Default of payment | Biden will try to unblock the situation with McCarthy

(Washington) As an American default threatens, Joe Biden tries again on Monday to find a compromise with Kevin McCarthy, his main opponent in a showdown as much political as budgetary.

The two men, who have already seen each other twice in two weeks with other parliamentary leaders, this time have a one-on-one meeting at 5:30 p.m. local time.

Their teams have already resumed talks that had frankly turned sour over the weekend.

It took a telephone conversation on Sunday between the American president and the Republican boss of the House of Representatives to resolve the situation somewhat.

Kevin McCarthy deemed the exchange “productive”, according to American media, and Joe Biden launched that it had “gone well”, returning to the White House on Sunday evening after a G7 Summit in Japan.

The 80-year-old Democrat had originally planned to extend his diplomatic tour in Oceania, to assert the American presence in the face of Chinese ambitions, but the politico-budgetary imbroglio in Washington forced him to give up this segment of the trip.

Hostage

To remove the risk of bankruptcy, Congress – the Senate held by the Democrats and the House with a Republican majority – must vote to raise the maximum authorized public debt ceiling. This parliamentary procedure, long routine, has already given rise to extremely politicized battles under the Obama presidency.

This time the Republicans require, to give their green light, a sharp reduction in public spending. Joe Biden, who is campaigning for re-election in 2024 on a social justice pledge, opposes it.

The conservative camp accuses the White House of being too spendthrift. The presidential party for its part castigates a republican project which would finance tax gifts to the rich by strangling the working classes.

Republicans and Democrats, on the other hand, are in unison on one thing: it is the opposing camp that is holding the country “hostage” with the risk of bankruptcy.

Asked about CNN, Kevin McCarthy said he was “very confident” in the ability of both sides to avoid default, recalling that, without a cross-party agreement, “the law raising the ceiling is on the Senate desk”.

This text, which had been adopted in the House of Representatives, with a Republican majority, however, has little chance of passing the Senate to be adopted, the majority there being Democrats.

Mr. McCarthy, however, was positive, assuring that “what we have negotiated will be seen by a majority of Republicans as the right solution to get us back on the right track”.

The American president warned him that he would refuse any agreement that would “endanger the health care of 21 million Americans” or “food aid” for the most precarious.

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If no agreement is reached, an unprecedented payment default, with potentially catastrophic consequences for the American and global economy, could occur after the 1^er June.

The “debt ceiling”, greater than 31 trillion dollars – a record in the world – was reached several months ago, but the federal government has so far managed the situation through accounting arbitrations.

In the event of default, the United States would no longer be able to repay holders of Treasury bills, this king of global finance investments. The government could also no longer pay certain salaries of civil servants, nor pensions for veterans, among others.

So, who will give in first? The American president, who knows well that an economic rout, whatever its political genesis, would compromise his chances of re-election? Or Kevin McCarthy, whose position depends on a handful of elected radicals, who call on him – like former President Donald Trump – not to “bend”?

The left wing of the Democratic Party is pushing Joe Biden to force through by invoking the 14^e amendment to the US Constitution, which prohibits “questioning” the solvency of the world’s leading power.

In this case the government would issue new loans, as if the debt ceiling did not exist.

Joe Biden is studying this possibility, fraught with legal dangers, especially when one faces like him a Supreme Court firmly anchored on the right.