Agreement principle. After weeks of negotiations, the United States will be able to avoid defaulting on the debt if Congress approves the agreement reached by the president, Joe Biden, with the speaker of the House of Representatives, the Republican Kevin McCarthy. Both have been speaking this Saturday by phone to certify the pact, which the most radical sectors of both parties do not like, but which arrives in time to avoid an economic collapse. “Avoid what could have been a catastrophic default,” in Biden’s words.
The agreement has been announced by McCarthy with a tweet and then in an appearance at the Capitol. “I just got off the phone with the president a moment ago. After he wasted his time and refused to negotiate for months, we have reached an agreement in principle worthy of the American people.” has tweeted.
Later, he had a brief appearance in which he did not admit questions, claiming that he had to inform his colleagues in the House of Representatives first. “I just got off the phone with the President. Today I have spoken with him twice and after weeks of negotiations, we have reached an agreement in principle. We still have a lot of work to do. But I think it’s an agreement in principle worthy of the American people. It contains historic spending cuts, consistent reforms that will lift people out of poverty and into the job market. Corrects the excesses of the Government. There are no new taxes, no new government programs. There is much more inside the bill. We still have more work to do tonight to finish writing it ”, his intervention began.
Republicans are poised to deliver big, consequential change in Washington. Soon, we will vote for a responsible debt limit agreement that stops Democrats’ reckless spending, claws back unspent COVID funds, blocks Biden’s new tax schemes, & much, much more https://t.co/TQ7CblFsaM
—Kevin McCarthy (@SpeakerMcCarthy) May 28, 2023
McCarthy then thanked his negotiating team, said he hopes to brief his group, finish drafting the bill, check with the White House, speak to the president again this Sunday afternoon, and post below. the text, to vote on it on Wednesday.
The details of the agreement have not yet been revealed, which allows the debt ceiling to be raised for the remainder of the Biden presidency in exchange for limits on spending also for two years. McCarthy may encounter resistance from the hardline wing of his party, the same one that jeopardized his election as Speaker of the House of Representatives. With Democratic support, there should be no problem passing the bill if only a few Republican representatives fall out, but McCarthy will try to avoid a rift within his caucus.
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Biden does not want to talk about a debt ceiling agreement, but about a “budget agreement”, as he has done in a statement released by the White House. In that same statement, however, he acknowledges that the pact “avoids what could have been a catastrophic default and would have led to an economic recession, devastated retirement accounts and millions of lost jobs.”
“It’s an important step forward that reduces spending while protecting critical programs for workers and growing the economy for everyone. In addition, the agreement protects my top legislative priorities and accomplishments and those of the Democrats in Congress. The agreement represents a compromise, which means that not everyone gets what they want. That is the responsibility of governing ”, he added in his Biden note, which urges Congress to approve the new law.
“Things are looking good, I am very optimistic,” Biden had told reporters this Friday afternoon as he left the White House to spend the weekend at the official residence at Camp David (Maryland). This Saturday, in addition to McCarthy, Biden has also spoken by phone with the Democratic leaders of the House of Representatives, Hakeem Jeffries, and of the Senate, Chuck Schumer, as reported by the White House.
A new letter to Congress from Treasury Secretary Janet Yellen had left a little more time in the decisive phase of the negotiation. “We now estimate that the Treasury will not have sufficient resources to meet the government’s obligations if Congress has not raised or suspended the debt limit before June 5,” Yellen said in her new letter, addressed to the president of the House of Representatives, Republican Kevin McCarthy, and the rest of the leaders of Congress. Until now she had not given a specific date, but she had warned that the risk began on June 1.
Yellen has confirmed that the government has money to make more than $130 billion in scheduled payments in the first two days of June, including payments to veterans and Social Security and Medicare beneficiaries. Those payments will leave the Treasury with an extremely low level of resources, Yellen explains. During the week of June 5, the Treasury is expected to make payments and transfers worth some 92,000 million dollars and for this it will already need to borrow.
The Treasury secretary has insisted that waiting until the last minute to suspend or increase the debt limit, set so far at $31.38 trillion, can cause serious damage to business and consumer confidence, raise costs of short-term borrowing for taxpayers and negatively affect the credit rating of the United States. Congress has this week to approve the agreement reached.
The International Monetary Fund (IMF) asked this Friday in Washington for an immediate solution, but also a permanent remedy so that the problem does not recur on a recurring basis. After meeting with Yellen, and with the president of the Federal Reserve, Jerome Powell, the managing director of the IMF, Kristalina Georgieva, insisted on the need to find a solution such as, for example, that the approval of the budget items entails the approval of the debt necessary to undertake them.
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