A global financial and economic crisis appears to have been averted by the deal in the US debt dispute. However, the compromise still has to clear one important hurdle.
US President Joe Biden and Republican House Speaker Kevin McCarthy have sealed their compromise on a bill to avert the United States from default. Previously there had only been talk of a “provisional agreement”.
“Speaker McCarthy and I have reached a bipartisan budget agreement that will prevent the worst crisis — a default for the first time in our country’s history,” Biden tweeted yesterday (local time).
The deal is “good news” for the American people, Biden continued. He called on Congress to immediately pass the deal to raise the US debt ceiling through 2025 in exchange for significant spending cuts. A vote in the Chamber is scheduled for Wednesday.
The draft must be passed in both chambers of Congress – the House of Representatives and the Senate – and signed by the President as quickly as possible so that the US government does not run out of money. US Treasury Secretary Janet Yellen recently warned that the money could run out on June 5th. This was preceded by an intense dispute that even prompted Biden to cancel trips abroad.
Compromise after hard negotiations
Biden and McCarthy had praised the compromise: Biden announced on Saturday that it was an important advance that would reduce spending while protecting important programs for working people and strengthening the economy for all. In addition, the agreement secures the most important parts of his agenda. However, the 80-year-old also admitted “that not everyone gets what they want.”
McCarthy spoke of an “agreement worthy of the American people.” On Fox News, he said confidently: “I think the majority of Republicans will vote for this bill.” President Biden also supports the text, “so I think many Democrats will vote for it.”
Another hurdle in Congress
Approval in the House of Representatives on Wednesday is likely, but not guaranteed. The situation in the chamber is particularly muddled because the Republicans have a very narrow majority. There are also radical MPs in the parliamentary group who show no interest in a realistic compromise. McCarthy was only elected chairman by his group at the beginning of the year after a historic election chaos. This had greatly weakened his position.
The dispute over the debt limit is a major test for McCarthy, in which he must deliver results for his party. He must also succeed in rallying a few radicals behind the agreement in order to have the broadest possible majority in his party. If he had to rely on a particularly large number of votes from the Democrats because his party colleagues opposed him, that would further weaken him.
Controversy over taxes for the rich
The compromise that has now been reached is intended to effectively freeze the size of the federal budget, which the Democrats under Biden actually wanted to increase. The budgets of many federal agencies and ministries would be adjusted for this.
McCarthy spoke of “historic spending cuts” that would not be accompanied by new taxes or government programs. The Democrats actually wanted to increase state revenues by taxing the rich more heavily. The Republicans opposed it. During the negotiations, you had urged Biden to make savings in social areas, for example, in return for an increase in the debt limit.
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.
