The United States dismisses the threat of a default

A series of meetings at the White House, in small or large committees, endless negotiating sessions… the whole of Washington was suspended for weeks from the fate of the “debt ceiling” and the risk of a default on payment by the States -United. After weeks of negotiations, America can breathe: by a vote, the American Congress raised, Thursday 1er June, the debt ceiling and averted, within a few days, the threat of bankruptcy.

America, like almost all major economies, lives on credit. But unlike other developed countries, the United States regularly come up against a legal constraint: the debt ceiling, its maximum amount of indebtedness, which must be formally raised or suspended by Congress. From this routine legislative procedure, the Republicans, the majority in the House of Representatives and their boss Kevin McCarthy, have made an instrument of political pressure against Democratic President Joe Biden.

Even if it is very common for last-minute agreements to be reached on this type of file, these endless negotiations have prompted the rating agency Fitch to place ” under surveillance “ US AAA rating.

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“A great victory for the economy and for the American people”, according to Biden

Saturday evening, in the middle of the long holiday weekend, the two parties finally snatched an agreement with forceps. This text has made it possible to avoid the worst: that the coffers of the country find themselves dry, risking pushing the United States into default. Overnight, the country would have had the greatest difficulty in honoring its financial commitments, whether in terms of salaries, pensions or reimbursements to their 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, international.

It is to avoid this scenario with potentially catastrophic repercussions that Democratic President Joe Biden and Republican House of Representatives boss Kevin McCarthy reached this compromise. The agreement had already been approved Wednesday evening by a large majority of elected members of the House of Representatives.

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Joe Biden applauded the Senate vote on Thursday “This is a great victory for the economy and for the American people”he greeted, saying to himself ” eager “ to promulgate the e-text.

Promise to limit certain expenses

Concretely, the text makes it possible to suspend for two years, therefore until after the presidential and legislative elections of 2024, the maximum amount of indebtedness of the United States, currently at 31,400 billion dollars. In exchange, Democrats agreed to limit some spending, but not as much as Republicans wanted. That is why many of them opposed the measure, both in the House and in the Senate.

“Make no mistake, there is still a lot to do”to clean up American finances, assured the Republican tenor in the Senate, Mitch McConnell.

A big point of contention for the left, the compromise includes modifications to the conditions imposed to benefit from certain social aid. “I cannot, in my soul and conscience, vote in favor of a bill that harms workers”said the influential senator Bernie Sanders.

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The World with AFP

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