Debt ceiling, the US at risk of default from 1 June: what to know

Not only is time running out but it is running out: without an increase in the debt ceiling, the United States could default on June 1, unleashing an “unprecedented economic and financial storm”. Janet Yellen sounds the alarm on an emergency for which a solution still appears far away, so much so that Joe Biden is forced to “cut” the trip to Asia and return to the US immediately after the G7 to seek an agreement with the Republicans and avoid the default. “The positions are still distant but an agreement is possible by the weekend,” says House Speaker Kevin McCarthy at the end of the meeting in the White House with Biden and the Democratic leaders to try to unblock the impe that has arisen . “We have a lot of work to do in a short time,” he adds, however praising the president’s decision to appoint two people to deal directly with McCarthy’s team and thus try to reduce the time. Biden has asked his staff to continue the meetings on the issues to be resolved: the president – reports the White House – is optimistic about the possibility of a “bipartisan and responsible agreement if the parties continue to negotiate in good faith”. “We must find a bipartisan agreement” that avoids a “disastrous” default, observes the leader of the Democrats in the Senate Chuck Schumer as he leaves the White House.

The case

Usa, default alert for debt ceiling node. At risk the payment of obligations, salaries and military expenses

Albert Simoni

To demonstrate his commitment to the negotiations, Biden, according to rumors, will limit his mission in Asia to only the G7 in Hiroshima, thus skipping the stops in Papua New Guinea and Australia, where he was supposed to participate in the Quad meeting. Behind the scenes, administration and Republican officials are working hard to avert a catastrophic default that would also jeopardize America’s credit rating. To try to ease a deal, a small group of moderate Democrats also ured McCarthy that they would support him if a debt-ceiling deal causes a rebellion among conservatives and a call for his removal as Speaker. An opening, it is believed, that could push the Republican leader in the chamber to greater concessions in the awareness of his secure political future. So far cold on the subject, Wall Street is now starting to falter under the weight of talks still far from a solution, fearing a repeat of 2011 when S&P cut the US rating due to tensions over the debt ceiling. And the European Stock Exchanges are opening cautious. While investors seek shelter in the stocks of Big Tech, believed to be among the few able to navigate a default, the CEOs of large companies join Yellen’s alarm. In an open letter they warn Biden and Congress about the “potential disastrous consequences” of a default. “Not resolving the current impe could easily result in even more negative consequences. Even though the US economy is strong, high inflation has put stress on the financial system. A default – they warn – would weaken our position in the global financial system».

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