After weeks of negotiations, America can breathe: by a vote of the US Congress, the United States suspended June 1 Thursday the ceiling of its debt and removed, within a few days, the threat of default. "This is a great victory for the economy and for the American people," President Joe Biden said.

According to the US Treasury, the world's leading economic power had only until Monday to avoid bankruptcy. America, like almost all major economies, lives on credit. But unlike other developed countries, the United States regularly faces a legal constraint: the debt ceiling, its maximum amount of debt, which must be formally raised or suspended by Congress.

Tough negotiations

From this routine legislative procedure, the Republicans, majority in the House of Representatives, and their boss Kevin McCarthy, have made an instrument of political pressure against Democratic President Joe Biden. A series of meetings at the White House, in small or large committees, endless negotiation sessions... all of Washington was suspended for weeks in the fate of the famous "debt ceiling".

Even if it is very common for last-minute agreements to be found on this type of file, these endless negotiations have pushed the rating agency Fitch to place "under surveillance" the AAA rating of the United States.

On Saturday night, in the middle of the long holiday weekend, the two sides finally snatched an agreement by forceps. This text made it possible to avoid the worst: that the country's coffers would run dry on June 5, risking pushing the United States to default.

Overnight, the country would have had the greatest difficulty in honouring its financial commitments, whether in terms of salaries, pensions or repayments to their creditors, and would have been forced to make drastic choices. This unprecedented situation would have plunged into the unknown the American finance and economy but also, by extension, international.

It is to avoid this potentially catastrophic scenario that Democratic President Joe Biden and Republican House of Representatives boss Kevin McCarthy have reached this compromise. The agreement had already been approved Wednesday evening by a large majority of the elected members of the House of Representatives.

It is now up to Joe Biden to sign it into law – a mere formality. The Democratic leader said he was "impatient" to do so. The president also said he would address the American people early Friday evening to detail the contours of the text.

Concretely, the agreement makes it possible to suspend for two years, so until after the presidential and legislative elections of 2024, the maximum amount of debt of the United States, currently at 31,400 billion dollars. In exchange, the Democrats agreed to limit some spending, but not as much as the Republicans wanted.

"Still a lot to do"

That is why many of them opposed the measure, both in the House and in the Senate. "Make no mistake, there is still a lot to do" to clean up American finances, assured the Republican tenor in the Senate, Mitch McConnell.

A major point of contention for the left, the compromise includes changes to the conditions imposed to benefit from certain social benefits. "I cannot, in good conscience, vote in favor of a bill that harms workers," said influential Senator Bernie Sanders.

With AFP

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