Default on June 5th at the earliest

LAccording to US President Joe Biden, an agreement in the dispute over raising the US debt limit is within reach. Kevin McCarthy of the Republican Party spoke of “progress” in talks with the White House. US Treasury Secretary Janet Yellen postponed her default forecast from June 1 to June 5.

“We’re close and I’m optimistic,” Biden told reporters at the White House. He hopes for a clarification of the dispute “before the clock strikes twelve”.

McCarthy, Speaker of the House, said negotiators had made “progress”. However, he added that nothing is decided “until everything is decided”. He had previously emphasized: “I want to solve this problem.”

According to US Treasury Secretary Janet Yellen, there is a risk of a default on June 5 at the earliest, not on June 1 as previously expected, according to a letter to the Speaker of the US House of Representatives on Friday. The estimate is based on the most recent available data. Yellen called on Congress to protect confidence in the US and the country’s creditworthiness and to act as soon as possible.

Negotiations have been going on for weeks

For weeks, Democrats and Republicans have been arguing in tough rounds of negotiations about raising the debt ceiling. In the United States, Parliament decides the maximum amount of money the state can borrow. A default could have catastrophic consequences not only for the US economy.

Several US media reported that President Joe Biden’s administration and the Republicans were getting closer in the dispute that had been going on for months. According to this, the debt ceiling could be raised for two years and thus beyond the presidential election of November 2024.

In return, there will be cuts in certain government spending. That’s what the Republicans, who hold the majority in the House of Representatives and can block an increase in the debt limit, are demanding.