In Congress, Republicans are marching their soldiers forward
Republicans in the House of Representatives on Wednesday passed a text condition for raising the US debt ceiling to cut the budget.
Kevin McCarthy on April 25, 2023 in the Capitol.
Getty Images via AFP
Republican Kevin McCarthy scored his first points Wednesday in a game of lying poker between the White House and the House of Representatives over the U.S. debt ceiling. In exchange for the ceiling increase
His plan, which would cut $4.5 trillion in federal spending over the next ten years in exchange for a $1.5 trillion increase in the current $31 trillion public debt ceiling, was accepted by the Republican majority in the House of Representatives. .
For Kevin McCarthy, it didn’t work out. With his slim majority and weak room for maneuver, debates continued between Tuesday and Wednesday to appease all Republicans.
The issue was politically significant for the House “Speaker” as it was also a test of his ability to unify within his party, albeit one that has been caught between elected Republicans close to Donald Trump. More moderate Republicans worry about reducing the influence of the federal government, on the one hand, and the impact of such a plan on the U.S. economy, on the other.
By getting his plan, which is unlikely to be adopted by the Senate with a Democratic majority, the Republican leader succeeded in increasing the pressure on US President Joe Biden, who launched his campaign on Tuesday. In 2024. “The Senate has done nothing. The President did nothing. “The chamber will raise the ceiling and rein in Washington’s spending,” Kevin McCarthy promised Tuesday evening.
The text provides that at the end of March 2024, that is, in the middle of the US presidential election campaign, Congress will have to decide again on the country’s debt ceiling, which will undoubtedly become one of the main themes. It actually started on Tuesday. Kevin McCarthy responded to the announcement of Joe Biden’s candidacy, saying the president is “focused on the future of America and his own political future.”
The president should have announced that “Biden is finally coming to the negotiating table to discuss a responsible increase in the ceiling and thus avoid the first deficit in our history.” “I would be happy to meet with McCarthy, but not on whether or not to raise the debt ceiling. This is not negotiable,” the US president responded during a press conference at the White House on Wednesday.
A great challenge for America
Democrats believe the debt ceiling is not a negotiable item, recalling that it is not about new spending, but what has already been voted on from administrations of both parties.
For the US, the stakes are high: the country has never defaulted on its debt before, and the latter serves as a safe haven for the global financial sector thanks to the firmness of the US guarantee. US Treasury Secretary Janet Yellen warned again on Tuesday that a default would be “economically and financially catastrophic”.
Unlike most advanced economies, the U.S. debt is limited and must be voted on by Congress to continue its steady rise. A situation that has already occurred 78 times since the early 1960s, mostly without difficulty.
Finding consensus quickly is essential for the US, especially since default could happen sooner than initially expected.
In a note published on Monday, Moody’s Analytics said it expects a default risk “perhaps as early as June” that investors are beginning to take into account, as evidenced by insurance costs against payments. default. US, highest since 2011.
So does Kevin McCarthy’s plan work? According to Moody’s, not necessarily because the latter will have a real impact on the economy: a 0.6 percent drop in U.S. potential growth for 2024 and the destruction of 780,000 jobs, enough to make Republicans shudder.
Compared to the scenario of voting for the new ceiling without conditions, unemployment would be 4.6%, up from 3.5% in March 2023. “Congress must vote to raise or suspend the debt ceiling. He must do so without conditions. And he shouldn’t have waited until the last minute,” Suttig said Tuesday in a jab at Janet Yellen.
AFP
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