"US Default Concerns Eased... Focus on Eco-Friendly 'Climate Investment'"

US Debt Ceiling Bill Allows Ruling Party Solo Adjustment
Biden Stimulus Plan Becomes Feasible... Scale Adjustment Inevitable
Uncontested Area Is Climate-Ready Eco Policies... "Focus on Renewable Energy"

U.S. Treasury Secretary Janet Yellen testified at a Senate Finance Committee hearing in Washington, DC, on the 30th of last month (local time). At the hearing, Secretary Yellen urged Congress to raise the debt ceiling.
[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The issue of a U.S. 'default' (debt default) has been temporarily resolved as the U.S. Congress allowed the ruling party to raise the federal government's debt ceiling unilaterally. There is an analysis that it is necessary to focus on investments in renewable energy sectors such as solar power to prepare for future climate change.

On the 12th, the U.S. Senate passed a fast-track bill to raise the federal government's debt ceiling. This allows the ruling Democratic Party to raise the debt ceiling without the help of the Republicans. Fourteen Republican senators, including Senate Minority Leader Mitch McConnell, also voted in favor on that day.

Earlier, U.S. Treasury Secretary Janet Yellen indicated that the Treasury's cash depletion date would be on the 15th, when $118 billion (about 140 trillion won) from the Highway Trust Fund must be transferred. Since this issue has been temporarily eased, there is an analysis that attention should be paid to the scale of the debt ceiling increase. This is because it is tied to President Biden's second stimulus package, 'Build Back America,' and the funding of next year's budget.

If the $1.8 trillion Build Back America stimulus package is implemented, the U.S. government's debt could increase. According to the Congressional Budget Office (CBO) analysis, the debt could increase by about $791.6 billion by 2026 if the bill is enacted. Although it is expected to decrease slightly by 2031 due to increased tax revenues from corporate and income tax rate hikes, the debt could still increase by $367.1 billion. This is why there have been calls for raising the debt ceiling.

It is especially necessary to pay attention to the renewable energy sector going forward. Kang Daeseung, a researcher at DB Financial Investment, said, "If the debt ceiling issue is resolved, the Democratic Party can pass the 'Build Back America' stimulus bill currently pending in the Senate without Republican support, but a reduction in scale seems inevitable to gain the consent of moderate Democratic senators." He added, "While moderate Democratic Senator Joe Manchin demands cuts mainly in social welfare measures such as four weeks of paid leave, there is little disagreement within the Democratic Party regarding climate change measures, so the climate change-related sections are expected to pass without major cuts."

The main climate change-related contents in the stimulus package include installation of residential solar panels, subsidies for electric vehicle purchases, improving building energy efficiency, and promoting eco-friendly public transportation. Researcher Kang predicted, "Since Senator Joe Manchin has stated that he is working on adjustments related to electric vehicle subsidies, it may be effective to pay attention to the value chain related to the U.S. renewable energy industry, which has not yet expressed opposition."

This content was produced with the assistance of AI translation services.