A series of meetings in the White House, in small or large committees, endless negotiating sessions… all of Washington was suspended for weeks from the fate of the “debt ceiling” and the risk of default by the states. United. After weeks of negotiations, America can breathe a sigh of relief: by a vote, the US Congress, on Thursday 1eh June, the debt ceiling and averted the threat of bankruptcy within days.
“A default would have caused severe hardship to American families, potentially resulting in the loss of millions of jobs and trillions. [de dollars] wealth for households”Treasury Secretary Janet Yellen said in a statement. “glad” of this voice.
America, like almost all major economies, lives on credit. But unlike other developed countries, the United States regularly runs up against a legal constraint: the debt ceiling, its maximum amount of debt, which must be formally raised or suspended by Congress. This routine legislative procedure has been used by Republicans, the majority in the House of Representatives – and especially their boss, Kevin McCarthy – as an instrument of political pressure against Democratic President Joe Biden.
Although it is very common for last-minute deals to exist for this type of file, these endless negotiations have led rating agency Fitch to place “under surveillance” US AAA rating.
“A great victory for the American people”
On Saturday night, in the middle of the long holiday weekend, the two parties finally reached an agreement with tweezers. This text has made it possible to avoid the worst: that the country’s coffers run out on Monday 5 June, as the Ministry of Finance feared. From one day to the next, the United States would have had the greatest difficulty in meeting its financial obligations, be it salaries, pensions or repayments to its creditors, and would have been forced to make drastic choices. This unprecedented situation would have plunged into the unknown the American finance and economy, but also by extension internationally.
It is to avoid this scenario with potentially catastrophic consequences that the Democratic President, Joe Biden, and the Republican leader of the House of Representatives, Kevin McCarthy, have reached this compromise. The agreement had already been approved by a large majority of the elected members of the House of Representatives on Wednesday evening.
Mr. Biden applauded the Senate’s vote Thursday “This is a big win for the economy and for the American people”he greeted, saying to himself “eager” to design the text.
Promises to limit certain expenses
Specifically, the text makes it possible to suspend for two years, therefore until after the presidential and legislative elections in 2024, the maximum amount of debt of the United States, currently at 31,400 billion dollars. In return, Democrats agreed to limit some spending, but not as much as Republicans wanted. Therefore, many of them opposed the measure, both in the House and in the Senate.
The world app
The morning of the world
Every morning you can find our selection of 20 articles not to be missed
Download the app
“Make no mistake, there is still much to do”to clean up American finances, assured the influential Republican Senator Mitch McConnell.
A major point of contention for the “left”, the compromise includes changes to the conditions imposed to benefit from certain types of social assistance. “I cannot in my soul and conscience vote for a bill that hurts workers”said the no less influential Senator Bernie Sanders.