▲ Janet Yellen


While negotiations between the White House and Congress on raising the debt ceiling have made some progress, the expected time for the government to default if a deal fails has been slightly delayed from the 1st to the 5th of next month.

Treasury Secretary Janet Yellen sent a letter to Congress on the 26th (local time), saying, "If Congress does not raise the debt ceiling by the 5th of next month, we do not expect the government to have sufficient resources to meet its payment obligations."

Yellen warned that the Treasury Department could meet the $130 billion in Social Security and military pension payments due on Jan. 1~2 of next month, but that "this spending will keep the Treasury coffers at extremely low levels."

Yellen has said that if Congress does not raise or suspend the federal debt ceiling by the first of next month, the federal government could default.

The White House and the Republican Party, which reportedly made some progress in negotiations the day before, continued working-level negotiations on the day and focused on reaching an agreement.

House Speaker Kevin McCarthy, a Republican, told reporters on Tuesday that the negotiations had reached a critical juncture, saying, "Progress was made in the working-level negotiations the previous evening (25th)."

McCarthy said, "The work will continue until a final settlement is reached, and negotiations continue today."

The Associated Press reported that the two sides narrowed their disagreements over raising the current debt ceiling of $31.4 trillion (about 4.2 trillion won) in exchange for two years of federal spending cuts with the presidential election in mind.

Among the discretionary spending, it is said that freezing the remaining items except for defense and veterans affairs at this year's level is said to be the most likely, but the two sides are still at odds over the details, and it is expected that it will be difficult until a final settlement is reached.

The New York Times (NYT) reported that the deal also included cuts of $10 billion of the $80 billion earmarked to crack down on tax evasion by high-income earners and corporations, but the deal is still under discussion.

The U.S. government issues debt each year to cover expenditures in excess of tax revenues, and the limit of this debt is determined by Congress.

Republicans, who won the House majority in last year's midterm elections, are facing off with the White House and Democrats over a budget bill in the House that would raise the debt ceiling and cut federal spending in areas such as Social Security.

US President Joe Biden, at a nomination ceremony for the next chairman of the Joint Chiefs of Staff the day before, made it clear that default is not an option, saying that "there will be no default."

"The only way forward is through bipartisan agreement, and I believe we'll get there," President Biden said, urging Congress to act now.

The expected default deadline has been pushed back to the 5th of next month, giving us more time to negotiate, but the deadline is still tight given the internal persuasion and working procedures for the bill to be dealt with by both sides.

Congress will adjourn until Memorial Day, the 29th, which is Memorial Day in the United States.

In the case of the House of Representatives, the physical deadline is still tight, given that negotiations have not yet been finalized, considering that a three-day period of deliberation is mandated to deal with the bill.

President Biden has also gone into Memorial Day holiday mode.

President Biden will depart for Camp David this afternoon to rest and remain at his Wilmington home on the 28th.

Persuading internal hardliners is also key.

The Freedom Caucus, a group of hard-line conservative Republicans, declared that the deal was unacceptable.

Representative Ralph Norman, leader of the Freedom Caucus, condemned the deal as "waterboarding" and said it was "completely unacceptable, it's not something we agreed to."

Progressive-leaning Democrats are also calling for President Biden to invoke the 14th Amendment East Sea raise the limit on his own.

The 14th Amendment states that "all debt obligations of the federal government must be complied with," which some constitutional scholars have interpreted to give the president the power to issue government bonds without Congress raising the debt ceiling.

However, many, including Treasury Secretary Yellen, oppose it, citing concerns about unconstitutional litigation and adverse effects.

Deputy Treasury Secretary Wally Adeyemo appeared on CNN on Tuesday and denied the possibility of invoking Article 14 outright, saying, "I think the President has made it very clear that the 14th Amendment is not going to solve our problems."

He added, "Congress has that power, and the president is asking us to act as soon as possible."

(Photo = Getty Images Korea)