United States: Congress finds short-term deal to avoid default
US Senate Majority Leader Chuck Schumer after the Senate reaches an agreement, in Washington on October 7, 2021. REUTERS - LEAH MILLIS
Text by: RFI Follow
2 min
In the United States, the specter of default is receding, at least until December.
After a night of negotiations in Congress, senators agreed to raise the debt ceiling.
A
minimum
agreement
found
in extremis
.
Advertising
Read more
It was absolutely necessary to find a solution to avoid the catastrophic scenario of a default on October 18, when the US Treasury estimated that the country would be short of liquidity.
The only way: raise the debt ceiling currently limited to the staggering sum of $ 28.4 trillion.
This decision required the agreement of parliamentarians.
In the Senate, Democrats were hoping for a long-term resolution, reports our Miami correspondent
David Thomson
.
No question for the Republicans, for whom these negotiations are a powerful lever of political pressure on the Democrats.
► See also: United States: Joe Biden denounces the attitude of Republicans towards the risk of default
On Wednesday evening, their leader, Mitch McConnel, therefore proposed a
minimum
solution
: raise the ceiling, but only until December. A compromise accepted this Thursday morning by the leader of the Democrats in the Senate Chuck Shumer. "
I have good news
", he declared in the hemicycle, announcing the agreement. He said he hoped that a vote on this proposal would be held “
today
”. But this would require the unanimity of the senators, which was not guaranteed at the beginning of the afternoon on the Republican side.
The vote will therefore probably have to follow the traditional procedure and be held on Saturday, when ten Republicans must imperatively support the agreement with the 50 Democrats.
The House of Representatives will then in turn have to approve this measure so that Joe Biden can enact it, not until next week.
A respite to negotiate investment plans
This compromise therefore only postpones the parliamentary battle for a month and raises the debt ceiling.
It will not be used to finance the two gigantic plans of Joe Biden but rather to repay the loans of his predecessors, in particular those of Donald Trump.
The White House reacted lukewarm to this deal.
“
This gives us a little time, but does not solve the problem,
” commented Jared Bernstein, one of his economic advisers.
“
Spending two more months arguing over this does not resolve the uncertainty.
"
In fact, the agreement reached on Thursday only postpones until the end of November a parliamentary battle that promises to be epic over the finances of the United States.
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, nicknamed "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.
Newsletter
Receive all international news directly in your mailbox
I subscribe
Follow all the international news by downloading the RFI application
google-play-badge_FR
United States
Finance
Joe biden