Relief on the other side of the Atlantic. After several days of intense negotiations, US President Joe Biden and Republican leader Kevin McCarthy have reached an "agreement in principle" to avoid a US default.

The executive and the opposition must find an agreement, otherwise the country risks no longer being able to honour its financial commitments from 5 June: salaries, pensions or repayments to its creditors.

A "compromise" to be found

Raising the debt ceiling is usually a routine procedure, but since it must be approved by Congress, the Republicans, who have held the majority in the House of Representatives since January, decided this year to use it to demand a reduction in public spending.

Joe Biden has long repeated that raising the ceiling must be carried out unconditionally, since the country's debt is the result of policies pursued by all administrations. After days of long and difficult negotiations, the agreement allows both sides to claim some sort of victory.

Joe Biden spoke of "compromise," while Republican House Speaker Kevin McCarthy called it "worthy of the American people."

A two-year respite

The agreement makes it possible to raise for two years, so until after the presidential election of 2024, the maximum amount of debt of the United States, currently at 31.400 trillion dollars. In exchange, the Democrats agreed to limit some spending, but not as much as the Republicans wanted.

The 99-page text was released Sunday night, and the deal will be the subject of scrutiny and debate in the coming days. According to several sources and press reports, some demands from both sides have not been accepted, such as the elimination of several tax loopholes requested by the Democrats, and the repeal of clean energy tax credits requested by the Republicans.

Limited expenditure and conditional social assistance

Non-defence spending will remain roughly stable in fiscal year 2024 and will increase by only 1% in 2025. The agreement maintains the Biden administration's planned increase in spending on the military and veterans.

It also provides for a $10 billion cut in funding for tax services to modernize and strengthen controls. McCarthy's office said the deal provides for the recovery of "billions of dollars of unspent Covid funds" during the pandemic, but gave no further details.

A major point of contention, the compromise includes changes to the conditions imposed to receive certain social benefits: it increases from 49 to 54 the age until which adults without children must work to receive food stamps, but it eliminates this obligation to work for veterans and the homeless.

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