Trade is becoming increasingly strained in the United States. This Friday, the chapter concerning the negotiations on the American debt could not really find a conclusion. Joe Biden, for his part, warned that he would not give in to the “extreme” demands of the Republicans, but he also said he was optimistic about the ability to reach an agreement in the coming days. “I still think we will be able to avoid a default” of payment, he assured journalists on the sidelines of the G7 summit in Hiroshima (Japan).
The Democratic administration and the Republican opposition are engaged in a race against time to avoid a payment default by the United States. This could happen from June 1, with potentially catastrophic consequences for the US economy, and even the world.
“The differences are great”
On Friday, House Republican Leader Kevin McCarthy left the negotiating table with Republican Representatives Garret Graves and Patrick McHenry. The discussions then resumed shortly after this “pause”. Republicans are demanding drastic government budget cuts before giving the green light to raising the debt ceiling. “The differences are great on many subjects,” lamented Friday Patrick McHenry, quoted by the site NewsNation.
A few moments earlier, it was the White House which had admitted to stumbling over “real differences” with the Republican opposition and indicated that the discussions were “difficult”. But the resumption of negotiations makes us “optimistic”, White House spokeswoman Karine Jean-Pierre said on Saturday. “Discussions just ended a few moments ago” in Washington, she assured.
A shortened visit to the G7
If Joe Biden will not accede to the “extreme” demands of the Republicans, “there is a way to find a reasonable bipartisan agreement if the Republicans return to the negotiating table in good faith”, indicated for his part the director of White House communications Ben LaBolt.
The negotiations are taking place in the absence of President Joe Biden, who is in Japan for the G7 meeting. He cut short his Asia-Pacific tour due to the US debt crisis and is due to return to Washington on Sunday after the Hiroshima summit ends. “He is informed daily” of the state of the negotiations concerning the debt, and this “several times a day”, specified the spokesperson for the White House.
Cut $130 billion
The sticking point between the two camps: the Republicans’ demand to reduce federal spending, to bring it back to 2022 levels. That is to say, cut $130 billion in spending. “We can’t spend more money next year,” said Kevin McCarthy. A red line that the Democrats refuse to cross.
The Biden administration has meanwhile pushed to extend the borrowing limit until 2025, according to US media citing officials involved in the talks. The Democrats want to believe that an agreement remains possible if the two parties agree not to obtain satisfaction on all the demands, according to a source close to the discussions.
” Hurry up “
And again, both sides blame each other. “It is high time for the White House to get serious. Time is running out,” tweeted Mitch McConnell, Senate Republican Minority Leader, accusing Joe Biden of waiting months before agreeing to negotiate with Kevin McCarthy. Congressional Democrats, meanwhile, are expressing growing concern over demands from Republicans to impose tougher work requirements on recipients of certain welfare benefits.
“Republicans are threatening to crash our economy unless we cut Medicare, evict thousands of people from their public housing, and put nearly a million Americans out of work,” lamented elected Democrat Nanette Barragan, in a tweet. And to add that “their plan puts politics before human beings”.
On Wall Street, the stock market which was confident Friday morning after the optimistic comments of the day before, turned red in the middle of the session. The Dow Jones index ended the day down 0.33%, and the Nasdaq 0.24%.