As the federal government's debt reached its statutory limit, the US government took special measures to avoid default.
This is from the 19th local time.
The federal government's statutory debt limit is 31.4 trillion dollars, and our money is about 3 trillion 9 trillion won.
For those of us who are unfamiliar with the unit of 'Kyung', it's a scale that doesn't even come close to how much it is.
This is the result of pouring money into various investments such as welfare policies and infrastructure, including the war in Ukraine and medical expenses.
The government debt ceiling in the United States has been in place since 1917.
Its purpose was to prevent the federal government from spending uncontrolled by Congress.
At first glance, you might think that it is because the Biden government spent unreasonably on allied support and welfare policies, but in fact, there has always been an increase in the debt ceiling in previous US governments.
Since 1960, the US government debt ceiling has been raised 78 times, according to the US Treasury Department.
Almost every year, the federal government has been spending more than it is collecting, and it has made up for it by issuing bonds and other things.
No Negotiations vs Spending Cuts First
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The Biden administration, including the White House and Treasury Department, is asking Congress every day to raise the debt ceiling without preconditions.
"It's a question of economic stability or chaos," said White House National Economic Council Director Brian Dees on CNN on the 19th, arguing that "the mere thought that the United States may not fulfill its obligations can hurt the economy."
He made it particularly clear that he had no intention of negotiating the issue of raising the debt ceiling with other issues.
But Republicans, who took control of the House in the last midterm elections, are making massive government spending cuts a precondition for raising the debt ceiling.
House Speaker Kevin McCarthy, a Republican, said in an interview with Fox News, "All governments have to balance their budgets." that" he criticized.
House Speaker McCarthy has proposed a meeting with President Biden.
In fact, this is a matter of policy judgment, and it is difficult to say that either side is right.
In a good way, it is a policy difference, and in a bad way, it is close to political strife.
Republicans say we need to stop waste and reduce budget deficits, but the Democrats are fighting that it is an investment for people's livelihood, and raising the debt ceiling and budget deficits are separate.
The problem is that it is difficult for both sides to find a point of contact in the current political landscape.
It is difficult for the White House, who is about to announce a re-election challenge, to reduce spending, and House Speaker McCarthy cannot help but notice hardliners in a situation where his position in the party is not solid enough to be elected chairman after 15 votes.
Special measures were taken...
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The federal government is unlikely to default on its debt obligations until early June, as the Treasury Department has decided to implement special measures.
A special measure is a way to create extra money by reducing expenses on a specific business instead of borrowing money, such as by issuing bonds.
However, since there are variables and limitations in adjusting spending, it is inevitable to be uncertain how much financial space will last.
Treasury Secretary Yellen also mentioned that there is 'significant uncertainty'.
There is time to spare, but as I said earlier, it is difficult for both the ruling and opposition parties to back down, and it is unclear how much time will be earned through special measures, so concerns about 'economic uncertainty' are growing.
Bloomberg News reported on the 25th local time that market anxiety is growing amid conflict over the US federal government's debt ceiling increase.
The market is watching to see when signs of a crisis will begin to show.
Treasury Secretary Yellen tweeted on the 21st (local time), "The United States has always paid off its debts since 1789, and the recognition that we are a nation that we can trust and rely on in that way has underpinned the global financial system." A default would cause widespread damage to the US economy."
The problem is that the global economy, especially the financial system, is organically connected, so the chaos in the United States does not end with only the United States.
'No way' catches people... Don't Forget the 2011 Nightmare
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No matter how fierce the conflict, you may think that the US federal government should go to default, but even if it does not go to default, damage can occur.
During the Obama administration in 2011, US politicians agreed that long-term debt reduction was necessary.
But the solution was different.
Republicans argued that the deficit should be reduced by reducing welfare spending, while the Obama administration argued that the deficit should be reduced by increasing tax revenue through tax increases.
While the tug-of-war over the increase in national debt continued, special measures by the Treasury Department took effect, bringing the country to the brink of default on its national debt for the first time in history.
In August 2011, the two parties agreed on a compromise between reducing welfare spending and increasing tax revenues, but Standard & Poor's (S&P), the credit rating agency, downgraded the US credit rating from AAA to AA+, saying the bipartisan agreement was not enough to cut fiscal spending.
It's been 70 years.
Since then, financial markets have fluctuated and the US economy has been hit hard.
There was no way our economy would be safe, as people in the US and China were told that you could catch a cold just by coughing.
As the US stock market shook, our KOSPI index also plummeted for several days in a row, and the 1,800 line collapsed.
At the time, the sovereign debt crisis of eurozone countries such as Spain and Italy also had a big impact, and the world economy suffered a huge blow as bad news intertwined.
It remains to be seen how this US debt ceiling issue will play out.
However, it seems clear that it is not an issue that can be seen across the river as if it is a political dispute in the United States.
(Photo = Getty Image Korea)