The postponement of this important meeting on the US public debt has further complicated the political calendar in the face of the risk of default on the payment of US debt.
However, a source familiar with the discussions confirmed that this postponement was “positive”, explaining that “the teams continue their meetings, and it was not the right time to involve the leaders” at the highest level.
Sources close to the talks said the delay was a sign that talks at staff level were progressing.
“The White House did not cancel the meeting, and we all decided it was in our best interests to allow our teams to meet again before we see each other again,” Kevin McCarthy told a conference call. press.
Congressional Republicans are demanding that Biden agree to a significant cut in fiscal spending first, before agreeing to raise the debt ceiling by $31.4 trillion, a move that will allow the government to borrow more money. money.
And US Treasury Secretary Janet Yellen warned in early May that the United States, the world’s largest economy, was in danger of defaulting on its debts from early June.
The US government had already reached the statutory borrowing limit in January, and since then the Treasury Department has used special accounting measures to make cash available. Yellen told Congress that those measures could end on June 1.
On Thursday, the International Monetary Fund expressed concern about the “serious repercussions” on the global economy of the US default.
political machination
Democrats and Republicans are locked in a showdown over raising the debt ceiling, accusing each other of holding the world’s largest economy “hostage” to their policies.
This legislative maneuver is necessary so that the world’s largest economy can continue to borrow, pay its bills and pay its employees and creditors.
Former President Donald Trump stepped into the discussion by urging Republicans, over whom he still wields significant influence, on Wednesday to “cause a default” if Democrats did not agree to “massive cuts” in spending.
For his part, Biden wants an unconditional raising of the debt ceiling, arguing that Congress voted for a very long time, including the time of his predecessor, in this direction without any particular debate.
unemployment and deflation
The US president held a meeting on Tuesday with the leaders of the Democratic and Republican blocs in the House of Representatives and the Senate, including McCarthy, without reaching a solution.
And US Treasury Secretary Janet Yellen warned on Thursday that the mere thought of a default could “create significant economic costs”.
She added that “the mere threat of default could lead to a downgrade in our financial rating and an erosion of consumer confidence” while raising credit interest rates.
The White House says that if the United States does not repay the American debt, a situation that has never happened, unemployment will increase and the American economy will collapse almost immediately.
The political stakes for the two main parties, Biden and McCarthy, are high.
Biden, 80, a candidate for a new presidential term, has yet to improve his approval ratings, while McCarthy, barely elected by a narrow majority, must strengthen his position.
The US debt ceiling is currently around $31 trillion, a record high for all sovereign debt in the world in absolute terms.
This amount was recorded in mid-January, but the federal government has so far managed the situation through accounting maneuvers.
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