Biden announces final settlement in debt dispute
After weeks of tough negotiations on the debt ceiling, the US government and opposition have finally reached an agreement. President Joe Biden speaks of a “really important step forward”. But Congress still has to approve it.
US President Joe Biden has announced a final agreement in the dispute between the government and opposition over raising the country’s debt ceiling. “Good news,” he said Sunday night at the White House: “The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history.”
The threat of a “catastrophic default” is off the table. He appealed to both parties in Congress to approve the plan quickly. “The Speaker of the House and I have made it clear from the start that the only way forward is bipartisan agreement,” he said.
Biden had negotiated again with the Republican Speaker of the House of Representatives, Kevin McCarthy, after both had already announced a “basic agreement” on Saturday evening (local time). Until the agreement has passed Congress, there is still a risk of default on June 5th. That’s the ultimate deadline that Treasury Secretary Janet Yellen recently set for reaching the debt ceiling.
The corresponding draft law was published on Sunday evening shortly after Biden’s comments in the White House. It is 99 pages long and calls for spending cuts along with increasing the country’s borrowing capacity. It can now be examined by MPs from both parties before it is expected to be voted on in the House of Representatives on Wednesday.
With a view to the upcoming vote in the Senate, Republican Senate Minority Leader Mitch McConnell has already called on his colleagues to approve the bill. They must “act quickly and adopt this agreement without undue delay,” he said.
The negotiators from Democrats and Republicans worked hard on the draft text on Sunday. The agreement is based on compromises that are likely to have a hard time on both the right-wing fringes of the Republican party and the left wing of the Democrats. Republicans sold the deal as a success for the party. However, it fell partially short of the level of spending cuts they were aiming for.
McCarthy: Democrats ‘got nothing’
McCarthy told reporters that not everyone got what they wanted in the deal. Privately, he told Republicans in a switching conference that the Democrats “got nothing.”
The coming days will decide whether the country succeeds, as so often in the past, in a impending payment default averted at the last minute – or whether, if the project fails, a crisis threatens not only the USA but the global economy.
Analysts have warned that such a situation could result in an international financial crisis, destroying millions of jobs and soaring the cost of credit and unemployment. The market for US Treasury bonds is likely to collapse.
Biden said he’s confident the plan will make it onto his desk to go into effect after Congress approves it with his signature. McCarthy was also optimistic.