Debt ceiling negotiations in the US enter a “pause”

The leader of the Republicans in the United States House of Representatives, Kevin McCarthy, announced this Friday that the negotiations to increase the borrowing limit of the country and avoid a default entered into a “pause“, between “real differences” according to the White House.

“Yeah we had to take a break“, said to McCarthy to reporters on Capitol Hill when questioned about the status of the negotiations, while the White House indicated shortly before that they persist “real differences” between the two parties to remedy the crisis.

“We can’t spend more money next year” Prosecutor, maintained the Republican McCarthyin a wrestling with the White House that has been going on for weeks, when the date of June 1 approaches and the United States could enter into an unprecedented moratorium.

Republicans continue to insist that President Joe Biden must cut public spending if he wants to win their support for raising the country’s debt ceiling, a ceiling that Congress has to raise or suspend.

Meanwhile, the Democrats maintain that the two things cannot be linked and want an increase in debt issuance capacity without conditions.

“real differences”

The pro-government camp presents the now paused talks as an opportunity to discuss the budget. But this Friday the White House acknowledged the difficulties of making progress with their Republican counterparts.

“There are real differences between the parties on budget issues and the talks will be difficult”, a White House official said in a statement prior to the McCarthy.

“The president’s team is working hard to find a reasonable bipartisan solution that can be passed by the House (of Representatives) and the Senate”, he added.

The president, who is at the G7 summit in Japan, cut short his tour of Asia to return to Washington earlier to try to get a deal.

arm wrestling

Biden and McCarthy They held two meetings in recent days as the deadline looms that the Treasury Department says could put the United States between a rock and a hard place.

The Republicans claim to lower public spending and the fiscal deficit, and they want to reduce the issuance of debt that usually makes it possible to cover that gap.

Democrats and Republicans do not agree on this increase in the debt issuance capacity of USAdespite the fact that it is essential for the country to honor its payments to creditors, suppliers, pay salaries of public officials and pensions.

Raising the debt issuance limit is usually a routine procedure in the country, which has used this system dependent on Congress for decades. But this time, as has been the case more frequently, the issue is the subject of a political wrestling match.

The United States exceeded the maximum public debt issuance limit in January, which is US$ 31.4 trillion, and since then extraordinary measures have been applied that only allow it to meet obligations for a while.

In reaction to this paralysis, the New York stock market ended in red this Friday after a good week.

The indices, which started the day positively, lost ground and closed with losses. He Dow Jones yielded 0.33%, the technological nasdaq 0.24% and the S&P 500 0.15% at the closing bell.

“The disappointment over the debt negotiations is certainly” the origin of the fall in shares, indicated Jack Ablinof Cresset Capital.