A third deal was reached yesterday that will allow the US Congress to vote soon on raising the debt limit, in order to avoid the risk of the US being forced to declare a moratorium on payments, which could have potentially catastrophic consequences for the country and beyond.
The debt limit is the maximum amount the US can borrow. It is set by Congress and must be increased or suspended by December 15, as otherwise the federal government will no longer be able to repay its debts to its creditors and will be forced to cut its spending.
This unprecedented situation would plunge the American financial markets and the American economy into crisis, dragging the world economy and causing a major recession.
The US, which like almost all of the world’s major economies has been living on credit for decades in terms of its public finances, has in several cases raised this inclusive “threshold”, which under normal circumstances requires the votes of both Democrats as well as Republicans.
But the Republican opposition categorically refuses to consent at this time, arguing that it would give a blank check to Joe Biden, whom he accuses of skyrocketing inflation.
After weeks of negotiations, he finally gave the green light yesterday to resort to a complicated parliamentary maneuver thanks to which the Democrats will only need their own votes to increase the debt limit.
“I think it is in the best interest of the country to avoid a delay in payments,” said Mitch McConnell, a strong leader of the Republican caucus in the Senate.
The process was expected to be ratified in the House of Representatives on Tuesday night (Greek time this morning), allowing Congress to raise the debt limit before December 15th.
The issue is doubly urgent.
Because Congress needs to overcome this barrier as quickly as possible to finally discuss Joe Biden’s giant social and ecological investment plan, which the White House aspires will allow America to be “better rebuilt.”
This package costs 1.75 trillion. popular polls suggest funding, among other things, to reduce greenhouse gas emissions and global warming. But he has been stuck in the US parliament for months now.
The leader of the Democrats in the Senate, Chuck Sumer, expressed for the umpteenth time yesterday, Tuesday, his will to offer the political victory for Joe Biden, which would mark his approval “before the Christmas holidays”.
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