U.S. President Joe Biden and Republican House Speaker Kevin McCarthy have instructed to resume negotiations on the debt ceiling, which had recently been temporarily halted due to a deadlock, on the 21st (local time). Earlier, as the debt ceiling negotiations, which had shown signs of progress, failed to advance, concerns over a U.S. government default have once again spread. Janet Yellen, U.S. Treasury Secretary, reiterated her warning that if the debt ceiling is not raised, the default deadline could be as early as June 1.
According to The Wall Street Journal (WSJ) and others, President Biden and Speaker McCarthy each instructed their negotiation teams to resume discussions on the debt ceiling from 6 p.m. that day. President Biden, who was visiting Japan to attend the Group of Seven (G7) summit, spoke with Speaker McCarthy on Air Force One on his way back. After the call, Speaker McCarthy confirmed that "there is still no agreement. We are far apart," but said that the negotiation teams from both sides would meet later that afternoon for talks. This came about two days after Speaker McCarthy declared on the 19th that he would not negotiate until President Biden returned.
Following their second meeting last week, both President Biden and Speaker McCarthy expressed that a default would not occur, raising expectations that the related negotiations would soon conclude. However, as the positions between the White House and the Republicans remain firmly opposed, concerns about a default are increasing. WSJ reported, "President Biden and Speaker McCarthy are resuming talks to prevent a default," but added, "so far, they have only blamed each other for failing to narrow their differences."
In a press conference before returning home that day, President Biden took a firm stance, saying he could not accept the Republicans' demands. He said, "The other side (Republicans) needs to move away from their 'extreme' position." While the Republican Party, which holds the majority in the House, has insisted on large government spending cuts as a precondition for raising the debt ceiling, President Biden has consistently maintained that tax reform through increased taxes on the wealthy should be considered. President Biden reaffirmed the stark difference in views, saying, "The Republicans say this (wealth tax) revenue is off the table, but it is not off the table. That is why there is a significant difference in opinion." Speaker McCarthy also appeared on Fox News Sunday and countered, saying, "I do not think saying we should spend less than we did this year is 'extreme.'"
The U.S. exhausted its $31.4 trillion debt ceiling in January and has been holding on with special measures since then. If Congress does not raise the debt ceiling, unprecedented default scenarios are expected to cause job losses, financial market turmoil, and other repercussions. The so-called X-day, when cash is expected to run out, as estimated by Treasury Secretary Yellen, is June 1.
On the same day, Secretary Yellen appeared on NBC and warned again, saying, "In early June, as early as June 1, we will not be able to pay all our bills," calling it a "hard deadline" that cannot be adjusted.
She expressed concern, saying, "If the debt ceiling is not raised, we will face difficult choices about which bills to leave unpaid," adding, "We have to pay interest on unpaid debt, and there are obligations to seniors relying on Social Security, military pay, and contractors providing services to the federal government. Some of these will be unpaid." Furthermore, she said, "If the debt ceiling is not raised, there will be difficult choices," and "Regardless of what decisions we make, if the debt ceiling is not raised, there may be no acceptable outcome."
Some analysts suggest that the Biden administration may ultimately take emergency measures to raise the debt ceiling without congressional approval based on the 14th Amendment. Regarding this, Secretary Yellen said, "We have discussed it extensively, but considering legal uncertainties and tight timelines, it does not seem appropriate to use it." On the same day, President Biden said, "We are looking into whether we have the authority under the 14th Amendment. I believe we do," but this is also considered to have low feasibility. If this provision is invoked, there is concern that lawsuits and other actions could actually halt the process of raising the debt ceiling, which is currently a major worry.
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