Deal in sight? Negotiators yesterday continued to try to outline a compromise full of political second thoughts to avoid declaring a default by the US federal government, which according to the latest data is expected to start on June 5 instead of June 1, which gives little more time in the White House and in the opposition.

President Joe Biden said yesterday afternoon (local time, in the early hours of this morning Greece time) that he was “optimistic”, adding that he was “hopeful” to know within hours “if we are able to conclude an agreement”.

“We’re closer (to the deal), but we haven’t closed it yet,” a source familiar with the negotiations between Democrats and Republicans said earlier, but expressed skepticism that anything would actually be announced within hours.

And Speaker of the House of Representatives Kevin McCarthy, the protagonist of this politico-economic serial on the opposition side, spoke of progress. But “nothing is agreed until it is agreed,” she added, continuing her pressure on the president.

There is a lot of pressure on this case, which is hard to understand outside of Washington, even more so outside of the US.

Among the major sticking points are Republicans’ requirement that those receiving welfare and/or government assistance, especially food aid, work for it.

White House spokesman Andrew Bates accused the opposition of being willing to put “more than eight million jobs at risk if they fail to take bread out of the mouths of hungry Americans.”

The date that the Finance Ministry says it will not be able to honor the country’s loan and other financial obligations is now June 5th, not June 1st, which gives a few more days to spare.

“Based on the most recent data available, we now estimate that the Treasury Department will not have sufficient resources to meet the government’s obligations if Congress does not raise or suspend the debt limit by June 5,” Mrs. Yellen said yesterday in a her letter to members of the US Congress.

In the first two days of June, more than 130 billion dollars will have to be paid for pensions and other coverage, especially for veterans, which means that her ministry will have “extremely low funds”, she explained.

Congress – the Democratic-controlled Senate and the Republican-controlled House – must vote as soon as possible to approve an increase in the maximum amount the state can borrow, failing which the US could be forced to declare a default, a state of default with potentially disastrous economic, financial and social consequences.

It’s a process that for years has been a mere formality, but this time, Republicans are demanding drastic cuts in public spending to give the green light. Officially, Joe Biden refused to negotiate, accusing the opposition of holding the American economy “hostage”.

In fact, advisers on both sides have been talking non-stop for weeks and according to press reports have now agreed on some rough lines.

The deal would freeze some categories of spending but leave the defense and veterans budgets intact, the New York Times and Washington Post reported.

In exchange, the debt limit will be raised for two years, for a horizon beyond the next presidential election, reducing the risk of a default until then.

Debt reduction

Each side wants to limit the damage at the political level.

Kevin McCarthy, who wants to consolidate his position, seeks to be able to boast that he imposed strict fiscal austerity, while the Democrats protected social benefits for the needy and their big investment programs.

The American president, who is campaigning for his re-election, repeated yesterday Thursday that “two opposing visions” collide in the negotiations.

The octogenarian Democrat likes to say that he is fighting for more social and tax justice, but according to the press, his negotiators agreed not to increase as much as he promised the means to fight tax evasion.

IMF Managing Director Kristalina Georgieva stressed yesterday that finding a solution is “fundamental” for the global economy, noting at the same time that the US must do “more to reduce its public debt”.

Even if an agreement is reached, the timetable will be tight. Many members of parliament have returned to their constituencies for a few days, given the opportunity by the three days of “Memorial Day” (the last Monday in May, the day after tomorrow the 29th this year).

Besides, some members of the more progressive wing of the Democrats, as well as some Republicans, are threatening not to approve, or to delay as long as they can, any text they deem to make too many concessions to the opposing side.