Only a few days remain for the world’s largest economy to prevent a global crisis. After a top meeting in the debt dispute, there are warm words, but still no solution.
There is still no breakthrough between the White House and Republicans in the US debt dispute. “I felt like we had a productive meeting. We haven’t reached an agreement yet,” Republican Speaker Kevin McCarthy said yesterday after a top White House meeting with US President Joe Biden.
However, he thinks that the conversation has been positive, especially in areas where he disagrees with Biden. Biden also said he had a “productive meeting” with McCarthy on the need to “avoid catastrophe for our economy.”
Avoid catastrophic scenario
According to forecasts by the Treasury Department, the US government is threatened with default from the beginning of June. According to experts, if this were to happen, a global financial crisis would throw the world economy into severe turbulence. Both sides have repeatedly emphasized that they want to avoid the catastrophic scenario.
Biden’s government is running out of money because in the United States, Parliament decides how much the state can borrow. Last-minute negotiations to raise the debt ceiling are not uncommon, but this time they are particularly bitter. The Republicans in Congress want to push Biden in return for cuts in the social sector.
The situation is particularly complicated because the Republicans only have a very narrow majority in the House of Representatives. The parliamentary group also includes particularly radical MPs who show no interest in a realistic compromise. However, McCarthy wants to rally some of the radicals behind a possible deal with the Democrats in order to have a majority in a vote. Otherwise he would have to rely on the support of the Democrats, which weakens his position as chief negotiator.
Early return from Asia
The looming crisis had recently had an impact on Biden’s travel plans: After the G7 summit in Japan, he traveled directly back to Washington on Sunday instead of visiting Papua New Guinea and Australia. Meanwhile, during the G7 summit in Hiroshima, the 80-year-old was regularly informed about the status of the negotiations. On the return trip, Biden also spoke to McCarthy on the phone.
McCarthy had rated the talks as “productive” and pushed for an early agreement before the meeting on Monday. “I think we can reach an agreement tonight. We can reach an agreement tomorrow, but you still have to get something done this week to get it passed (in the House) and taken to the Senate,” the Republican negotiator said. Although there were “very good discussions”, nothing has been agreed so far.
Republicans: Don’t tax top earners more
Biden also described the call as “good”. On the fringes of the G7 summit, he had accused the Republicans of taking extreme positions and not being willing to compromise. Biden himself promised a cut in government spending. But one must also talk about government revenue, specifically about tax increases for top earners. Republicans are not ready for that.
US Treasury Secretary Janet Yellen reiterated Monday in a letter to McCarthy and other leaders in Congress that the world’s largest economy faces a risk of default beginning June 1. The US would then no longer be able to settle most of its bills. Millions of people could lose their jobs as a result. In 2011, a Republican majority in Congress delayed raising the debt ceiling. At that time, the US credit rating was downgraded for the only time in history.
Source: Stern
I have been working in the news industry for over 6 years, first as a reporter and now as an editor. I have covered politics extensively, and my work has appeared in major newspapers and online news outlets around the world. In addition to my writing, I also contribute regularly to 24 Hours World.
