(WASHINGTON) Joe Biden said he was optimistic on Tuesday about the possibility of avoiding a US default, which could happen within two weeks, but the Republican opposition was more cautious, at the end of a meeting at the White House.
“There is still work on many difficult issues,” the White House said in a statement, but that Joe Biden is “optimistic” about reaching a “reasonable budget deal.”
The US President will meet again this week by phone with senior congressional officials. He will see them again in person after returning on Sunday from a trip to Japan for the G7 meeting.
The White House announced that Joe Biden canceled the major diplomatic tour he was scheduled to undertake in the wake of Papua New Guinea and Australia, as evidence of the urgency and difficulty of the discussions.
On the Republican side, on the other hand, the tone was more guarded. House Republican leader Kevin McCarthy, who was held with a narrow conservative majority, said this meeting was “a little more productive” than the previous meeting on May 9.
On it depends, to a large extent, the short-term financial fate of the United States.
“Our positions are still far apart, but what changed during this meeting is that the president chose two people from his administration to negotiate directly with us,” he told reporters in Congress.
“This does not mean that we will reach an agreement,” he said, but that “the process has improved.”
However, “I am not more optimistic,” said Kevin McCarthy, two weeks before the ominous date of a possible default by the world’s largest economy, an unprecedented scenario with potentially catastrophic consequences.
“catastrophe”
In the context of a presidential campaign, and in light of great political tension in general, neither the American president, nor the candidate for a second term, nor the governor, wants to be the one who closes his eyes first.
The White House has repeatedly warned of a possible default, a situation in which the federal government will not be able to pay a single penny, whether to pay salaries, pay social benefits or pay off creditors.
It would be “catastrophic” and “devastating for America and, frankly, the entire world,” Joe Biden said in a video posted to Twitter before the meeting.
This unprecedented scenario of US default threatens from 1any June if no agreement is found in Congress to raise the authorized public debt ceiling.
“We urge an agreement to be reached quickly so that the country can avoid this potentially devastating scenario,” urge more than 140 CEOs of American companies, including giants Pfizer, Morgan Stanley or even Goldman Sachs, in an open letter sent to the White House and officials Congress on Tuesday.
The parliamentary calendar complicates matters further. The House of Representatives and the Senate, which together constitute Congress, which must also vote on debt, do not meet at the same time, until 1any June, for four days only.
Many options
The US Congress must regularly—and this is state-specific—raise the ceiling on the public debt.
However, Kevin McCarthy’s Republicans refuse to vote in this direction as long as Joe Biden does not accept deep budget cuts.
The White House is officially refusing to negotiate raising the debt ceiling, a long routine procedure that, according to Joe Biden, should not be politicized because debt has been racked up by governments on both sides.
But in reality, there are several options on the table.
Thus Republicans and Democrats can agree that several tens of billions of dollars planned for the response to the COVID-19 pandemic, but never used, will be scrapped, in order to reduce public spending.
There is also a discussion, according to the American press, of allocating permits in the energy sector, and tightening the conditions for allocating some social benefits.
This last option infuriates some elected Democrats on the far left, for example Senator Elizabeth Warren, who on Tuesday denounced at the Capitol “an attempt, pure and simple, to deny people the benefits they depend on to survive.”
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