* Dispute between Democrats and Republicans
* A bad outcome would trigger a global crisis
The United States, the first power and the most important economy on the planet, could start defaulting on government payments on June 1 if Congress does not increase or suspend the so-called “debt limit” by then.
We are witnessing another disturbing episode of the unique functioning of that democracy, which could have greater consequences for other countries, because a bad outcome -which has been ruled out for now- would unleash a serious crisis for the world economy.
In that country, in addition to approving tax and budget laws, Congress must specify how much the government can borrow to meet its obligations. It is the so-called “debt limit”, which ends up defining what programs the Executive can or cannot develop. Given that in recent years there has been rotation in the White House and in control of the Senate and House of Representatives by the Democratic and Republican parties, and that neither achieves large majorities over the opponent in the legislature, the “debt limit ” became a heated contest to impose wills, interfere or force decisions, in exchange for giving or obtaining concessions.
The announcement this week by the Treasury Secretary, Janet Yellen, that the “debt limit” is on the horizon, put the markets on alert for the enormous investments that the United States debt accumulates and for the debacle that it would mean a cessation of payments.
Acting on behalf of the Republicans, the current speaker of the House, Kevin McCarthy, said that they seek to contain growth and government spending, debt and deficits, for which they propose a substantive cut in federal spending that would affect important initiatives of the Biden government -clean energy, student loans, among others-.
The Democrats, for their part, remind them that it was the Republicans, in Trump’s time, who authorized the largest increases in spending with the consequent increase in deficits and call them to responsibility because, in their opinion, -with undeniable intentions policies-, they only want to ruin Biden’s administration at the compromising cost of affecting the economy and hurting middle-class Americans and, above all, the poorest.
Until now, the government and the Democratic congressmen are adamant in not negotiating on the “debt limit” and have even announced that only once the Republicans increase it, they will review the spending chapter with them.
The Republican response came from the House, which approved by 217-215 votes, a bill that patents his party’s project to condition the increase in the “debt limit” in exchange for a sustained 14% cut in spending during one of each. McCarthy says the decisions on this are now on the Democratic side.
Chuck Schumer, Senate Majority Leader, responded that it is the Republicans who have to negotiate down their parameters and that a reversal of the Biden government’s policies is out of the question. In the White House, they are studying the possibility that, if no agreement is reached in Congress, it is the president himself who approves the increase in the “debt limit”, based on a provision of the 14th amendment, which says that the validity of the public debt of the United States will not be questioned. If it were to occur, this event would generate an unprecedented confrontation between the parties and between the Executive and Legislative branches, which would take the final decision to the Supreme Court, dominated by conservatives.
The issue is at a point of maximum tension and the ticking of the clock is distressing, but it is possible that pressure from the business community and the financial sector will put the parties on the path of negotiation in the coming weeks. There are good grounds for achieving this, particularly since the Republicans have already announced that will not affect military spending, social security or Medicare, which accumulate the largest percentage of the budget. In any case, the turbulence sends another message to society about the urgency of correcting some rules of democracy that open up spaces for dirty play and spurious pressures between the parties.