"US, 'Negative Watch'... Partial Progress in Debt Ceiling Negotiations (Comprehensive)"

Yellen Reconfirms Early June Deadline

Global credit rating agency Fitch has placed the United States on "Rating Watch Negative," while reports indicate some progress has been made in debt ceiling negotiations to prevent a federal government default. As the political brinkmanship, the already reached debt ceiling, and the so-called "X-Day"?the date when available funds are expected to run out?approach, fears of default are growing.

According to Bloomberg on the 24th (local time), Republican House Speaker Kevin McCarthy told reporters, "We have made some progress, and that is very positive," adding, "We are determined to reach the right agreement, and you can see that we are working in that direction." Although there are still many unresolved issues, he expressed optimism, saying, "I still believe there is time to reach an agreement."

White House spokesperson Karine Jean-Pierre, during a briefing held amid the four-hour negotiation session that day, said productive discussions were taking place and expressed hope that "if we continue in good faith, we can reach an agreement."

While the White House and Democrats criticized Republicans for holding the U.S. economy hostage, they also argued that additional concessions from the Republican side are necessary to pass an agreement in the divided Congress.

Meanwhile, global credit rating agency Fitch rated the U.S. sovereign credit rating as AAA but designated it as "Rating Watch Negative," indicating a possible downgrade due to default risks.

Fitch stated, "This reflects increasing political partisanship that is preventing resolution of issues such as raising or suspending the debt ceiling, even as the expected default date rapidly approaches." Fitch noted that if the debt ceiling negotiations are not concluded by the given date, the U.S. credit rating could be downgraded, though it assessed the likelihood of the U.S. failing to meet its debt obligations on time as very low.

U.S. Treasury Secretary Janet Yellen. [Photo by AP News]

Amid rising fears of default, Treasury Secretary Janet Yellen reiterated that the negotiation deadline is fast approaching. Participating virtually in the Wall Street Journal (WSJ) hosted ‘CEO Council Summit’ that day, Yellen said, "It is difficult to say exactly when (available cash) will be depleted," but maintained the existing position that early June is the default deadline. She emphasized again, "It seems almost certain that we will not get past early June," and stated, "We must not allow the United States to default."

Earlier, Speaker McCarthy appeared on CNN and, when asked whether Republicans should be held responsible if a default occurs due to failed negotiations, replied, "I do not expect a default," adding, "We are not the only party involved, so it should not be blamed solely on Republicans." Conversely, CNN reported that Democrats are fiercely criticizing McCarthy, accusing him of being held back by hardline conservatives within his party and refusing to compromise.

President Biden and Speaker McCarthy held their third meeting on the 22nd to negotiate raising the debt ceiling but failed to reach an agreement. Since then, the White House and Republican negotiation teams have continued working-level talks daily.

Some believe that even if spending adjustments delay the default date, it will not extend beyond June 15. Meanwhile, the House plans to recess on the 25th ahead of the Memorial Day holiday next week, and the Republican side has reportedly instructed lawmakers to prepare for the possibility of processing an agreement.

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