Thursday’s postponement of discussions at the highest level on US public debt until next week has further complicated the political timeline over the risk of a US debt default.
And a White House spokesman had stated that a meeting on public debt that was scheduled, Friday, between President Joe Biden and Republican Speaker of the House of Representatives Kevin McCarthy, and other parliamentary leaders, was postponed until early next week.
The White House asserts that if the United States defaults on the American debt, a situation that has never happened, unemployment will rise and the American economy will collapse almost immediately.
A source close to the discussions confirmed that this postponement was “positive,” explaining that “the teams continue their meetings, and it was not the right time to involve the leaders” at the highest level.
“The White House did not cancel the meeting, and we all decided it was in our best interest to allow our teams to meet again before we meet again,” Kevin McCarthy said in a press conference.
The conservative official added, “Joe Biden doesn’t have a plan, doesn’t seem to want a deal, and wants a default.”
And the US Treasury indicated that the White House may not be able to meet its financial obligations as of June 1.
Until then, the House of Representatives, which is supposed to vote on raising the debt ceiling that the United States can obtain, will only be in session for eight days.
Biden is also supposed to be away, for at least a week, on a few days’ diplomatic tour of Asia, though he has said he could abandon it if the impasse persists.
On Thursday, the International Monetary Fund expressed concern about the “dangerous repercussions” on the global economy of the US default.
Democrats and Republicans are locked in a confrontation over raising the debt ceiling, accusing each other of making the world’s largest economy a “hostage” of their policies.
This legislative maneuvering is necessary so that the world’s largest economy can continue to borrow, pay its bills, and pay its employees and creditors.
Former President Donald Trump intervened in the discussion by urging Republicans, on whom he still has great influence, on Wednesday to “cause a default” if the Democrats did not agree to “massive cuts” in spending.
For his part, Biden wants an unconditional increase in the debt ceiling, arguing that Congress voted for a very long time, including during the era of his predecessor, in this direction without any specific discussion.
- High unemployment and the collapse of the economy
And the US President held a meeting, on Tuesday, with the heads of the Democratic and Republican blocs in the House of Representatives and the Senate, including McCarthy, without reaching a solution.
And US Treasury Secretary Janet Yellen warned Thursday that the mere thought of a default could “cause significant economic costs.”
“The mere threat of default could result in a downgrade of our financial rating, weakening consumer confidence, while raising interest rates on credit,” she added.
The political stakes for the two main parties, Biden and McCarthy, are high. Biden, 80, who is a candidate for a new presidential term, has not yet succeeded in improving his popularity, while McCarthy, who was elected with difficulty by a narrow majority, must strengthen his position.
The US debt ceiling currently stands at about $31 trillion, a record for all sovereign debt in the world in absolute terms.
This amount was recorded in mid-January, but the federal government has so far managed the situation through accounting maneuvers.
