American debt: a “pause” in the discussions has increased the pressure
The threat of a default by the United States rose a notch on Friday, after a “pause” in the negotiations, which then resumed, on the debt ceiling between the White House and the Republican opposition.
US President Joe Biden, however, remains “confident”, White House spokeswoman Karine Jean-Pierre assured Saturday, acknowledging that “real differences” persist between Democrats and Republicans on the subject.
On Friday, House Republican Leader Kevin McCarthy left the negotiating table with Republican Representatives Garret Graves and Patrick McHenry. The discussions then resumed shortly after this “break”.
Republicans are demanding drastic government budget cuts before giving the green light to raising the debt ceiling.
“The differences are great on many subjects,” lamented Friday Patrick McHenry, quoted by the site NewsNation.
A few moments earlier, it was the White House which had admitted to stumbling over “real differences” with the Republican opposition and indicated that the discussions were “difficult”.
But the resumption of negotiations makes us “optimistic” declared Mrs. Jean-Pierre on Saturday from Hiroshima (Japan).
“Discussions just ended a few moments ago” in Washington, she assured.
The negotiations are taking place in the absence of President Joe Biden, who is in Japan for the G7 meeting. He cut short his Asia-Pacific tour due to the US debt crisis and is due to return to Washington on Sunday after the Hiroshima summit ends.
– “Informed daily” –
“He is informed daily” of the state of the negotiations concerning the debt, and this “several times a day”, specified the spokesperson for the White House.
An agreement will be found “if both sides negotiate in good faith”, she added.
The Democratic administration and the Republican opposition are engaged in a race against time to avoid a payment default by the United States.
This could happen from June 1, with potentially catastrophic consequences for the US economy, and even the world.
But Republicans are calling for budget cuts before giving a green light to raising the debt ceiling.
The sticking point: Republicans’ demand to cut federal spending, back to 2022 levels. That is, cut $130 billion in spending.
“We can’t spend more money next year,” said Kevin McCarthy.
A red line that the Democrats refuse to cross.
The Biden administration has meanwhile pushed to extend the borrowing limit until 2025, according to US media citing officials involved in the talks.
The Democrats want to believe that an agreement remains possible if the two parties agree not to obtain satisfaction on all the demands, according to a source close to the discussions.
And again, both sides blame each other.
– “Hurry up” –
“It’s high time for the White House to get serious. Time is running out,” tweeted Mitch McConnell, Senate Republican Minority Leader, accusing Joe Biden of waiting months before agreeing to negotiate with Kevin McCarthy.
Congressional Democrats, meanwhile, are expressing growing concern over demands from Republicans to impose tougher work requirements on recipients of certain welfare benefits.
“Republicans are threatening to crash our economy unless we cut Medicare, evict thousands of people from their public housing, and put nearly ONE MILLION Americans out of work,” lamented elected Democrat Nanette Barragan, in a tweet.
And to add that “their plan puts politics before human beings”.
On Wall Street, the stock market which was confident Friday morning after the optimistic comments of the day before, turned red in the middle of the session. The Dow Jones index ended the day down 0.33%, and the Nasdaq 0.24%.
President Joe Biden is due to return from Japan to Washington on Sunday. He had expressed Thursday his hope to complete an agreement in principle with the Republican opposition.
Kevin McCarthy had expressed optimism that a bill could be presented by next week, but he had indicated that it would take an agreement in principle by Sunday or Monday.
Republicans in the House of Representatives voted on April 26 a bill providing for an unprecedented cut in public spending in exchange for a suspension of the debt ceiling until the end of March 2024, paving the way for another crisis of debt in the midst of the presidential election campaign.