(Washington) “Nothing has changed” but the discussion continues: Joe Biden and tenors of the opposition stuck to their positions on Tuesday on the American public debt, while a default threatens in the short term.
“I hope this president understands that as the leader of this nation, you cannot […] hold the country hostage,” said Republican Kevin McCarthy after an interview in the Oval Office.
According to the Speaker of the House of Representatives, “nothing changed” after an hour-long exchange with the Democratic leader and three other Congress leaders.
But he signaled that the same protagonists would meet again on Friday, which was confirmed by Joe Biden, who wanted to be a little more optimistic during an exchange with the press.
He spoke of a “productive” meeting and promised that he would do “everything in (his) power to avoid” a default by the world’s leading power, which has never happened. This is “not an option”, he hammered.
The president even considered it “possible”, if the blockage continues, to cancel a trip to take him in ten days to Japan then to Papua New Guinea and Australia in order to strengthen American alliances in the area. Asia Pacific.
“Hostage”
The leader of the Senate Democrats Chuck Schumer for his part returned the politeness to his Republican opponents, also accusing Kevin McCarthy of holding the debt ceiling “hostage”, because it conditions the vote of an increase in the debt ceiling to budget cuts.
This legislative manoeuvre, specific to the United States and which consists in increasing the maximum amount of authorized public debt, is essential to prevent the world’s leading power from finding itself, perhaps from the 1er June or at least this summer, unable to pay its bills, officials and creditors.
In this affair where each camp accuses the other of blackmail at default, the White House insists that raising the debt ceiling, long a mere formality, must be voted on without conditions or negotiations.
The Conservatives are asking for the debt issue to be linked to an effort on public spending, which they consider to be out of control.
Joe Biden has ruled out, due to legal complications, resorting in the short term to some kind of coup that would see him invoke the 14e amendment of the American Constitution in order to continue to issue debt despite the famous ceiling.
But he said that once the current crisis is over, he intends to think about it to “see if it works”.
This political stalemate, if it is not completely new – Republicans and Democrats had already engaged in similar contests during the presidency of Barack Obama – nevertheless already arouses the feverishness of the markets.
Political stake
To lift the threat of a default, Joe Biden needs to convince some of the Republican senators, for lack of a sufficient majority in the upper house.
Above all, he needs to find common ground with Kevin McCarthy.
The Democratic president and the Republican leader are playing big: the credibility of the American debt, but also their political credit.
The first, at 80, is a candidate for re-election and is unable to boost his low popularity rating. The second, elected with difficulty at the head of the lower house by a slim majority, must consolidate his position.
The debt ceiling is currently set at some $31 trillion – the record for all sovereign debt in the world in absolute terms. This amount was reached in mid-January, but the federal government has so far managed the situation through accounting manoeuvres.
If the impasse continues, for the first time, holders of US Treasury bonds, the king of global finance, could no longer recover their stake.
So, the White House assures him, the robust recovery for which the American president takes credit is over: the markets would collapse, the recession would be historic and unemployment would soar sharply in the United States – with consequences for the whole world. ‘Mondial economy.