Democrat Biden will host the two Republican congressional leaders, House Speaker Kevin McCarthy and Senate Minority Leader Mitch McConnell, at the White House in a meeting that will kick off a decisive round in a struggle for influence economic situation between the two parties and their eyes on the 2024 presidential election.
The debate revolves around raising the ceiling on the public debt, a routine measure adopted without any controversy, since the American government often spends more than its budget, but it cannot borrow more without the approval of Congress.
But this year, Republicans have demanded that they agree to raise the debt ceiling, and thus prevent Washington from defaulting on its debt, that Biden first agree to major budget cuts, in line with the position according to which the president was wasteful and irresponsible in his economic management.
Days before the meeting, which will be attended by House Democratic Minority Leader Hakeem Jefferies and Senate Democratic Majority Leader Chuck Schumer, Biden accused Republicans of taking the country’s economy ” Held hostage”.
Biden, who hopes to win a second presidential term in the 2024 election, stresses that the priority is to raise the debt ceiling, and then it is possible to discuss budget cuts to reduce the debt by $ 31 trillion, which is the largest in the world.
While the debate over which stage precedes the other is normal, it has turned into a test of political will, with each party clinging to its position despite the fact that time is running out and the possibility that States States do not repay their debt. seriously begins to loom on the horizon.
What would it mean for the world’s largest economy to default on its debt? The possibilities are multiple: triggering of a wave of panic whose effects will perhaps not be limited to the United States, sharp rise in interest rates, sale of equities, downgrading of the rating of Treasury bonds.
A White House analysis warned that “the impending breach of the US debt ceiling could cause significant disruption”, but its actual occurrence would “likely cause serious damage”.
When does this date arrive? Nobody has an exact answer, but the estimates speak of the date of June 1, that is to say only three weeks after the meeting on Tuesday.
Do not negotiate “under threat”
As the date approaches, the gap between Biden and the Republicans seems to widen.
According to the far-right Freedom Caucus, which virtually dominates Republican decision-making in the House of Representatives, the White House is adhering to an “irrational and reckless” strategy on the issue of the public debt ceiling.
For his part, Biden rejects any change in his position.
The president, who has reached the age of eighty, is counting on the economic recovery from the consequences of the pandemic obtained during his first term as the winning card in the battle for the 2024 elections.
If the preservation of these achievements can be for him an additional reason to avoid a new crisis, he does not wish to submit to Republican pressure to link raising the debt ceiling and reducing the budget, believing that this will transform a simple and essential in issue subject to political back and forth.
Biden said Friday that Republicans want to “hold the debt hostage to push us to accept some unfair cuts.”
“We can discuss what we can cut, how much to spend, but not under the threat of default,” he said, adding, “That’s why we have a budget track to discuss. publicly”.
Biden recalled that Republicans voted unconditionally three times to raise the debt ceiling during the tenure of his Republican predecessor, Donald Trump. “Nobody ever refused to vote in favor of raising the debt ceiling,” he added.
And he stressed that he would tell Republican leaders on Tuesday that they should “do what every other Congress has done, which is to raise the debt ceiling and avoid defaults.”
Analysts speak of the existence of several exits to avoid default in the short term, including, for example, the conclusion of an interim agreement to raise the debt ceiling that allows the completion of arduous negotiations.
Another solution could be the conclusion of an agreement providing for a commitment on budgetary levies to be determined later in exchange for an increase in the debt ceiling, but which threatens to cause the country to repeat this tension the year next, with the complications that entails. during the presidential election year.
And if all solutions fail, the White House has not ruled out resorting to a constitutional power that would allow it to bypass Congress and unilaterally authorize raising the borrowing limit, even if such a step may cause controversy and be challenged in Parliament. courts.
And Biden confirmed, in an interview with “MSNBC” on Friday, that things “have not reached that point yet.”
As the world waits for the economic conclusion of this attraction, it seems that the Biden administration is also looking to play on the political nerve and the impact of this internal crisis on Washington’s external position in the face of opponents like Moscow and Beijing. .
“They want to see chaos in the American system. They want to see that we are unable to perform our basic functions,” said Shalanda Young, director of the White House Office of Management and Budget.
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