(Washington Composite Electric) The period of government debt defaults in the United States is getting closer, and negotiations between the two parties to increase the upper limit of debt raising have no results.At the time of the situation increasingly tight, the Minister of Finance Yellen postponed the earliest time in debt defaults to June 5th, a little more time for debt negotiations.
The U.S. Treasury has previously warned that if the upper limit of debt is raised, the federal government may first face debt default on June 1.However, Yellen on Friday (May 26) said that if Congress does not act, the federal government may not be able to pay all the bills from June 5.The new estimate date is a few days later, but it is more positive.
Yellen said in a letter to Congress that unless Congress agreed to raise a debt limit of US $ 3.14 trillion (approximately S $ 42.4 trillion), it would trigger a discriminatory debt default."According to the latest data, we estimate that if Congress will not increase or put on hold on the upper limit of debt on June 5, the Ministry of Finance will not have enough resources to fulfill government obligations."
After the expected time point was moved, the team of President Biden and the Speaker of the Republican House of Representatives McCarthy won more negotiation time.
McCarthy: Congress can complete work on June 5th
After sending a letter, Biden said that the confidence will make a breakthrough before midnight on Friday, but the actual situation has not yet reached an agreement the next day.McCarthy said on Saturday that the agreement has not been reached, and the expected delay of debt defaults will not affect the negotiations, but Congress should be able to complete the work by June 5.
The two parties have initially agreed to raise the upper limit of debt, so that the government can borrow the amount required by the country that is sufficient to cope with the state that is sufficient until November of the November of November.However, the Republican Party insists that the Democratic government has reduced expenses in all aspects to control the inflated deficit.The two sides are mainly tapped on the issue of increasing or decrease in expenses.The hardliners Republicans have already spoken. If the government cannot effectively reduce the expenses, they will not let the debt limits be approved.
Any agreement reached by the White House and Congress must be approved by the two houses of the Congress before the president signed the law, which takes at least a week.However, during the review of Congress, any member of the parliament had the right to obtain objections, so it may be dragged for several days.
Moody's prediction of the International Credit Institution Moody's predict that if the United States has a debt default, GDP (GDP) will decrease by 4%, and more than 7 million workers will be unemployed.Even if it is only a short breach of contract, it will cause 2 million jobs to lose.
Daoming Securities strategist believes that even if the United States can eventually avoid the worst situation of debt defaults, the international credit evaluation agency FITCH may still reduce the AAA credit rating of the United States to AA+, making the US debt holding cost a lotincrease.
