Time is running out to avoid falling from the default abyss that will plunge the US economy into recession and drag global financial markets down, and after weeks of intense negotiations, the US President said: Joe Biden and the leader of the Republican majority in the House of Representatives, Kevin McCarthy announced this weekend that it has signed a deal for suspend the debt ceiling and, in Biden’s words, “a destructive default“.
Details of the deal were made public on Sunday, when the legislation was introduced. and great challenge now to get that 99-page text Congressional approval before June 5The day marked “” by Treasury Secretary Janet Yellen.X-dateIt is a situation where the United States may remain without resources to meet payments made by extraordinary means since the debt ceiling set at $34.4 trillion in January was exceeded.
With division into roomsThe opposition of some of the Democrats, who felt that McCarthy had made some unacceptable concessions to take office as president, as well as the decisive weight he had to give to the extreme wing of his party that opposed the deal, was a Benintense political war with uncertain outcomeServed.
What does the deal include?
The deal between Biden and McCarthy Does not raise and suspend the debt ceiling until January 2025, It is practically equivalent to an increase as it enables the US to meet its payments up to that date. Against this, spending cuts and caps on many national programs over the next two yearsthough noto Tap neither Social Security nor Medicarepublic health program for the elderly.
In particular, the agreement obliges sustaining so-called discretionary spending in the next fiscal year (where federal agencies and programs are funded) and Increase only 1% in 2025It is equivalent to a discount as it will not even include an increase in inflation. According to a calculation by The New York Times, this equates to a spending reduction of 55,000 million in 204 and 81,000 million in 2025.
Inside military spending, instead, it was approved 2024 3.3% increase Up to 886,000 million (as Biden claimed) and 895,000 million in 2025.
The agreement is also to pick up in the next two years tax offices WE 20,000 million dollars It diverts the $80,000 million allocated by the Inflation Reduction Act, which Biden signed last summer, to other programs.
They are also imposed new study requirements to qualify for some public assistance programs Like food aid. Specifically and gradually, the age at which a childless person must work to be eligible for this benefit will increase from the current 49 to 54. Some vulnerable groups, such as veterans and the homeless, are exempt.
One of the agreed-upon elements is Speeding up processes for approval of specific energy projects and the time allowed for carrying out environmental impact assessments is shortened. there is also a special deal It will speed up approval of a gas pipeline in West Virginia, A project with strong opposition from environmental groups.
What did Biden achieve and what did he fail to achieve?
Although Biden initially and for some time insisted that he would not negotiate a debt ceiling with the Republicans, and only offered to speak separately about budgets and conservative calls for deep spending cuts, he had to. “Can you think of an alternative?” he rhetorically asked during a brief media appearance on Sunday. loyalty what does it mean No one can get everything they want, but it is the responsibility of the rulers.“.
one of the great victories Part of the deal for the Democrat, if he gets the green light from the cameras, is that To ensure that a similar crisis does not occur until after the 2024 presidential elections. It has also achieved that labor requirements for receiving public assistance do not affect programs such as: health aid (public health services for the poorest) or help families in need are more limited than Republicans would like.
Biden had to Forget the suggestions to increase taxes to top revenues and ideas to reduce spending on companies or public health programs, such as getting more discounts for insulin. It also saw its financial support to the Treasury cut off to prosecute fraud and tax evasion. And you will need to freeze your student debt forgiveness plan for two years.
McCarthy’s achievements and failures
Big success for McCarthy Forcing Biden to take back his words and sit down to negotiate. The strongest Republican in the country could also present as a victory a deal that includes federal spending and increases work requirements to qualify for some benefits. important first step” In the words of Republicans like Newt Gingrich. Giving impetus to fossil fuel energy projects is another triumph of his.
However, McCarthy agreed to eliminate a similar situation before the 2024 presidential election.or too far from ambitious conservative goalsThis was reflected in a budget bill passed by Republicans in the Lower House, which proposed much deeper and permanent cuts and spending limits.
What should it be and what could it be?
For the deal to see the light Needs to be approved by Congress and both the power separation in the assemblies and the polarization and internal ruptures within the two parties do not guarantee this approval.
The biggest challenge is in the Lower House, which McCarthy chairs. He had to make concessions to the members of the council in order to become the ‘speaker’. The ultra-conservative wing of the Republican Party and that means those radicals are now a determine the weight.
despite vote in the lower house Washington from 7:30 p.m. Wednesday (72 hours after the legislation comes into effect), before It should go through the Rules Committee on Tuesdaywhere there are nine Republicans and four Democrats. With three of the conservative seats held by extremist lawmakersthese can be Postpone the legislative process.
When it comes to debate and voting in front of the entire House, a large number of House Republicans have declared that they will oppose the deal. force enough Democrats to vote yes to give it the green light. The more progressive wing of Biden’s party is opposed to a deal they believe is too compromised.
Any delayAnd later required confirmation in the Senateraise the pressure, because lThe issue should be resolved by June 5th.
“It doesn’t matter if it’s a good deal or a bad deal.. alternative chaos‘ wrote the progressive economist and former Minister of Employment. Robert Reich. “What happens from now on depends on how many members of the lower house would prefer rule to chaos.”