American default: hope for a political agreement is growing

A deal finally in sight? As the window of opportunity narrows to avoid an American default, the White House and negotiators continued Friday to build a compromise with heavy political implications. According to several American media, the teams of Democratic President Joe Biden and those of the Republican boss of the House of Representatives, Kevin McCarthy, have already agreed on a few main lines.

The agreement, essential for conservatives to agree to vote in Congress to raise the public debt ceiling of the United States, would freeze certain spending, but without touching the budgets devoted to defense and veterans, report for example the New York Times or the Washington Post. It would postpone for two years, until the next presidential election, the risk of default.

This unprecedented scenario of a bankruptcy of the first world power could intervene after June 1 for lack of political agreement and vote in the Senate as in the House of Representatives. The United States would then find itself unable to repay its creditors, which is the definition of a default, but also to pay the salaries of certain civil servants and social benefits.

The challenge, in addition to avoiding a financial, social and economic cataclysm, is to allow each camp to limit damage at the political level. Kevin McCarthy, who needs to assert his stature as Speaker of the House, could claim to have instilled more budgetary rigor, while the Democrats would claim to have protected social benefits or major investment projects.

The American president, campaigning for re-election, explained Thursday that “two opposing visions” were, according to him, at work in these discussions. He posed as a champion of social and fiscal justice, demanding that the wealthiest and big corporations "pay their fair share" of taxes, painting Republicans as the party of the big money and Wall Street. But according to the press, the 80-year-old Democrat would have given up, in negotiations with the Republicans, to increase as much as he wanted the means devoted to the fight against tax evasion.

If an agreement is found, it will still have to be adopted by the Senate, narrowly controlled by the Democrats, and by the House of Representatives, over which the Conservatives have a fragile majority. And that won't be an easy task. On the one hand, because the parliamentary calendar is constrained: many elected officials returned to their homes across the United States for a break of several days on the occasion of the long weekend of "Memorial Day".

On the other hand, because certain progressives within the Democratic Party, just like certain elected representatives of the Republican Party have already threatened not to ratify a text which would make too many concessions to the opposing camp. Republican Senator Mike Lee pledged on Thursday that he “would use every procedural tool at (his) disposal to prevent a debt ceiling agreement that did not contain substantial spending reforms. I'm afraid we're headed in that direction."

Democratic senators have asked the president to rely on the 14th amendment to the Constitution, which prohibits questioning the "solvency" of the United States, to force through and continue to issue debt even if no agreement was not found. What the White House now opposes a categorical refusal, to the chagrin of the progressive camp. In other words, Joe Biden and McCarthy will have to play in the center to rally the most parliamentarians from both sides, an exercise that has become excessively difficult in a country where political divisions have widened significantly in recent years.