The US Secretary of the Treasury, Janet Yellen, has repeatedly warned that the United States risks defaulting if Congress does not approve raising the sovereign debt ceiling. Default “could happen on June 1”, warned Janet Yellen on Monday.
In the context of the crisis, President Biden called Kevin McCarthy, the Speaker of the House of Representatives, on Monday while he was visiting Israel. Biden invited McCarty, one of the leaders of the Republican Party, to come to a meeting called at the White House on May 9. Hakeem Jeffries, the leader of the Democratic group in the House of Representatives, as well as Chuck Schumer, the leader of the Democratic group in the Senate, and Mitch McConnell, the leader of the Republican group in the Senate, were invited to the meeting.
President Biden “will emphasize that actions to avoid insolvency must be adopted immediately by Congress, without conditions”, said a White House official, under the protection of anonymity. The US president does not agree to any condition formulated by the Republican leaders in Congress. It will accept possible reductions in federal budget expenditures only after avoiding the current crisis situation.
Kevin McCarthy, the president of the United States House of Representatives, proposed, in mid-April, an addition of 1,500 billion dollars to the sovereign debt threshold, but conditioned the plan to reduce budget expenditures, according to the website Axios.com. Kevin McCarthy announced that he will continue negotiations with the Biden Administration on the basis of a plan to increase the sovereign debt threshold by 1,500 billion dollars, but he asked for the limitation of discretionary budget spending at the level of the fiscal year 2022, the capping at 1% of the increase in the budget deficit, the reactivation of unspent funds during the pandemic and the rejection of the law on funding intended for the Internal Revenue Service (IRS). Also, McCarthy would like to suspend the facilities approved by President Biden regarding credits for public higher education and cancel the tax credits granted by the Inflation Reduction Act.
The United States reached the sovereign debt ceiling set at $31.4 trillion in January, but the Treasury Department continued to make payments through exceptional actions to manage existing resources and spending.
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