America Moves Away From The Debt Abyss For Now

The United States temporarily moved away this Thursday from the catastrophe that would mean the default on its debt, when Democrats and Republicans in Congress reached an agreement to raise the debt ceiling until December.

After days of tension, in the morning he announced the “good news” of an agreement between the parties to raise the debt limit, which will last until December 3.

If the test passes as planned, the House of Representatives, in turn, will have to give the green light, which will not be until next week, so that President Joe Biden can enact it.

“The Senate is moving toward the plan I laid out yesterday to prevent Americans from suffering a crisis created” by the Democrats, said the leader of the Republican senators, Mitch McConnell.

Encouraged by hope for a deal, Wall Street opened higher on Thursday.

But this advance angered several Republicans on Thursday, including former President Donald Trump, for whom Mitch McConnell “leaned” toward Democrats.

“Do politics with our economy”

But the locks are not going to go away, however. Republicans steadfastly refuse to pass any measure to raise the nation’s borrowing cap because they say it would be like giving Biden a blank check to fund his massive investment plans.

By offering temporary respite to avoid a debt crisis, McConnell urged Democrats to reach a lasting solution using a complex legislative avenue.

But President Biden’s camp has so far refused to use this “too risky” maneuver for debt.

The White House reacted lukewarm to this deal. “This gives us a little time but it doesn’t solve the problem,” said Jared Bernstein, one of the president’s economic advisers. “Spending two more months arguing about this does not resolve the uncertainty.”

And onboard Air Force One, Karine Jean-Pierre, a White House spokeswoman, accused McConnell of “doing politics with our economy.”

In reality, the deal reached Thursday only postpones until late November a promising parliamentary battle over America’s finances.

Because, in parallel with the debt limit, Congress will also have to agree before December 3 on a new budget if it wants to avoid the paralysis of federal services, a situation also known as “government shutdown” or ‘shutdown’.

The confluence of these two threats heralds a busy few weeks on Capitol Hill.

Democrats hope, however, to take advantage of this respite on the financial front to focus in the coming weeks on difficult negotiations within the party itself to adopt Biden’s two big investment plans, in infrastructure and social reforms.

Political pressures

The United States Treasury has set October 18 as the date from which the world’s largest economy may find itself insolvent if its Congress fails to increase the country’s borrowing capacity.

The pressure had been mounting very clearly in recent days on Republicans, especially from Biden.

The US president, weakened by the chaotic withdrawal from Afghanistan, and amid intense discussions in his party to carry out his main economic and social reforms, did not want to have a financial cataclysm as well.

The president invited great Wall Street figures to the White House on Wednesday to warn them about the consequences of a ‘default’, which would be the first in the history of the United States.

The United States, which like almost all major economies has been living on credit in terms of public spending for decades, has already repeatedly raised this famous debt “ceiling”.

But Republicans already began during the presidency of Barack Obama, Trump’s predecessor, to use this routine legislative maneuver as an instrument of political pressure.