now set for June 5, against June 1 previously, offering a few short days of respite. More than $130 billion in payments for pensions, health and veterans and others are expected in the first two days of June, which "will leave the Treasury with an extremely low level of resources," she said.

" READ ALSO Towards a major economic crisis? 5 minutes to understand the risk of U.S. default

The challenge is to get Congress – the Republican House and the Democratic Senate – to vote quickly to raise the public debt ceiling, otherwise the United States could default, an unprecedented situation with potentially catastrophic economic, financial and social implications. This parliamentary maneuver has long been a formality for both parties. But this time the Republicans are demanding, in exchange for their green light, a reduction in public spending.

A very tight schedule

Officially, Joe Biden refuses to negotiate, believing that he is being held "hostage". In reality, advisers from both sides have been talking non-stop for days and, according to several US media, have already agreed on some broad lines.

The agreement would freeze some spending but would not affect defense and veterans' budgets, report the New York Times and the Washington Post. It would make it possible to postpone the risk of default for two years, until after the next presidential election.

If an agreement is reached, it will still have to be passed by the Senate, narrowly controlled by the Democrats, and by the House of Representatives, in which conservatives have a fragile majority.

The parliamentary calendar is constrained: many elected officials have returned to their fiefdoms for a break of several days, on the occasion of the long weekend of "Memorial Day". In addition, some progressives within the Democratic Party, as well as some elected representatives 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.

Source: leparis

All news articles on 2023-05-27

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