US debt ceiling dispute comes to a head

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On Monday, US President Joe Biden and the chief negotiator for the opposition Republicans, Kevin McCarthy, are set to meet again for a top-level talk. Time is of the essence: In early June, the US government is threatening bankruptcy if Biden’s team does not reach an agreement with Republicans in Congress on raising the debt ceiling by then.

Given the difficult negotiations, President Joe Biden on Sunday accused Republicans of taking extreme positions. Some of the proposals from the Republican negotiators are simply “unacceptable,” Biden said at his closing conference at the G7 summit in Hiroshima, Japan. Republicans need to understand that there can’t be a two-party deal that “exclusively, exclusively” follows their terms.

Biden said he was willing to cut government spending as the Republicans demand. But we also need to talk about government revenues, especially tax increases for top earners. The Republicans are not ready for that. Biden complained that there were major differences of opinion on this issue. “We can come to an agreement,” Biden stressed. “Default is not an option.”

In the US, parliament sets such a limit at irregular intervals and determines how much money the state can borrow. This time, the procedure has degenerated into bitter jerking, which carries great dangers: a default by the world’s largest economy could lead to a global financial crisis and an economic downturn.

The dispute had accompanied Biden during his visit to Japan. In Hiroshima, the president was regularly updated on the status of the negotiations. Because of the dispute, his participation in the G7 summit was sometimes even on the edge. Biden eventually canceled a scheduled visit to Papua New Guinea and Australia to return to Washington directly from Hiroshima on Sunday.

On his return trip to Washington, Biden called McCarthy en route after the Republican asked the president to speak. McCarthy rated the conversation as “productive”. Over the weekend, he again accused the government of abandoning a deal. The “socialist wing of the Democrats” controls the party, he said.

The world’s largest economy could go bankrupt on June 1, according to US Treasury Secretary Janet Yellen. The US would then no longer be able to pay most of its bills. Millions of people could lose their jobs as a result. In 2011, a Republican majority in Congress delayed raising the debt ceiling. At that time, the US credit rating was downgraded for the only time in history. (SDA)

Source: Blick