The threat is over, for now. An agreement has been reached in the United States Congress to avoid a potentially catastrophic default by the United States, announced Thursday (October 7th) the Democratic leader of the Senate, Chuck Schumer. The country’s debt limit is set to be raised by $ 480 billion, which would allow it to honor its payments until early December.
The Senate approved the text, Thursday afternoon, by 50 votes to 48. The House of Representatives, with a Democratic majority, must vote it probably in the middle of next week.
If the temporary agreement reassured Wall Street, which ended up, it neither calmed the climate on Capitol Hill, nor completely satisfied the White House.
“The Republicans have played a dangerous and risky game”, thundered the leader of the Democrats in the Senate, Chuck Schumer, denouncing the opposition’s categorical refusal to approve with them a more lasting measure. “What we need now is a long term solution, so that we don’t go through this risky drama on a regular basis, and we hope the Republicans will join us.”, he continued.
His wrathful tone outraged some of the 11 Republicans who had just voted with the Democrats in a crucial procedural step in reaching the final vote.
An agreement due to the leader of the Republicans
Among them was Republican leader Mitch McConnell, who proposed the deal in order to avoid “A crisis provoked” by Democrats, he said. With this proposal, this veteran of Congress offered a temporary way out for the two camps, which were encysted in diametrically opposed positions.
But this advance also enraged several Republicans, on the same line as Donald Trump, for whom Mitch McConnell “Folded” in front of Camp Biden. “Republican senators: do not vote for this terrible agreement”, had launched the former president just before the procedural vote.
Even though the White House said the Democratic president ” looked forward “ to sign this agreement, she also expressed her distrust of a temporary solution. December 3 “Is a short time” and “Uncertainty remains in the longer term”, Secretary of the Treasury Janet Yellen explained on CNN.
Republicans are refusing to endorse any long-term measures to raise the debt ceiling because they say it would be like giving a blank check to Joe Biden to finance its vast investment plans.
These plans have not yet been adopted by Congress. Raising the debt ceiling is used to repay sums already borrowed, including trillions of dollars spent under former President Trump.
By offering temporary respite to avoid a debt crisis, Mitch McConnell urged Democrats to reach a lasting solution by December, on their own, through a complex legislative path. But President Joe Biden’s camp has so far refused to use this maneuver “Too risky” for the debt.
The battle for finances is yet to come
Because in parallel with the debt limit, Congress will also have to agree by early December on a new budget if it wants to avoid the paralysis of federal services, the shutdown.
The Democrats hope, however, to take advantage of this respite on the financial front to focus in the coming weeks on the difficult negotiations within their party to adopt the two major investment plans wanted by Joe Biden, in infrastructure and social reforms.
The US Treasury has set October 18 as the date from which the world’s largest economy could be in default if its Congress fails to increase the country’s debt capacity.
The pressure had been mounting very clearly for several days on the Republicans, especially from Joe Biden. The American president, weakened by the chaotic withdrawal from Afghanistan, and who is also struggling to get his major economic and social reforms through, did not want a financial cataclysm in addition.
The United States, which like all major economies, or almost, have lived on credit for decades in terms of public spending, have already raised this famous “ceiling” countless times.
But the Republicans had started during the Obama presidency to use this routine legislative maneuver as an instrument of political pressure.