(Washington) Canada’s government held its breath on Tuesday as a race against time began across the border that has left the global economy on the brink.
US President Joe Biden has met with members of Congress, including Republican Speaker of the House Kevin McCarthy, to negotiate a possible increase in the debt ceiling, which will limit the government’s borrowing power.
Treasury Secretary Janet Yellen warned last week that the cap could be reached as soon as June 1ah June.
Republicans, who hold a majority in the House of Representatives, say they will not agree to raising the limit until the Biden administration cuts government spending.
“McCarthy is fighting with a very narrow majority and the very real possibility that the right wing of his party could (again) turn against him as Speaker of the House,” said Duke University politics professor John Aldrich.
“Everyone at the table understands the risks of a default: our economy would go into a deep recession,” President Biden said. Almost eight million Americans would lose their jobs and our international reputation would suffer. »
If Canada is careful not to comment on the situation, the consequences could be felt in the country.
“In a lot of ways we’re like a 51e state,” said Professor Andreas Schotter, a specialist in international trade at Western University. Businesses and institutions that sell products or services or lend money to the US government will feel the impact of a default almost immediately, he said, also citing the impact on stock markets and already rising interest rates that would skyrocket.
He doesn’t think it will happen, but predicts that given the current political situation, the potential deal could come at the last minute.
“The consequences of a US debt default would be global and discussions between the President, the Executive Branch and Congress are ongoing,” the Embassy of Canada said in a statement. “Canada is following this situation very closely. »
Deputy Treasury Secretary Randy Boissonnault said Tuesday it was an internal problem that the United States would have to solve itself. However, he noted that G7 finance ministers will meet in Japan this week.
With information from David Fraser, Ottawa.
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