D - 10. While the threat of an American default looms, Joe Biden and opposition leader Kevin McCarthy wanted to believe Monday in a way out of the crisis, but their disagreements have not yet been overcome. "I have just completed a productive meeting" with the Republican boss of the House of Representatives, the US president said in a statement, calling for negotiations "in good faith" to find a budget compromise. He acknowledged the persistence of "differences" that the teams of the two men will have to iron out, in a very short time.
Treasury Secretary Janet Yellen said Monday that it was "very likely" that the United States would run out of public money after June 1. Kevin McCarthy, after a tete-a-tete in the Oval Office, told him that "the tone tonight was better than any time before." But he too recognizes fundamental differences. This summit meeting aimed to relaunch the discussions, which had frankly turned sour this weekend, in the absence of Joe Biden. The 80-year-old Democrat, who returned from the G7 summit in Japan on Sunday, had originally planned to extend his diplomatic tour of Oceania, but the political-budget imbroglio in Washington forced him to cut short his trip.
To remove the risk of bankruptcy, Congress – the Senate held by the Democrats and the House with a Republican majority – must vote to raise the maximum authorized public debt ceiling. The Republicans require, to give their green light, a sharp reduction in public spending. Joe Biden, who is campaigning for reelection in 2024 on a social justice pledge, opposes it.
“We have to change course, our debt is too big,” Kevin McCarthy said before his meeting with Joe Biden. The US president said that while he was in favor of deficit reduction, it was necessary to "address tax loopholes and ensure that the rich pay their fair share" of taxes.
The "debt ceiling" of more than $31 trillion - a world record - was reached several months ago, but the federal government has so far managed the situation through accounting arbitrations. In the event of payment default, the United States would no longer be able to repay the holders of Treasury bonds, this investment king of global finance. The government could also no longer pay certain salaries of civil servants, nor pensions for veterans, among others. The consequences for the US and global economy would be catastrophic, many economists warn.
So who will give in first? The American president, who knows well that a recession, whatever its political genesis, would jeopardize his chances of re-election? Or Kevin McCarthy, whose position depends on a handful of elected radicals, who call on him - like former President Donald Trump - not to "bend"? "We must arrive at a result that we can sell to both sides," Joe Biden admitted on Monday, who prides himself on having become, over the course of a long parliamentary career, an outstanding negotiator.
The left wing of the Democratic Party would rather see him pass in force by invoking the 14th amendment of the American Constitution, which prohibits "questioning" the solvency of the first world power. In this case, the government would issue new loans, as if the debt ceiling did not exist. This strategy is however fraught with legal dangers, especially when one faces like Joe Biden a Supreme Court firmly anchored on the right.
