And the US president presented his opponent, Speaker of the House of Representatives Kevin McCarthy, with a proposal for cuts that would reduce federal government spending by “more than a trillion dollars over ten years”, according to what has been reported. reported by Agence France-Presse. .
This is in addition to Biden’s commitment to reduce the deficit, which exceeds three trillion dollars over ten years.
The source said the White House is ready to cap government spending for two years, while Republicans are calling for a longer term.
The informed source said there will be an opportunity available on Wednesday for the two negotiating teams to discuss the new proposals, as they resume their talks at noon at the White House.
The 80-year-old Democrat, who initially ruled out negotiating under threat of state bankruptcy, also offered to reallocate funds originally intended for the COVID-19 response.
On Wednesday, US Treasury Secretary Janet Yellen reiterated the need for Democrats and Republicans to reach a compromise on the public budget that would allow Congress to approve raising the public debt ceiling.
The Conservatives are linking their agreement to raise the public debt ceiling to an agreement to cut public spending.
And Yellen pointed out that if Congress, which is split between a Democratic Senate and a Republican House of Representatives, doesn’t act, “it seems almost certain that we won’t last beyond June.”
Yellen pointed out that “the payment system we are adopting is designed to pay the bills” to the government, not to “select which bills to pay”, leaving no room for the Treasury to prioritize payments over others.
And if no agreement is reached, “we will be able to default on some of our obligations, which is unacceptable”, according to Yellen.
As of June 1, the United States could find itself in a situation of default, that is to say that it will not be able to honor its financial obligations, whether in terms of salaries and pensions, or to pay their financial obligations to creditors.
Yellen said the Treasury Department would soon provide Congress with additional clarity on when the United States might go into default.
Analysts expect U.S. stock markets to suffer a temporary severe shock in the event that the U.S. Treasury is unable to meet all of its financial obligations.
Similarly, interest rates charged by investors on bonds issued by the United States are expected to rise sharply.
This rise in the cost of credit will lead to a drop in corporate and household investment, as well as consumption, which will lead to a severe recession in the United States, perhaps also in Europe and elsewhere.
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