December 10, 2022

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Suspended game postponed to December: US bankruptcy averted

The suspended game was postponed to December
U.S. bankruptcy averted

The Biden government can sigh with relief: Democrats and Republicans came to an end to a compromise on the debt ceiling, indeed at the last minute. Bankruptcy of the United States is on the table. But only until December. Then there may be the threat of “shutdown”.

After several days of struggle, the US Congress is avoiding the bankruptcy of the world’s largest economy. Democratic Senate Majority Leader Chuck Schumer announced an agreement with Republicans in Washington to raise the debt ceiling by two months. The plan was introduced by Mitch McConnell, the Conservative Senate Minority Leader.

“I have good news: we have reached an agreement on extending the debt ceiling until December,” Schumer told the Senate. He hopes to see them “today”. Several hours of negotiations preceded the announcement. “The Senate is moving ahead with the plan I outlined yesterday to save Americans from the crisis triggered by democracy,” McConnell said of the deal.

The Republican offer came shortly after US President Joe Biden, U.S. Treasury Secretary Janet Yellen and several influential corporate directors issued a roundtable warning of a “catastrophic” US default. If the United States fails, the recession is “possible,” Yellen said. Due to the pioneering role of the United States, there was also the threat of global economic turmoil. Before the agreement was reached, the United States was going bankrupt, probably on October 18 for the first time in its history. The purpose of raising the debt ceiling is to repay the money already borrowed.

Siege by blocking minorities in the Senate

In fact, the now hard-to-reach agreement postpones the parliamentary debate to the end of November. In addition to the debt ceiling, Congress will have to adopt a new budget in early December if it wants to avoid a freeze on so-called “federal” institutions. Although the credit limit has been suspended or raised dozens of times under the presidents of both parties over the past few decades, Republicans now face opposition. By blocking minorities in the Senate, the party is preventing the debt ceiling from being lifted through ordinary legal means.

Through the interim solution, McConnell is urging Democrats to follow a special path called “reconciliation” for a permanent solution. Democrats wanted to avoid this; They say this process is time consuming and risky. In addition, they do not want Republicans to be relieved of the responsibility of jointly handling the country’s debt burden, especially since the debts go back to the Trump administration.

Democrats have accused Republicans of obstructing Biden’s political agenda and seeking to wreak havoc ahead of the next congressional election. Biden accused Republicans of “playing Russian roulette with the US economy.” Since Barack Obama’s presidency of the Democrats, Republicans have been using the debt ceiling as a means of political pressure.

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