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Tentative deal in U.S. debt ceiling negotiations

2023-05-28T01:20:10.413Z

Highlights: U.S. government and leading representatives from Congress reached a preliminary agreement on Saturday. The project would still have to be approved by Congress. US President Joe Biden spoke on the phone on Saturday evening with the Republican chairman of the House of Representatives, Kevin McCarthy, among others. Yellen warned that a possible default by the world's largest economy could occur on June 5. This could trigger a global financial crisis and a sharp economic downturn. In the meantime, this debt ceiling of around 31.4 trillion US dollars has been reached.



The U.S. debt dispute has been dragging on for months. © Patrick Semansky/AP

For months, Republicans and Democrats have been arguing bitterly about raising the debt ceiling in the United States. Now a solution is emerging - but the last hurdle has not yet been overcome.

Washington - In the negotiations to raise the debt ceiling in the United States, negotiators have achieved a breakthrough and are expected to avert a default by the world's largest economy, according to media reports. The U.S. government and leading representatives from Congress reached a preliminary agreement on Saturday (local time). The project would still have to be approved by Congress.

CNN reported that the negotiated text would now have to be proofread and confirmed by the negotiators overnight. US President Joe Biden spoke on the phone on Saturday evening with the Republican chairman of the House of Representatives, Kevin McCarthy, among others.

The final agreement would have to be passed in both chambers of Congress and signed by the president as soon as possible so that an imminent default by the US government would actually be averted. This was preceded by an intense dispute that even prompted US President Joe Biden to cancel trips abroad.

Yellen warned of default on June 5

In the U.S., the parliament sets a debt ceiling at irregular intervals and determines how much money the government can borrow. In the meantime, this debt ceiling of around 31.4 trillion US dollars has been reached and the Treasury has to tap into the capital reserves. For an increase in the debt ceiling, Biden and his Democrats need the Republicans in Congress.

U.S. Treasury Secretary Janet Yellen recently warned that a possible default by the world's largest economy could occur on June 5. This could trigger a global financial crisis and a sharp economic downturn. The U.S. would then no longer be able to pay a large part of its bills - millions of people could lose their jobs as a result.

The dispute had been dragging on for months. High-ranking members of Biden's team had continued to negotiate during his trip to Japan for the G7 summit. Biden had previously emphasized that it had already been possible to prevent a default 78 times in US history. However, both Republicans and Democrats would have to be prepared to cut corners. Dpa

Source: merkur

All news articles on 2023-05-28

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