No agreement, but progress between Biden and the opposition

First modification: 05/23/2023 – 04:13

As a possible US default looms, US President Joe Biden and opposition leader Kevin McCarthy wanted to believe that they would find a way out of the crisis on Monday, May 22, but their disagreements have yet to be overcome.

“I have just completed a productive meeting” with the Republican head of the House of Representatives, Biden said in a statement. In addition, he called for “good faith” negotiations to find a budget compromise. He acknowledged the persistence of “differences” that the two-man teams will have to iron out, in a very short time.

Treasury Secretary Janet Yellen recalled the stakes of the meeting. She this Monday she emphasized, once again, that it was “very likely” that the United States would find itself without public money after June 1.

The US president assured, when receiving the head of the House of Representatives in the Oval Office, that he was “optimistic” about the possibility of a “progress” at the end of the meeting.

“We do not have an agreement, but we do have a productive discussion in the areas where we have differences of opinion,” McCarthy estimated at the end of the meeting. “I think the tone tonight was better than any time before“, he added, but “we still have philosophical differences.”

The two men, who have already met twice in two weeks with other parliamentary leaders, this time came face to face. The meeting was intended to relaunch the discussions at the level of the advisory teams, which had become tense this weekend, in the absence of Biden.

The 80-year-old Democrat, who returned from the G7 summit in Japan on Sunday, had originally planned to extend his diplomatic tour of Oceania, but the budget-political imbroglio in Washington forced him to cut his trip short.

Hostage

To eliminate the risk of bankruptcy, Congress – with the Senate in the hands of Democrats and the House with a Republican majority – must vote to raise the maximum authorized ceiling on public debt. The Republicans demand, to give the green light, a sharp reduction in public spending. Biden, who is campaigning for reelection in 2024 on a commitment to social justice, opposes it.

Before the meeting, ” questioned McCarthy about the possible deal. In an optimistic tone, the Republican assured: “What we have negotiated will be seen by the majority of Republicans as the correct solution to return to the correct path.”

The US president told him on Monday that he was certainly in favor of reducing the deficit, but that it was necessary “to take an interest in tax loopholes and make sure the rich pay their fair share” of taxes.

The “debt ceiling”, more than 31 trillion dollars – a record in the world – was reached several months ago, but until now the federal government manages the situation through accounting arbitrations.

In the event of a default, the United States would no longer be able to pay holders of Treasury bonds, the quintessential global financial investments. The Government could not continue paying certain salaries of civil servants, nor pensions for veterans, among others. The consequences for the US and world economy would be catastrophic, many economists warn.

Constitution

So who will give in first? The US president, who knows full well that a recession, whatever its political genesis, would jeopardize his re-election chances? Or Kevin McCarthy, whose job depends on a handful of radical elected officials, who are asking him, like former President Donald Trump, not to “bend”?

The left wing of the Democratic Party pressures Biden to break through by invoking the 14th Amendment to the US Constitution, which prohibits “questioning” the solvency of the world’s leading power.

In this case, the government would issue new loans, as if the debt ceiling did not exist. However, this strategy is fraught with legal dangers, especially when facing a Supreme Court firmly entrenched on the right, as Biden does.

with AFP

This article was adapted from its original in French.