Preliminary agreement in US debt ceiling negotiations Why there is hope in the conflict between the US and China

The US government and senior representatives of Congress reached a tentative agreement on Saturday (local time). The project still needs to be approved by Congress.

Broadcaster CNN reported that the negotiated text should now be checked and confirmed by the negotiators overnight. US President Joe Biden called Republican Speaker of the House of Representatives Kevin McCarthy on Saturday night.

The final agreement would need to be passed in both chambers of Congress and signed by the president as soon as possible to actually avert impending bankruptcy of the US government. This was preceded by a fierce row that even led US President Joe Biden to cancel trips abroad.

In the US, parliament sets a debt ceiling at irregular intervals and determines how much money the state can borrow. This debt ceiling of approximately USD 31.4 trillion has now been reached and the Ministry of Finance must draw on the capital reserves. Biden and his Democrats need the Republicans in Congress to raise the debt ceiling.

US Treasury Secretary Janet Yellen recently warned that the world’s largest economy could go bankrupt on June 5. This 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.

The dispute had dragged on for months. Senior officials from Biden’s team continued to negotiate during his trip to Japan for the G7 summit. Biden had previously emphasized that he had avoided default 78 times in US history. However, both Republicans and Democrats should be prepared to turn the corner. (sda/dpa)