The battle lines have been drawn ahead of the first meeting today between President Joe Biden and House Speaker Kevin McCarthy to discuss raising the US debt ceiling and a looming default deadline.
Republicans have painted Biden as a refusenik who has no interest in negotiations while Democrats demand that McCarthy and his party lay out the spending cuts they want to make to bring down the deficit.
A memo released yesterday by Biden’s economic advisers said the president would pose two questions to McCarthy at today’s meeting. First, according to the memo, the president will ask the Speaker to “commit to the bedrock principle that the United States will never default on its financial obligations”.
Second, Biden will call on Republicans to publish a budget blueprint laying out their plans to reduce the federal deficit.
The Speaker responded on Twitter by saying: “Mr. President: I received your staff’s memo. I’m not interested in political games. I’m coming to negotiate for the American people.”
Janet Yellen warned last month that the Treasury had begun to take “extraordinary measures” to cut spending after the US hit its $31.4tn borrow limit. Yellen also said the US ran the risk of a damaging debt default starting in early June if the dispute between the White House and Congress was not resolved.
Explainer: The US hit the debt ceiling. What happens next?
Five more stories in the news
1. Eurozone inflation slows Annual inflation in countries that use the euro slowed to 8.5 per cent, its lowest level since May, in the latest sign that price rises are slowing in most advanced economies. The fall in consumer prices, down from 9.2 per cent in December, comes a day before the European Central Bank is widely expected to increase its deposit interest rate by 50 basis points to 2.5 per cent.
2. US says Russia is not complying with nuclear arms treaty The US has determined Russia is not complying with its obligations under the last remaining nuclear arms control treaty between the two countries, officials at the US state department said yesterday. A report sent to Congress stated that Russia violated the New Start treaty by failing to allow required inspections and refusing to participate in compliance meetings.
3. Sunak faces crunch decision on N Ireland UK prime minister Rishi Sunak is facing a big test of his authority as a deal to resolve the post-Brexit trade dispute in Northern Ireland is “getting close”, according to one person briefed on the talks. Sunak will have to sell the deal to pro-UK unionist politicians in the region and Eurosceptic MPs in his own party.
4. Universal Music in talks to overhaul streaming model The world’s largest music company is in talks with big streaming platforms to overhaul the industry’s economics and direct more money towards artists, according to people familiar with the matter. The shake-up, which stands to revolutionise the way musicians make money, comes amid a rise in online bots and Spotify’s success.
5. US and India launch new tech and defence initiatives New technology, space and defence initiatives between the two countries reflect an effort to counter China in the Indo-Pacific, wean New Delhi off its reliance on Russia for weapons and boost India’s homegrown technology capacity.
The day ahead
Investors await outcome of Fed meeting European stocks and US futures were steady with the US central bank poised to lift borrowing costs by a quarter percentage point to a range of 4.5-4.75 per cent — the highest level since the start of the financial crisis in September 2007.
Opinion: With the entire credibility of central banking on the line, the Fed’s focus needs to be on fighting inflation, argues Richard Bernstein.
Economic data Labor department data is expected to show that the number of job openings slipped in December compared with the previous month. The Institute for Supply Management will also publish its manufacturing report.
Corporate results Facebook-owner Meta reports its latest company results. There are also earnings from the maker of Marlboro cigarettes in the US, Altria, as well as Peloton and T-Mobile.
What else we’re reading
Can the EU keep up with the US on green subsidies? The huge incentives in the Inflation Reduction Act are provoking a debate in Europe with ramifications for the entire single market. As the US and China pour hundreds of billions of dollars into green industries through state funding, some say the EU should go the same way. Others argue more fundamental problems need to be addressed.
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McDonald’s court ruling turns up heat on corporate executives Last week’s court decision involving the former global chief people officer at McDonald’s, who was fired following allegations of sexual misconduct in 2019, could become a cautionary tale for companies across the US.
Hindenburg vs Adani: claim and counterclaim Gautam Adani, one of the world’s richest men, has faced scrutiny since short seller Hindenburg Research accused his conglomerate of engaging in stock price manipulation and accounting fraud. The Financial Times details the allegations and the response.
Debt woes mount for US healthcare sector A fifth of America’s distressed bonds were issued by healthcare companies, according to an Ice Data Services index. The indications of financial trouble highlight how the sprawling healthcare industry in the US is under pressure from rising interest rates and a slowing economy after a frenzy of private equity deals.
Is the IMF right about the UK economy? The fund consigned Britain to the economic doghouse this week when it singled out the UK as the only leading economy likely to contract this year. Is the forecast correct? And if so, why is the UK economy growing so slowly, and what can be done about it?
Saudi Arabia’s ambitious tourist push Saudi Arabia wants to lure 100mn visitors annually by the end of the decade. Despite its ambitions, there are doubts about whether the deeply conservative kingdom, where alcohol is forbidden and unmarried couples theoretically face prosecution, can compete with the party vibe of Dubai or the mix of beaches and history in Egypt.
Take a break from the news
Mercedes-Benz opened the doors to the world’s most extraordinary car collection and allowed Peter Aspden an extremely rare peak inside. “I was once allowed five minutes on my own in the Sistine Chapel, and this room recalls a similar sensation of wanting to look in detail at everything around me,” Peter writes.
Source: Economy - ft.com
