US Debt Ceiling Negotiations Stalemate... United Voices to "Prevent a Horrific Default"

Second Meeting Ends Without Progress
McCarthy: "Still Far Apart"
Congress: "Government Spending Cuts First"
White House Demands Unconditional Increase
Biden Shortens G7 Schedule to Renegotiate

The second meeting between U.S. President Joe Biden and House Speaker Kevin McCarthy to raise the U.S. debt ceiling ended without any progress. However, both sides agreed that "default is a terrible option" and showed strong willingness to negotiate. Amid concerns that the U.S. could face an unprecedented default as early as the beginning of next month, President Biden decided to shorten his upcoming overseas trip schedule to focus on reaching a negotiation agreement.

On the 16th (local time), President Biden met at the White House with Republican House Speaker McCarthy, Senate Minority Leader Mitch McConnell, Democratic House Majority Leader Hakeem Jeffries, and Senate Majority Leader Chuck Schumer to discuss the debt ceiling increase.

This meeting was the second following the previous one on the 9th, which only confirmed the differences between the two sides. After the meeting, Speaker McCarthy told reporters that "we are still far apart," confirming the gap in positions, but also expressed hope for a deal by saying "we are on a better path." He also mentioned, "It is possible to reach an agreement by this weekend." Leader Schumer also positively evaluated the meeting, saying, "We don't have much time, but we all agree that default is a terrible option."

Currently, the Republican Party, which holds the majority in the House, is demanding large-scale government spending cuts as a precondition for raising the debt ceiling, while the White House and Democrats insist that the debt ceiling is not negotiable and demand an unconditional increase. Local media, including The Washington Post (WP), reported that both sides agree on preventing a default but are at odds over which government programs to cut. It is known that before the meeting, aides from both sides discussed increasing mandatory work hours for low-income individuals receiving government support such as food assistance. The Wall Street Journal (WSJ) reported that staff-level talks are focusing on several topics where agreement might be reached, including reclaiming unused COVID-19 funds, streamlining energy project approval processes, and setting government spending caps.

However, concerns are expected to grow. The negotiation deadline is tight. President Biden is scheduled to attend the Group of Seven (G7) summit from the 17th to the 21st, and the Senate is on recess from the 22nd to the 29th for Memorial Day. The U.S. exhausted its $31.4 trillion debt ceiling in January and has been using extraordinary measures to buy time, but the estimated X-day when it can no longer meet obligations is around the 1st of next month.

Market analysts predict that even if the worst-case scenario of default is avoided, the closer it gets to X-day, the more inevitable the repercussions such as a sharp stock market decline will be. Moreover, the U.S. economy is already facing recession concerns due to over a year of aggressive Federal Reserve tightening and recent events like the Silicon Valley Bank (SVB) collapse. Treasury Secretary Janet Yellen said at the Independent Community Bankers of America (ICBA) event that "a U.S. default would cause economic and financial catastrophe," urging, "There is no time to waste. Congress must resolve the debt ceiling issue as soon as possible." She cited an analysis from the White House Council of Economic Advisers warning that a default lasting more than three months could cause the stock market to plunge 45% and eliminate up to 8.3 million jobs, potentially leading to a severe recession comparable to the Great Depression.

David Solomon, CEO of Goldman Sachs, along with 140 other top U.S. corporate executives, also called for a swift resolution to the debt ceiling negotiations. They stated, "Stress on the economy is already evident following recent bank failures," and warned, "If a default occurs, the situation will worsen. This could weaken the U.S.'s position in the global financial system." They particularly referenced the 2011 debt ceiling negotiations during the Barack Obama administration, which led to a 17% stock market drop due to partisan conflict, emphasizing the need for a quick agreement. Signatories included Pfizer CEO Albert Bourla, Morgan Stanley CEO James Gorman, and Macy's CEO Jeff Gennette.

Meanwhile, the White House announced that President Biden has shortened his planned overseas trip to focus on debt ceiling discussions. Originally, after the G7 summit, Biden was scheduled to visit Papua New Guinea and Australia, but these visits have been canceled and he will return instead.

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