Debt: United States on the way to avoid default

Last night the US President described the vote of the elected members of the House of Representatives as follows. By a huge majority, they adopted the text aimed at raising the debt ceiling. According to the Democratic President, the result was For his part, the Republican leader of the House, Kevin McCarthy, recognized that the vote “puts the American citizen first”, noting that “no previous mandate had succeeded thus far”: Reducing federal spending.”Tonight’s vote passed the biggest budget cut in American history,” he insisted.

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The text must now be adopted by the Senate, which must make a decision quickly. The Democratic majority leader, Chuck Schumer, had in fact assured a little earlier on Wednesday that he would submit it “as soon as possible” so that “we avoid default”. Because this is what threatens: the United States’ first default on payments on the public debt, which will have catastrophic consequences for the American and world economy. The text should therefore be adopted before Monday, June 5 to avoid the worst.

a tack with forceps

To avoid this scenario with potentially devastating consequences for the economy, Joe Biden and Kevin McCarthy reached a deal that, like any deal, didn’t fully satisfy anyone. “Neither camp got everything it wanted,” summed up Joe Biden after the text was adopted. Kevin McCarthy, showing his optimism, acknowledged before the vote that he would not get all the votes in his camp.

And for good reason, Democratic leaders, although they were forced to make changes to the federal budget, ventured to bring up the missing votes from this text. Leader Hakeem Jefferies said, “House Democrats will make sure the country doesn’t default. Full stop.” The promise was kept as the bill received 314 votes in favor, 165 Democrats and 149 Republicans, while 117 elected officials opposed it, 71 Republicans and 46 Democrats.

suspension till 2025

In fact, the bill suspends the debt cap until 2025, that is, after the presidential election, in late 2024. In turn, 2024 would be limited to holding certain spending steady except for military spending and in 1 increments. %, excluding inflation in 2025. It also provides for a $10 billion reduction in funding allocated to the tax service to modernize and strengthen controls.

Kevin McCarthy’s office also said the deal provides for the recovery of “billions of dollars of unspent Covid money” during the pandemic, without giving further details.

A major point of contention, the agreement includes changes to the conditions imposed on those eligible to benefit from some social assistance: it increases the age from 49 to 54 to allow adults without children to work to receive food assistance. should, but it removes the obligation to work for veterans. and homeless.

(with AFP)