Joe Biden has warned that the United States could default this month for the first time in history.

President Joe Biden warned on Monday that the United States it could fail in a few days for the first time in its history, if the Republican opposition does not approve the raising of the American debt ceiling.

In a speech at the White House, Biden was very harsh on Republicans he accused of having behaved in a “hypocritical”, “dangerous and shameful” manner because they are reluctant to increase the country’s debt limit.

Biden warned that “a meteorite hits the US economy “ and he assured that “at this point I cannot guarantee that the United States will avoid a default.”

The Congress You have until October 18 to increase the debt limit Treasury Secretary Janet Yellen warned lawmakers last week of an approaching date that would stymie the ambitious welfare and infrastructure projects the president is seeking to approve.

The leadership of the Republican Party, traditionally in favor of budgetary discipline, opposes raising the debt ceiling. To pass the law through the Senate it takes 60 votes, but currently Democrats only have 50, as well as Republicans, so they would need Conservative support to prevent the United States from defaulting.

This debt ceiling situation, which plunges the United States into the abyss every few years, occurs because the government spends a lot more money from which you get by federal taxes.

The role of Congress

In 2021 alone, it is estimated that the government will spend around $ 5.8 trillion and have $ 3.5 trillion in revenue, which will leave a deficit of 2.3 trillion, according to the Congressional Budget Office.

The government can only issue debt up to the limit set by Congress, which has the power to raise this ceiling as it sees fit. The United States has never had to resort to defaulting on its sovereign debt, but it was close in 2011 with Barack Obama in the White House, causing chaos in the financial markets and a drop in the score creditworthiness of the country.

Biden accused Republicans of “Hypocrites” for resisting the increase in debt. “They are only doing it to cover the tax cut and increased spending under Donald Trump,” the president said, noting that under the tycoon’s administration “the debt has increased in four years by nearly eight thousand billion dollars, that is to say a quarter of the world debt accumulated in more than 200 years ”.

“The Republicans, with their hypocrisy, they play russian roulette with the North American economy, ”Biden added.

Republicans, led by Senate Minority Leader McConnell, argue Democrats should manage the debt ceiling themselves using a special budget process. known as “reconciliationWhich would not force Republicans to vote for it because it could be approved by simple majority.

But House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer said they opposed the idea and believed it was Republicans’ responsibility. help pay off debts incurred by both parties.

It’s a game of political tension: As the deadline approaches, Democrats must make a decision quickly whether they want to use the budget “reconciliation” process or let the country default.

Pressures

Biden pushed hard and said whatever could happen if this action wasn’t taken: “If the debt limit isn’t raised, the will of Congress will be called into question fulfill our obligations that we have already entered into, not the new ones that we have already entered into. “

“This will undermine the security of the US Treasury securities and threaten the reserve status of the dollar as a global currency the world depends on,” Biden said.

And continued: “America’s credit rating will be lowered, interest rates will rise on mortgages, auto loans, credit cards and loans. “

The president said that in the next few days, Americans may see their retirement savings shrink, interest rates go up and your mortgage and auto payments go up. “As of this week, your savings and your wallet could be directly affected by this Republican coup. It’s that simple, ”Biden said.

Experts say not to raise debt ceiling in time could stop the payments of millions of Americans, including federal worker salaries, health benefits, military salaries, tax refunds, Social Security checks, and payments to federal contractors.

Could result in job loss, a stop of tens of billions of aid for economic recovery after the Covid-19 still to be delivered, a virtual freezing of the credit markets and of the gross domestic product taking a tangible blow which could last several quarters.

PB