October 4, 2023

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Raising the Debt Ceiling | A fierce battle is raging in the US Congress

(Washington) The bitter battle between Democrats and Republicans to avoid a catastrophic payment by the United States moves to Congress on Sunday, where it promises to be tough and with an uncertain outcome.

After marathon negotiations, President Joe Biden and the Republican leader of Congress, Kevin McCarthy, on Saturday evening reached an agreement in principle to raise the US debt ceiling, making it possible to remove the threat of bankruptcy from June 5.

But the deal must win approval from a divided Congress and has already been subject to protests by elected progressives and conservatives, with some talking of “capitulation.”

“He may not satisfy everyone, but it’s a step in the right direction that no one expected,” Republican Party Chairman Kevin McCarthy defended Sunday on Fox News, particularly welcoming the “historic” cuts in public spending.

Photo by Nathan Howard, Reuters

Republican Party Chairman Kevin McCarthy

He predicted that a “majority” of elected Republicans would vote for the text.

It will be voted on Wednesday in the House of Representatives, where Republicans hold a slim majority of 222 to 213. Next comes the Senate, narrowly controlled by Democrats (51-49).

President Biden also welcomed the “compromise” on Saturday evening, saying it was “good news because it avoids a mistake. [de paiement] Catastrophe”.

According to a press release from House Minority Leader Hakeem Jeffries on Sunday, he was scheduled to meet with the Republican leader again later this afternoon to finalize the terms of the deal, which must be turned into a bill.

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Political debt

The text of the deal has not yet been released, but it raises the U.S. public debt ceiling for two years, so after the 2024 presidential election.

It is currently pegged at $31.4 trillion.

Non-defense spending will remain virtually unchanged next year and will increase only nominally in 2025.

Separately, the new rules apply to access to some federal aid programs, but according to a source familiar with the negotiations, the deal protects students from the Inflation Relief Act and the Loan Relief Program, which Mr. Biden signed.

Each side claims victory.

According to Democrats, there are no significant cuts that Republicans wanted, ensuring that spending will be limited for the first time in history for their part.

MM Both Biden and McCarthy play up their political credentials in these negotiations.

A first-time candidate for re-election must avoid a bankruptcy with disastrous consequences, seeking to establish his power after being badly elected to a perch early in the second year.

President Biden has long refused to come to the negotiating table, accusing the opposition of taking the US economy “hostage,” but finally decided to do so.

However, the situational coalition between elected progressives and elected conservatives within the Democratic Party threatens not to ratify the deal.

Conservative Republicans like Bob Goode or Lauren Bobert have already announced their opposition to the speech. “No elected official from the Conservative camp can justify a positive vote,” a second tweet said, adding, “Our voters are better than that, and you can count me out as NO to the deal.”

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In a third, Rep. Don Bishop took the Republican president to task for “getting almost nothing.”

Without raising the debt, the first world power risks defaulting on June 5, unable to meet its financial obligations: pay civil servants’ salaries, pensions or repay its creditors.

Like almost all major economies, the United States lives in debt.

But unlike other developed countries, the United States continues to run up against a legal hurdle: the debt ceiling, the maximum amount of U.S. debt, which must be formally raised by Congress.

This has long been standard legal practice. Republicans have turned it into a tool of political pressure.