There is no US debt deal yet
A just over a week as of June 1, the positions of Republicans and Democrats on raising the US debt ceiling remain distant. Yesterday, May 22, the president Joe Biden met the speaker of the House, the Republican Kevin McCarthyhowever, without significant progress being made. “No agreement, but a productive confrontation”McCarthy said as he walked out of the meeting.
But there is no talk of a possible agreement yet. The United States could fail to honor their obligations since 1 Junesince they are left alone in the federal coffers 57 billion dollars. Wall Street is watching the heated debate between the two sides carefully. Although among analysts it is widespread opinion that an agreement will come in good time to avoid default. An American default, event Without precedentswould have imponderable consequences on world markets and on the economy.
Previous
The debt negotiation between the White House and Congress is one scenario now frequent. During the Reagan presidency the roof was raised 18 times, eight with Bill Clinton and seven with George W. Bush. During the Obama administration, the ceiling was raised 11 times (for a total increase of approximately $6.5 trillion). During administration Trump, for three years out of four the agreement came after lengthy negotiations. In the 2011, during the Obama administration, there was the most sensational case among the recent ones. After a long confrontation, the Republicans got a clear political victorywith an agreement that involved cutting public spending and canceling new taxes for the wealthiest.
The agreement was found just two days from the date on which the US would have exhausted the available cash. In the meantime, however, the offices of the federal administration were temporarily closed due to the government’s inability to pay salaries and services, S&P downgraded US debt from AAA to AA+ and the stock market suffered a sharp correction.
What is the debt ceiling
Raising the debt ceiling allows the US to spend the money already allocated in programs that have been authorised by Congress. The measure was introduced in its current form in 1939. Until 1917, however, Congress had to vote on every spending measure of the federal government.
Il January 19th this year the Treasury Department reported that payments exceeded receipts. Among the emergency measures taken there were late paymentsbut this expedient will be possible, as the Treasury secretary underlined Janet Yellen, until June 1st. After that, the government will run out of cash if the deficit ceiling isn’t raised or frozen. Last year for the first time the public debt has exceeded i 31 trillion dollars. It currently amounts to 31,400 billion, equal to 120% of GDP Usa.
What happens without agreement
Without an agreement to raise the debt ceiling, the US government will not be able to take on new debt. That is, he won’t have enough money to pay accounts with i providersi employees federal, the interests accrued by holders of government bonds. Economists believe the economic scenario would be devastating and it could have effects on employment, with eight million jobs at risk, and on world markets.
The clash at work
One of the points of confrontation between Democrats and Republicans concerns the Biden administration’s labor policies. Conservatives accuse the Biden administration of encouraging the poor not to work. For the Democrats, support for the underprivileged has made it possible to reduce by 46% poverty among minors in 2021 alone. The extension of themedical assistance for the poor, moreover, it is considered by the Dems necessary to guarantee treatment for those who cannot afford private insurance.