US debt dispute: Biden cancels Australia trip

Washington The impending default by the United States is now also affecting the US President’s travel plans: Joe Biden has canceled visits to Australia and Papua New Guinea. The White House said on Tuesday (local time) that Biden would return to the United States on Sunday after the conclusion of the G7 summit in Japan to attend meetings with congressional leaders. He wants to ensure that Congress takes timely action to avert a crisis. The talks on Tuesday seemed to be making progress.

The background to this is that the US government is threatened with a default in a few days unless Biden’s government agrees with the Republicans in the US Congress on raising the debt ceiling. In the USA, the parliament sets a debt ceiling at irregular intervals and determines how much money the state can borrow.

In the meantime, this debt ceiling of around 31.4 trillion US dollars has been reached and the Treasury must tap into the capital reserves. Biden and his Democrats need the Republicans in Congress to raise the debt ceiling. However, these require significant savings in certain government spending.

The argument has dragged on for months. After a high-level meeting in the White House on Tuesday, however, there were signs of a rapprochement: Biden said “there is still a lot of work to be done on a number of difficult issues, but he is optimistic that there is a path to a responsible, bipartisan budget agreement.” give”.

He emphasized that 78 times in US history it has been possible to prevent a default. However, both Republicans and Democrats would have to be prepared to make compromises.

The Republican Chairman of the US House of Representatives, Kevin McCarthy, and the Democratic Senate Majority Leader, Chuck Schumer, had previously spoken of positive signs at the meeting with Biden in the White House. McCarthy even said that an agreement is still possible this week – but the two sides are still far apart.

In view of the changed travel plans, Biden has invited Australian Prime Minister Anthony Albanese for an official state visit at a later date, the White House said on Tuesday.

Yellen warns of default from June 1st

The government said it also contacted the office of the Prime Minister of Papua New Guinea, James Marape, to inform him of the changes. Biden wants to leave for Japan on Wednesday.

US Treasury Secretary Janet Yellen recently warned that a potential default by the world’s largest economy could occur as early as June 1st. This could trigger a global financial crisis and a severe economic downturn.

The US would then no longer be able to pay most of its bills – millions of people could lose their jobs as a result. In 2011, a Republican majority in Congress delayed raising the debt ceiling. At that time, the US credit rating was downgraded for the only time in history.

However, Biden will attend the G7 meeting of the leading industrialized nations in Hiroshima, Japan, as planned. In addition to the USA, the G7 countries also include Germany, France, Italy, Great Britain, Japan and Canada, as well as representatives of the European Union.

The heads of state and government are convening for the summit from Friday to Sunday (May 19-21). In addition to the Russian war of aggression in Ukraine and the problems of the global economy, the role of China should also be discussed.

Afterwards, Biden had actually planned visits to the island nation of Papua New Guinea and Australia. In Sydney on May 24, he should have attended the meeting of the so-called Quad Alliance together with the heads of government of Japan, India and Australia.

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