The debt limit dispute must be resolved

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This Tuesday (9 p.m. CET) he will once again invite senior Republicans and Democrats to a meeting at the White House. Such a meeting had already taken place last week – without a breakthrough. For the Biden administration, US bankruptcy is not an option. If the debt ceiling is not raised soon, it could happen.

For the US president, time is of the essence for another reason: on Wednesday he wants to travel to the G7 summit in Japan, and from there to Australia with a stopover in Papua New Guinea. During the trip, his ability to personally handle internal affairs is somewhat limited.

In the US, parliament sets a debt ceiling at irregular intervals and determines how much money the state can borrow. The debt ceiling is currently around USD 31.4 trillion (about EUR 28.6 trillion). This debt ceiling has now been reached and the US Treasury has to draw on the capital reserves – because the US is now no longer allowed to take on new debt to pay its bills. Biden and his Democrats need the Republicans in Congress to raise the debt ceiling. However, they oppose an increase without significant cuts in certain government spending.

To resolve the dispute, Biden is now once again inviting the summit meeting, which will include Republican Speaker of the US House of Representatives Kevin McCarthy. He was not very optimistic about the upcoming date: “I still think we are far apart,” the Republican said in Washington on Monday. Biden, on the other hand, was cautiously optimistic this weekend. “We are making progress,” he said. However, the “crucial point” has not yet been reached.

US Treasury Secretary Janet Yellen warns of possible government bankruptcy on June 1. A default by the world’s largest economy could lead to a global financial crisis and a serious economic downturn. The US would no longer be able to pay most bills – millions of people could lose their jobs as a result. When a newly elected Republican majority in Congress delayed raising the debt ceiling in 2011, the US credit rating was downgraded for the only time in history. The dispute over the upper limit is usually fought bitterly to the last moment. So far there has been no serious payment arrears.

Biden was open to talking about spending cuts with Republicans — “but not under the threat of bankruptcy.” The Democrat also did not rule out canceling upcoming trips abroad if the dispute is not resolved. However, National Security Council communications director John Kirby expressed optimism on Monday that this would not be necessary. “We intend to carry out this trip as planned,” he said. At the moment there are no plans to shorten the trip. Kirby said that for any trip the president will take — no matter when or where — events at home can influence the schedule.

(SDA)

Source: Blick