After a tough struggle, there is a compromise between Democrats and Republicans in the US debt dispute. The key issue is raising the debt ceiling. But the deal could still tip over.
These are the words many Americans have been waiting for: “After weeks of negotiations, we have agreed in principle on a deal,” said House Speaker Kevin McCarthy. And it was high time. Because in just eight days, the United States would probably not have been able to pay their bills.
McCarthy used this time pressure to push through one of the Republicans’ most important demands. President Joe Biden’s government has agreed to “historic cuts” in government spending. There will be “consistent reforms that will bring people out of poverty into work”. And there will be no new taxes. However, the details still need to be clarified.
“Not everyone gets what they want”
It is not an easy concession for President Biden, because he actually wants to spend more money, for example on climate protection. And Biden needs success because he wants to be re-elected next year.
Nevertheless, Biden was relieved in a written statement. “The agreement is a compromise – which means that not everyone gets what they want. This is good governance,” it said. It is good news for the American people because it will prevent a catastrophic default that could have led to an economic recession, the loss of pensions and the destruction of millions of jobs.
Congress has yet to approve it
So everything ok? Not yet, because Parliament has to approve the deal. Voting is scheduled for Wednesday. And depending on the details, there could still be problems for the two negotiators.
Among the Republicans, some right-wing hardliners might veer away, for whom the whole thing doesn’t go far enough. Republican MP Tim Burchett had already told CNN before the deal was announced that he would not agree to further raising the debt ceiling. The US must return to “financial sanity,” Burchett stressed. You can’t continue to spend so much money, both parties have to stick to it.
Resistance could also threaten from the democratic camp
And on the Democrat side, too, critics from the progressive camp could oppose large budget cuts. For example, Democratic MP Maxwell Frost emphasized in a CNN interview – also before the agreement was announced – that these are difficult times because the issue of debt is being used to advance a political agenda. Republicans would combine the two because that’s the only way they could get spending cuts that hard.
The parliamentary vote could still become a power test for Biden and McCarthy.