That is why, after the split in recent days between Republican negotiators and the White House, The president brought it up again with a phone conversation with House Republican Leader Kevin McCarthy From Air Force One on the return flight from Japan, and met him during the night in Washington. This time, the positions of the two fronts are very far apart, and the negotiators are conditioned by the radical wings of the two parties, which made them take a divergent stance. Really tough deal. They can also find a middle ground, but both risk repudiation of large parts of their political forces Congress that fails to approve an increase in the public debt ceiling (currently set at $31.5 trillion) before the treasury ran out of available funds and was forced to declare default because it could no longer meet its obligations. Janet Yellen, the head of the Treasury, guarantees that she will be able to keep the situation under control only until June 1. From that moment on, anything could happen, even if the real insolvency occurred a few days later, about the 10th or 15th of June at the latest.
It would be an economic disaster, and not just for the United States: For Moody’s Analytics, a default could cause a slump with Unemployment that will rise from the current 3.5 to 8 percent because 7 million Americans will lose their jobs While the stock market loses a fifth of its value.
Faced with such a catastrophe—but even half of it would suffice—the Americans would condemn both the White House and the Republican opposition without appeal, without distinguishing too much about responsibilities. Biden and McCarthy know this: They both have an interest in finding a middle groundor. The Chief tacitly admits that he has been conning for months claiming there is nothing to negotiate over it Congress must allow the government to fulfill its obligations With laws passed by the same parliament: now, however, he is negotiating some spending cuts, even if he cannot accept radical interventions on social spending and environmental investments.
A few days ago, the agreement seemed imminent. Then McCarthy, who if admitted too much risked losing Trumpian right votes and even frustration as Speaker of the House, hardened his stance: He wants to spend no more than 2024 this year And that’s some Social benefits (Food vouchers for nutritional support for the poor, assistance for needy families, medical assistance, and public health for indigent adults without children) Pay only for active job searches.
At this point, Biden also got tough: Negotiate cuts and He has given up on talking about raising taxes on the super-rich (a measure that has also been at the heart of his economic platform), but if he abandons welfare and the environment, he risks breaking with the left of Bernie Sanders and Alexandria Ocasio-Cortez. The liberal wing says Biden should stop negotiating and override the Republican veto Appeal to the Fourteenth Amendment to the Constitution under which the validity of American religion cannot be questioned.
Biden does not intend to go down this path except in an extreme emergency: he claims Having the power but not having the time to solve a series of legal problems can throw the markets into uncertainty. It is the “nuclear” option that keeps the negotiating table moving forward.
But the feeling is that after a 15-year “recreation”, consisting of cost-of-money reduction and also deficit spending to counter the effects of the Great Recession of 2008, then the economic consequences of the pandemic, and finally that energy crisis and the war in Ukraine, The issue of public debt has once again become central throughout the world. Especially In the United States, where debt has increased from $10 billion in 2008 to nearly $32 thousand today. With a doubling of GDP: from 60 to 120 percent
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