President Joe Biden and the Republican head of the House of Representatives, Kevin McCarthy, reached an agreement on Saturday night to raise the ceiling on the sovereign debt of the United States and thus avoid the entry of the country into suspension of payments or default: an event that could trigger a global financial crisis. It remains, however, for Congress to approve the arrangement.
The Democratic and Republican leaders reached "an agreement in principle" on the debt limit, they said, during their telephone conversation on the matter on Saturday after weeks of negotiations by their teams in Congress.
The announcement came just hours after US Treasury Secretary Janet Yellen had set June 5 as the date after which the United States could no longer borrow and issue bonds to pay its bills.
The pact establishes an increase in the debt ceiling sufficient to cover expenses and consequent foreseeable deficits in the next two years. The increase, which did not materialize at first, could be around four billion dollars over a current limit of 31.4 billion, according to previous information on the draft agreement.
But the measure, linked to a budget pact also for two years, must now be approved by Congress. And it is not clear that the vote will be easy. The Republicans of the ultra and Trumpist faction had been subjecting their favorable vote to a drastic snip that would affect the green economy and social spending, including a tricky "work requirement" for poor people who receive subsidies.
The Democrats further to the left, for their part, rejected some cuts that they understood that Biden might be willing to make.
McCarthy announced last night that the vote will take place on Wednesday. Until then, it seems likely that the tug of war will continue internally in both parties. This was indicated by the cautious label of "agreement in principle" used by him and Biden.
But the announcement should mean that the two leaders are running the numbers. Because if the agreement were not confirmed in the end, both the two of them and their respective formations would be incurring the closest thing to political suicide; a suicide that would have as real victims millions of citizens of the United States and, possibly, a good part of its vast area of influence.
After the announcement, Biden published a tweet that clearly sought to prepare the ground for possible protests from some of his own. The agreement, he wrote, "reduces spending" while protecting "critical programs" for workers. It is "a compromise - he stressed -, which means that not everyone gets what they want." But "that is the responsibility of governing," he added.
The pact is, in short, "good news for the American people." Because it "avoids what could have been a catastrophic default and led to an economic downturn" as well as "devastated retirement accounts and millions of lost jobs," Biden said.
The president added that the negotiating teams of the White House and the Republicans have yet to finalize the legislative text for the agreement to be submitted to the mandatory vote in the Lower House and the Senate.
McCarthy, for his part, said before the cameras: "We still have a lot of work to do, but I think this is an agreement in principle that is worthy of the American people.
The Republican leader announced without further details that the arrangement includes "historic reductions in spending and consequent reforms that will lift people out of poverty and incorporate them into the labor force." But the measures will "check government overreach," especially in the sense that they "do not provide for new taxes or new government programs."
