The United States has temporarily removed this threat. An agreement has been reached in the US Congress to avoid a potentially catastrophic default by the United States, announced Thursday (October 7th) the Democratic leader of the Senate, Chuck Schumer.
“I have good news, we have reached an agreement to extend the debt ceiling” until December, he said from the hemicycle of the Upper House, specifying that he wanted to pass it ” from today “. But that would require the unanimity of the senators, which was not guaranteed at the beginning of the afternoon on the Republican side.
The vote will therefore probably have to follow the traditional procedure and be held on Saturday, when ten Republicans must imperatively support the agreement with the 50 Democrats. The House of Representatives will then in turn have to approve this measure so that Joe Biden can enact it, not until next week.
Temporary exit door
“The Senate is moving towards the plan I outlined yesterday to prevent the Americans from a provoked crisis” by the Democrats, said the leader of the Republican senators, Mitch McConnell. With his proposal, this veteran of Congress offered a temporary way out for the two camps, which were each encysted in diametrically opposed positions.
But this advance enraged several Republicans Thursday, on the same line as Donald Trump, for whom Mitch McConnell “Folded” in front of the Democrats.
The blockages will not go away, however. Republicans still absolutely refuse to approve any long-term measures to raise the debt ceiling. They claim it would be like giving Joe Biden a blank check to fund his massive investment plans.
However, these plans have not yet been adopted by Congress. Raising the debt ceiling is used to repay sums already borrowed, including trillions of dollars spent under the presidency of former President Trump.
By offering temporary respite to avoid a debt crisis, Mitch McConnell urged Democrats to reach a lasting solution by December, on their own, through a complex legislative path. But President Joe Biden’s camp has so far refused to use this maneuver “Too risky” for the debt.
The problem is not solved
The White House reacted lukewarm to this deal. “It gives us a little time but does not solve the problem”, commented Jared Bernstein, one of its economic advisers. “Spending two more months arguing over this does not resolve the uncertainty. “
In fact, the agreement reached on Thursday only postpones until the end of November a parliamentary battle over the finances of the United States which promises to be epic.
Because in parallel with the debt limit, Congress will also have to agree by early December on a new budget if it wants to avoid the paralysis of federal services, the shutdown.
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 to adopt the two major investment plans wanted by Joe Biden, in infrastructure and social reforms.
The US Treasury has set October 18 as the date from which the world’s largest economy could be in default if its Congress fails to increase the country’s debt capacity.
The pressure had been mounting very clearly for several days on the Republicans, 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.
The United States, which like all major economies, or almost, have lived on credit for decades in terms of public spending, have already raised this famous “ceiling” countless times.
But the Republicans had started during the Obama presidency to use this routine legislative maneuver as an instrument of political pressure.