A classic compromise, limited and imperfect. But an essential compromise, which will allow the United States to retreat before a financial precipice. This is the agreement in principle reached on Saturday, May 27 between the White House and the Republican negotiators in the House of Representatives, regarding the raising of the debt ceiling and the budget cuts imposed in exchange. This agreement, which will still have to be voted on by the House on May 31 and then by the Senate, before being signed by Joe Biden, represents the only possible way to avoid a default by the Federal State on its financial obligations (spending accounts and debts) at the beginning of June.
Unlike previous increases in the debt ceiling, the Republican majority in the House wanted this time to link this measure to a limit on federal government spending. After refusing for a long time, Joe Biden had to accept the parameters of this negotiation. The increase in these expenditures will be frozen in 2024 and limited to 1% in 2025, except in the military sector. In exchange, raising the debt ceiling over this two-year period would make it possible to remove this subject from the field of partisan confrontation, before the presidential election of November 2024.
Several weeks of tense negotiations, interspersed with mutual accusations of blackmail and irresponsibility, took place between the two parties. The excitement mounted, while the timetable seemed increasingly restrictive, before the United States reached the debt ceiling set by Congress at 31,381 billion dollars (about 29,000 billion euros). To the point that some advisors at the White House were closely studying the hypothesis of bypassing Congress and invoking the Fourteenth Amendment to the American Constitution. Adopted in 1868, it specifies that “the validity of the public debt […] will not be questioned”. But this recourse would inevitably have led to legal challenges.
Instead, Joe Biden and House speaker Kevin McCarthy (California) managed to advance toward each other. In a statement on Saturday evening, the American president welcomed this agreement, “representing a compromise” And “good news for the American people, as it prevents what could have been a catastrophic default and led to an economic recession”. Joe Biden believes that the Democratic priorities and the legislative texts already voted for two years remain intact.
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