Biden will enact a law this Saturday that prevents “catastrophic” default in the US.

In a rare address from the Oval Office, President Joe Biden said Friday that he will sign the bill authorizing raising the United States’ debt limit this Saturday, removing the threat “catastrophic” of a default of the largest economy in the world.

On primetime television and behind his historic desk, Biden assured in a live broadcast that the bipartisan agreement was a compromise in which “no one got what they wanted”.

“Finding a consensus across partisan differences is difficult. Unity is hard, but we must never stop trying”, said the 80-year-old Democrat in a short speech.

Without the agreement, the United States risked a default or cessation of payments on its obligations as of Monday, June 5, the deadline set by the Treasury.

This would likely have triggered panic in the markets, huge job losses and a recession, with global implications.

“Nothing would have been more irresponsible or more catastrophic,” said the president.

In America, presidents have always reserved Oval Office speeches for moments of grave danger or national importance.

Despite the fact that the House of Representatives and the Senate put aside their differences and found an agreement at the last minute, the reputation of the US economy suffered.

The Fitch rating agency maintains the “AAA” credit rating of the United States on negative observation, which it plans to review in the third quarter of 2023.

The agency said in a statement that it assesses “the full implications of the latest episode of brinkmanship and the medium-term outlook for fiscal and debt trajectories.”

arduous negotiations

Congress this week adopted the bill that suspends the federal debt ceiling until January 2025, enough to get through the 2024 presidential elections without a repeat of the fight.

In addition, it sets certain limits on federal spending and provides for a reduction of US$10 billion in the funds assigned to the treasury to modernize and intensify controls.

Biden, who is running for re-election in 2024, sees the dramatic resolution of this political crisis as a victory by demonstrating his bargaining skills.

The president took advantage of the occasion to project a tone of confidence and calm. In a speech peppered with laughter and smiles, he praised his opponents for negotiating in good faith and promised the American people that he had never felt more optimistic.

Congress, continued the president, now preserves “the complete faith and credit of the United States”.

The decision follows weeks of hard-fought negotiations between Biden and House Republican Leader Kevin McCarthy, in which Democrats accused Republicans of holding the US economy “hostage” by insisting on cutting spending to accompany the increase in the debt limit.

In his speech, Biden praised McCarthy, a longtime politician loyal to former President Donald Trump, whom Biden defeated in 2020 and who aims to return in 2024.

“I want to commend Speaker McCarthy. You know, him and I, us and our teams, we were able to get along, get things done.”Biden said, while calling the Republican negotiators “completely honest and respectful of one another.”

Source: AFP