Aurelia Butler

WASHINGTON (Reuters) – The U.S. House of Representatives on Wednesday narrowly passed a bill to raise the government’s $31.4 trillion debt ceiling that includes sweeping spending cuts over the next decade.The bill isn’t expected to pass the Senate, and President Joe Biden would veto it if it did – but the mostly partisan 217-215 vote represents a win for Republican House Speaker Kevin McCarthy on an issue that rattled investors and markets.Now, McCarthy hopes to lure Biden into negotiations on cutting spending, even as the White House and congressional Democrats insist on a debt limit increase with no strings attached.The U.S. Treasury Department could run out of ways to pay its bills in a matter of weeks if Congress fails to act, and financial markets are already flashing warning signs. A 2011 standoff led to a downgrade of the government’s credit rating, which pushed borrowing costs higher and hammered investments.”We’ve done our job,” a victorious McCarthy told reporters just after the vote. “The Republicans have raised the debt limit. You have not. Neither has Schumer,” McCarthy added, referring to Biden and top Senate Democrat Chuck Schumer.McCarthy bridged deep divides among House Republicans to get the bill passed. Next is the far more daunting task in trying to broker a compromise with Democrats without losing the backing of some of his most conservative fellow Republicans.McCarthy called on Biden to begin negotiations on a debt limit increase and spending-cut bill and for the Senate to either approve the House bill or to pass its own. The House bill would increase Washington’s borrowing authority by $1.5 trillion or until March 31, whichever comes first, raising the specter of another round of negotiations during the 2024 presidential campaign. The bill would pare spending to 2022 levels and then cap growth at 1% a year, repeal some tax incentives for renewable energy and stiffen work requirements for some antipoverty programs.White House Press Secretary Karine Jean-Pierre said Biden would not sign off on such cuts.”President Biden will never force middle class and working families to bear the burden of tax cuts for the wealthiest, as this bill does,” she said in a statement. “The President has made clear this bill has no chance of becoming law.” DEMOCRATS SAY BILL ‘DOA’Schumer told reporters the House bill is “dead on arrival” in the Senate and that the Republican measure “only brings us dangerously closer” to an historic U.S. debt default that would shake markets and economies worldwide.Democrats control the Senate with 51 votes. Earlier in the day, House Majority Leader Steve Scalise predicted in an interview that passage of the Republican debt limit bill would change the “entire dynamic” and pressure Democrats to engage in negotiations. Republicans were quick to praise McCarthy’s victory, which had been in doubt until the last moment.”It now demonstrates that we can govern even with a five member majority, and there’s been so much criticism that we couldn’t do this,” Representative Michael McCaul said of the debt ceiling vote. “We’ve proved to the country that we can govern.”Throughout debate on the bill, Republicans cast Democrats as free-wheeling spenders of taxpayer money, which they say has pushed the national debt into a danger zone.Democrats, meanwhile, bemoaned the deep spending cuts the measure would bring on programs including healthcare for the poor, Head Start education for pre-schoolers and an array of other programs including law enforcement and airport security operations.The Department of Transportation said Wednesday the bill would shut down 375 federally-staffed and contract-run air traffic control towers around the country and result in 7,500 fewer rail safety inspection days.Early on Wednesday morning, McCarthy had to give in to some of his members’ demands to keep the legislation alive.The overnight changes removed a provision that would have ended a tax credit for biofuels that was part of Biden’s climate change initiatives in the 2022 Inflation Reduction Act.Bending to the far-right wing of the party, Republicans also accelerated some new, tougher work requirements for receiving Medicaid healthcare benefits for the poor, angering Democrats.”Republicans’ massive tax cuts to the rich have cost taxpayers over $10 trillion over the last two decades and now they want America’s workers and families to pay the price,” said Representative Richard Neal, the senior Democrat on the House Ways and Means Committee.The White House has called on Congress to raise the debt limit without conditions, as it did three times under Biden’s Republican predecessor, Donald Trump.Lawmakers do not know precisely how much time they have left to act. The “x-date” when the Treasury Department would no longer be able to pay all its bills could come as early as June or stretch later into summer. More

