The dollar is under pressure, affected by America’s default on its debts

President Joe Biden intervenes personally, today (Sunday), to try to break the deadlock in the complex negotiations on raising the US public debt ceiling, so that the largest economy in the world can avoid default.

The White House said that Biden, who concludes 3 days of the G7 summit in Hiroshima, will call House Republican Leader Kevin McCarthy at the end of the summit.

“President Biden continued to follow the negotiations closely on the bipartisan budget framework and the urgent need for Congress to act to avoid a default,” the official said.

According to the official, the US president “received an update from his team last night and this morning regarding the status of the negotiations. The president directed his team to coordinate with McCarthy to set a date for the call.

And the US President said, during a press conference in Hiroshima, that he would speak with McCarthy during his return flight. Biden described most of the Republicans’ proposals regarding the debt ceiling as “unacceptable.”

The crisis prompted Biden to shorten half of his scheduled Asian trip, and to refrain from visiting Papua New Guinea and Australia.

And the Treasury Department warned of dire consequences if the country runs out of cash to pay its bills, which would make it unable to pay federal employees and lead to a potential rise in interest rates with spillover effects on businesses, mortgages and global markets.

Treasury Secretary Janet Yellen said Monday that the United States may start defaulting on its debt “perhaps as early as June 1,” while the Congressional Budget Office expected that to happen in mid-June.

– Exchange of accusations

The Democratic administration and the Republican opposition are engaged in a race against time to avoid the possibility of the United States defaulting on its obligations after June 1.

The Republicans require that Biden agree to a significant reduction in budget expenditures in exchange for their agreement to raise the debt ceiling, ignoring the Democrats’ repeated demand for a “clean” increase in the public borrowing ceiling.

The Democrats accused the Republicans of using exaggerated tactics to advance their political agenda before the date when the United States would start defaulting on its debt, as the government ran out of money.

Usually, raising the public debt ceiling is an uncontroversial annual measure, and talks reached an impasse on Saturday night in Washington, with both sides trading accusations.

“We are not making any demands in order to avoid default,” White House spokesman Andrew Bates wrote in a tweet on Twitter, accusing the Republicans of seeking to cause a recession in the US economy.

And the White House media official, Karen Jean-Pierre, confirmed in a statement that the recent Republican demands constitute “a big step backwards and contain a set of extremist partisan demands that cannot be approved by the House of Representatives and the Senate.”

According to Jean-Pierre, McCarthy is under pressure from the pro-Donald Trump trend in his Republican party, which “threatens our nation’s default for the first time in our history unless extremist partisan demands are met.”

McCarthy tweeted Saturday, saying that the White House is “backing off.” He added, “Unfortunately, it seems that the socialist wing of the Democratic Party is in control, especially with President Biden being outside the country.”

On Friday, the Republicans left the talks for a short time, but soon after they resumed, Jean Biya said she was “optimistic.”

On Saturday, Biden insisted on his optimism about the possibility of reaching a solution. “I still believe we will be able to avoid default,” he told reporters.

If Congress does not raise the US debt ceiling by then, the country could miss repaying its loans, in an event that could be disastrous for global financial markets.