- The United States is threatened with insolvency at the beginning of June, as the US government is warning.
- Since the talks were not productive, the negotiations were temporarily interrupted, the opposition Republicans reported.
- Negotiations have since resumed, but no agreement has been reached to date. President Biden is nevertheless confident.
The US debt limit is $31.4 trillion. This mark has now been reached and the Ministry of Finance has to tap into the capital reserves. Because if Biden’s team cannot agree with the Republicans in Congress on raising the debt ceiling, the US government is threatened with a default in early June.
Failure to pay would have serious repercussions
In the USA, the parliament sets a limit at irregular intervals and determines how much money the state can borrow. This time the procedure has degenerated into bitter party-political wrangling, which is dangerous for the USA and beyond: A default by the world’s largest economy could trigger a global financial crisis and an economic downturn.
Nevertheless, negotiations between the Republicans and the Democrats continue to falter. The Republicans left the latest talks about an hour after the start of the negotiations. Several US media quoted Republican MP Garret Graves on Friday: “We have decided to take a break because it’s just not productive.”
I’m not worried at all. I still believe that we can prevent a default.
A representative of the presidential office was meanwhile cautiously optimistic: An agreement is still possible if both sides are willing to make concessions. At around 7 p.m. local time, the parties returned to the negotiating table. However, the reopening did not lead to any results and finally the talks were adjourned later in the evening. White House spokeswoman Karine Jean-Pierre spoke of “serious differences” at the G7 summit in Hiroshima.
Despite the difficult negotiations, US President Joe Biden is confident of being able to avert a crisis. “I still believe that we can prevent a default,” Biden said at a bilateral meeting with Australian Prime Minister Anthony Albanese on Saturday at the sidelines of the G7 summit in Hiroshima, Japan.
Legend:
Due to the domestic dispute over raising the debt ceiling, Biden’s participation in the G7 summit in Japan was at times on the brink.
Susan Walsh/Pool via REUTERS
When asked how worried he was about the negotiating situation, he replied: “Not at all.” These are negotiations, there are always different phases.
Because of the debt crisis, the US President had to change his travel plans. After the G7 summit, Biden originally wanted to travel to Papua New Guinea and Australia. He has now had to cancel these meetings in order to be able to help solve the debt crisis in his own country. Biden will be replaced at meetings in Oceanic space by his Secretary of State, Antony Blinken.