The United States seeks an agreement to avoid bankruptcy

Relief across the Atlantic. After several days of intense negotiations, US President Joe Biden and Republican leader Kevin McCarthy have reached an “agreement in principle” to avoid a default in payment by the United States.

The executive and the opposition must reach an agreement, otherwise the country risks from June 5 no longer being able to honor its financial commitments: salaries, pensions or reimbursements to its creditors.

A “compromise” to be found

Raising the debt ceiling is usually a routine procedure, but since it must be approved by Congress, Republicans, a majority in the House of Representatives since January, decided this year to use it to demand a reduction in spending. public.

Joe Biden has long repeated that the raising of the ceiling must be carried out unconditionally, insofar as the country’s debt is the result of the policies carried out by all the administrations. After days of long and difficult negotiations, the agreement allows both parties to claim a sort of victory.

Joe Biden spoke of “compromise”, while Republican Speaker of the House of Representatives Kevin McCarthy called it “worthy of the American people”.

A respite for two years

The agreement makes it possible to raise for two years, therefore until after the presidential election of 2024, the maximum amount of indebtedness of the United States, currently at 31,400 billion dollars. In exchange, the Democrats agreed to limit some spending, but not as much as the Republicans wanted.

The 99-page text was released on Sunday evening, and the deal will be subject to scrutiny and debate in the days to come. According to multiple sources and press reports, some demands from both sides have not been granted, such as the elimination of several tax loopholes requested by Democrats, and the repeal of clean energy tax credits requested by Republicans. .

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Limited expenses and conditional social assistance

Non-defence spending will remain roughly flat in fiscal year 2024 and only increase by 1% in 2025. Biden administration.

It also provides for a decrease of 10 billion dollars in funds allocated to tax services to modernize and strengthen controls. Kevin McCarthy’s office also said the deal provides for the recovery of “billions of dollars in unspent Covid funds” during the pandemic, but gave no further details.

A major point of contention, the compromise includes changes to the conditions imposed to benefit from certain social aid: it increases from 49 to 54 the age until which adults without children must work to receive food stamps, but it eliminates this obligation to work for veterans and the homeless.

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