hope for deal grows, reprieve until June 5

Published on : 05/27/2023 – 07:22

An agreement finally in sight? The White House and the negotiators continued Friday, May 27 to construct a compromise rich in political ulterior motives to avoid a US default, which could occur on June 5 instead of June 1, offering a short additional delay.

President Joe Biden was quite “optimistic” at the end of the afternoon, saying he hoped to know “by tonight if we are able to reach an agreement”. “We are closer (to an agreement) but it is not done yet,” said a source close to the discussions earlier, skeptical about the possibility of an announcement on Friday.

Speaker of the House of Representatives Kevin McCarthy, the main Republican protagonist of this politico-financial soap opera, had noted progress. But “nothing is certain until everything has been agreed,” he added, to keep the pressure on the president.

There is no shortage of pressure in this affair, which is difficult to understand outside the United States and more generally outside the Washington bubble. One of the main sticking points is the Republicans’ demand that recipients of benefits, such as food aid, work in exchange for obtaining them.

White House spokesman Andrew Bates said Republicans are ready to jeopardize “more than eight million jobs if they can’t get the bread out of the mouths of hungry Americans. “.

The date on which the US Treasury will find itself unable to honor its financial commitments has however been refined, now set for June 5, against June 1 previously, offering a few days of respite.

Debates around social benefits

“Based on the most recent data available, we now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress does not raise or suspend the debt ceiling by June 5. “, detailed Friday the American secretary of the Treasury Janet Yellen, in a letter to the elected officials of the Congress.

More than $130 billion in pension, health and veterans payments in particular are expected in the first two days of June, which “will leave the Treasury with an extremely low level of resources”, she said. precise.

The challenge is to get Congress – the Republican House and the Democratic Senate – to vote quickly to raise the public debt ceiling, otherwise the United States could find itself in default, an unprecedented situation with economic implications. , potentially catastrophic financial and social.

This parliamentary maneuver has long been a formality for both parties. But this time the Republicans demand, in exchange for their green light, a reduction in public spending. Officially, Joe Biden refuses to negotiate, believing he is being held “hostage”.

In reality, the advisers of the two camps have been talking non-stop for days and, according to several American media, have already agreed on some main lines.

The agreement would freeze certain expenses but without touching the budgets devoted to defense and veterans, report for example the New York Times and the Washington Post. It would postpone for two years, until after the next presidential election, the risk of default.

“Two opposing visions at work”

Each camp wants to limit damage at the political level. Kevin McCarthy, who needs to assert his stature as Speaker of the House, could claim to have instilled more budgetary rigor, while the Democrats would claim to have protected social benefits or major investment projects.

The American president, campaigning for re-election, explained Thursday that “two opposing visions” were at work in these discussions. He posed as a champion of social and fiscal justice. But according to the press, the 80-year-old Democrat would have given up in these negotiations to increase as much as he wanted the means devoted to the fight against tax evasion.

If an agreement is found, it will still have to be adopted by the Senate, narrowly controlled by the Democrats, and by the House of Representatives, in which the Conservatives have a fragile majority.

The parliamentary calendar is constrained: many elected officials returned to their strongholds for a break of several days, on the occasion of the extended weekend of “Memorial Day”.

In addition, some progressives within the Democratic Party, like some elected representatives of the Republican Party, have threatened not to ratify, or to delay as much as possible a text that would make too many concessions to the opposing camp.

IMF Managing Director Kristalina Georgieva said Friday that finding a solution was “critical” for the global economy, while stressing that the United States should do “more to reduce public debt”.

With AFP