The president of the United States, Joe Biden, classified as “unacceptable” this Sunday (21) the proposals of the republicans to raise the country’s debt limit, and mentioned the possibility of resorting to the Constitution to avoid a default.
Negotiations to get the United States out of this crisis, when June 1 is approaching and the country may run out of resources to honor its commitments, are stagnant between the government and opposition leaders in Congress, who are demanding a drastic cut from the Executive of spending in exchange for raising the so-called “ceiling” on the debt, which allows for the issuance of more credit.
“The time has come for the other side [republicano] abandon their extreme positions, because much of what they have proposed is simply unacceptable,” Biden told reporters during the G7 summit in Japan.
Soon afterwards, the American president declared: “I am considering the 14th Amendment” of the Constitution.
– What is the 14th Amendment? –
The 14th Amendment, which was added to the Constitution in 1868, stipulates that “the validity of the public debt of the United States, authorized by law, […] should not be questioned”. In other words, expenses already voted on must be able to be paid.
According to some experts, this provision makes the debt ceiling unconstitutional.
If the Treasury borrowed above the debt limit set by Congress, it would violate the law, said Neil Buchanan, a professor of law at the University of Florida.
However, failure to meet mandatory spending mandates set by Congress could be an even worse violation, giving the Treasury a justification to borrow more money and keep paying its bills.
Invoking the 14th Amendment can lead to legal disputes, but not doing so also carries risks.
If Treasury runs out of leeway to meet its obligations and ends up falling behind on certain payments, creditors have a “perfectly valid legal claim,” Buchanan said.
Social Security beneficiaries who do not receive their paychecks can join a class action lawsuit, he added.
On the other hand, if the Biden administration continues to borrow money, Republicans could sue him for breaching the debt ceiling.
That would put them “in a very uncomfortable position, because they would be suing the courts to force the president to default on the national debt,” explained Robert Hockett, a professor of law at Cornell University.
“We can get a deal,” Biden reiterated during the flight back to Washington from Japan this Sunday aboard Air Force One. But “I cannot guarantee that they [os republicanos] are not going to force a default,” he added, justifying his consideration of invoking the 14th Amendment.
“I think we have the prerogative” to use the resource, but “the question is whether it can be done and invoked in time”, commented the president, who canceled part of his trip to the Asia-Pacific before leaving Washington because of this crisis.
– Arm wrestling –
Biden is expected to hold a telephone conversation this Sunday with the Speaker of the House of Representatives, Republican Kevin McCarthy.
Republicans want to reduce public spending and the fiscal deficit, and they also want to reduce the issuance of debt that usually covers this difference.
The sticking point is the opposition’s demand to reduce federal spending to the level of 2022, which represents a cut of 130 billion dollars (R$ 648 billion, at current prices).
“We can’t spend more money next fiscal year,” McCarthy said.
Democrats are against these cuts and, in return, propose to reduce spending by raising taxes on the richest and companies that currently benefit from tax refunds. Republicans, on the other hand, are fervently against any tax increases.
This Sunday, Biden pointed out that it is precisely about tax revenues that there are “great disagreements”.
Biden and McCarthy held two meetings in recent days, as the deadline approaches that, according to the Treasury Department, could lead the United States to an unprecedented moratorium.
Democrats and Republicans have not been able to reach a good agreement on this increase in the United States’ debt issuance capacity, despite the fact that this is essential for the country to honor its payments to creditors, suppliers, salaries of public servants and pensions.
Raising the ceiling on debt issuance is routine in the country, which has used this Congressional-dependent system for decades. But this time, and as has happened more often, the issue has become the epicenter of a political dispute.
The United States surpassed the maximum public debt issuance limit in January, which is 31.4 trillion dollars (R$ 156.5 trillion, in the current exchange rate), and, since then, it has been applying extraordinary measures that only allow it to comply with obligations for a certain period of time.
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