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Showdown between Democrats and Republicans over the US debt ceiling

Lobbies from financial circles, but also the boss of the giant Amazon, called on Tuesday, September 14, the US Congress to immediately raise the debt ceiling, which the elected Republicans again refused to support.

“Failure to meet our existing obligations would be irresponsible and cause irreparable harm to the economy and to American taxpayers”, warned these organizations representing the banking and financial sector in a letter to elected officials.

The debt ceiling has been in effect again since 1er August, after two years of suspension thanks to an agreement between the Trump administration and Congress. Without a new deal, the US will run out of money “During the month of October”, had warned the Secretary of the Treasury, Janet Yellen, last week.

The irony of the republicans

The level of the country’s commitments relative to the debt ceiling is “Scary for consumer confidence and for confidence in US businesses and potential credit ratings if we don’t make sure to raise that cap.”Amazon boss Andy Jassy commented on CNBC on Tuesday.

Republican Senate Leader Mitch McConnell, meanwhile, told Democrats they should fend for themselves. “Democratic leaders have all the tools and procedures they need to manage the debt limit on their own, the same way they choose to manage everything else.”, he quipped Tuesday, in reference to a provision allowing the majority to pass its bills with its only votes.

The Democrats are considering bypassing the Republicans to adopt Joe Biden’s social spending plan of $ 3.6 trillion. On the other hand, they would like to obtain the support of the opposition for raising the debt ceiling.

“Irreparable damage”

Senate Democrat Leader Chuck Schumer recalled that “When President Trump was in power, Democrats worked three times with Republicans to suspend the debt ceiling and continue to ensure that the United States was able to pay its bills.”.

“If the United States defaults on its debt, it will hurt all Americans. (…) The consequences would reverberate around the world, and it could cause irreparable damage to the global economy, at a time when we are all working to get out of a once-in-a-century pandemic ”, he alerted.

The country would then no longer be able to repay its loans, pay the salaries of federal employees or their pensions. It would also trigger a global financial blast, and increase short-term borrowing costs for households.

In 2011, the rating agency Standard and Poor’s withdrew its AAA rating in the country, sanctioning long months of political blockage on the same subject.

The World with AFP