The Credit Union Consumer Sentiment index climbed to 59.2 in April from 53.9 in March. That compares to September’s 14-year low of 42.1 and the 77.0 recorded in February 2022, before Russia’s invasion of Ukraine.Ireland’s domestic economy weakened late last year but still posted the fastest growth in the euro zone for 2022 and is expected to expand again this year. “Stronger sentiment seems to be the result of an easing in fears rather than any sense that conditions are improving markedly at present,” the survey’s authors said in a statement.”Encouraging as the April sentiment reading is, it still suggests the current mood of the Irish consumer is dominated by uncertainty and caution.” More

CHICAGO (Reuters) – BlackRock (NYSE:BLK) has been buying U.S. Treasuries in anticipation of an economic slowdown and a protracted fight between the U.S. government and Congress around the debt limit, BlackRock Chief Investment Officer of Global Fixed Income Rick Rieder said on Wednesday.A U.S. debt default, though considered unlikely, would send financial markets into a tailspin as investors would lose confidence in the U.S. ability to pay its bonds, which serve as building blocks for the world’s financial system.Paradoxically, however, in previous debt ceiling crises investors have sought protection from the economic risks of a default by piling into U.S. long-term Treasuries.”If you go through a debt ceiling crisis, it’s a global crisis … And the flight to quality ends up being in U.S. Treasuries,” Rieder told Reuters in an interview. “If we default it will be a short-term default and so it makes sense to have some more interest rate exposure.”He said he had been adding 10-year Treasuries in recent weeks, with worries around the debt ceiling being a driver, as well as concerns around an economic slowdown and recent stress in the financial system.”The debt ceiling is certainly part of it,” he said, adding other recent steps were an overall reduction of risk in the portfolio, including in credit.Weaker-than-expected U.S. tax receipts have recently indicated that the deadline to raise the $31.4 trillion borrowing limit could be sooner than expected, sending shockwaves in the short-term part of the U.S. government bond market.The U.S. House of Representatives will vote on a Republican bill to raise the U.S. government’s $31.4 trillion debt ceiling and slash spending on Wednesday.The White House has called on Congress to raise the debt limit without conditions, as it did three times under Biden’s Republican predecessor, Donald Trump.”It’s so hard to foresee how far down the road this debt ceiling is going to take us,” Rieder said. More

Almost two-fifths of 35 to 44-year-olds have resorted to borrowing to make ends meet in the cost of living crisis, more than double the proportion of those aged over 55, according to one of the most comprehensive reports of its kind.The study by the Resolution Foundation published on Thursday also found that while nearly every demographic group had dipped into savings and cut spending owing to high inflation, a quarter of those aged under 35 had turned to the “bank of mum and dad” for help.It found that 37 per cent of people aged 35 to 44 had relied on formal lending, such as credit cards, overdrafts or loans in March, compared with 16 per cent of those aged over 55 and 26 per cent for the population as a whole.In contrast, about a quarter of 25 to 34-year-olds were forced to turn to family or friends for financial help in the past year, compared with 13 per cent in the 45 to 54 age bracket and just 2 per cent among those aged 65 and over.The study also found that almost a fifth of low-income families reported falling behind on at least one bill in the past three months. One in seven ate less or had skipped meals for seven days in the past month, double the rate of the population as a whole. About 500,000 people, equivalent to 6 per cent of low-income households, reported using a food or warm bank in the past four weeks.About 40 per cent of young people aged 25 to 34 said their mental health had been negatively affected by the rising cost of living, compared with 30 per cent across all age groups.

Molly Broome, an economist at the Resolution Foundation and author of the report, said that “almost everyone has been affected by the ongoing cost of living crisis, but different people have used different coping mechanisms to get by”.Official data released last week showed that UK inflation unexpectedly remained in double digits in March at 10.1 per cent — the highest of any G7 country and close to its 41-year high in October of 11.1 per cent.The report by the RF was supported by the Health Foundation and used data from a YouGov survey of 10,122 adults between November and March.Dave Finch, assistant director at the Health Foundation, said the state help in the form of cost of living payments was welcome but called for a wider strategy to tackle financial hardship and “prevent a rise in unaffordable problem debt and evictions”. More