Economy

WASHINGTON (Reuters) – U.S. President Joe Biden and House of Representatives Speaker Kevin McCarthy won’t come to their first meeting over raising the debt ceiling with any specific proposals to stave off a possible default, both sides indicated on Tuesday. Instead, the Wednesday meeting between Biden and McCarthy is likely to serve as the opening bell for months of back-and-forth maneuvering over raising the United States’ $31.4 trillion borrowing cap. Neither side is showing signs they’re willing to negotiate on anything just yet. Failure to reach agreement could lead to a possible default on U.S. debt as early as June. Republicans in the House have said any debt-ceiling hike should be paired with steep spending cuts. The White House says it will only discuss future spending cuts after the debt ceiling is raised.Biden will call on McCarthy to release a budget plan in the meeting and to commit to support the nation’s debt obligations, according to a White House memo seen by Reuters. “Raising the debt ceiling is not a negotiation; it is an obligation of this country and its leaders to avoid economic chaos,” White House economic adviser Brian Deese and director of the Office of Management and Budget Shalanda Young wrote. McCarthy, for his part, said Biden needs to be willing to make concessions in order to get a debt-ceiling hike though Congress.”The first thing they should do, especially as the President of the United States, (is) say he’s willing to sit down and find a common ground and negotiate together,” McCarthy told reporters in the U.S. Capitol. Unlike most other developed countries, the United States puts a hard limit on how much it can borrow, and Congress must periodically raise that cap because the U.S. government spends more than it takes in.The debt ceiling increase is usually voted in on a bipartisan basis, but Republicans have used their leverage previously to win spending cuts.Biden seemed to question McCarthy’s ability to keep Republicans in line Tuesday at a fundraiser in New York, calling McCarthy “a decent man, I think,” but noting the concessions he had to make to conservatives to become speaker. “Look what he had to do, and to make commitments that are just absolutely off the wall for a Speaker of the House to make in terms of being able to become a leader.” Detailed proposals may not emerge for several weeks. The White House has said it would release its budget proposal on March 9. House Republicans, meanwhile, will aim to produce their budget proposal in April, said House Republican Leader Steve Scalise. “I hope the president meets his deadline just like we’re going to work to meet our deadline,” Scalise said at a news conference.The White House has seized on the lack of consensus to highlight fringe proposals from some Republicans, including one that abolishes the Internal Revenue Service in favor of a higher sales tax and one that trims Social Security retirement benefits.McCarthy has ruled out cuts to Social Security and Medicare, the two largest government benefit programs. “You got to remember, you got a president here who’s never been in business… And he’s saying, ‘I’m not going to talk to you about the debt ceiling?,'” said Roger Williams, a House Republican, while exiting a conference meeting.    “It’s ridiculous. So maybe we can get that out of the way tomorrow with their meeting, and we begin to talk about what we can add and what we can subtract.”PAST SHOWDOWN A 2011 debt ceiling showdown between Democratic President Barack Obama and House Republicans took the country to the brink of default and prompted a first-ever downgrade of the country’s top-notch credit rating.Veterans of that battle warn that the politics and math are tougher this time around, making it more difficult to find a resolution until the government is about to run out of money – or after it has.”I think that the possibility of miscalculation runs higher today than it did in 2011,” said Neil Bradley, a former House Republican leadership aide who is now a top official at the U.S. Chamber of Commerce.The showdown over the growing U.S. debt threatens to roil the global economy if the United States defaults. The Treasury Department has already started taking “extraordinary measures” to stave off a default until summer after hitting the U.S. government’s $31.4 trillion borrowing limit earlier in January. (This story has been corrected to change “billion” to “trillion” in paragraph 2. The error first occurred in the previous version of this story.) More

KYIV (Reuters) – Russian forces are making incremental gains in their push to take territory in Ukraine’s eastern province of Donetsk, focusing on the town of Bakhmut north of the regional capital.Meanwhile, Ukrainian President Volodymyr Zelenskiy’s government is lobbying hard for some of its neighbours and Western allies to supply fighter jets that it can use to repulse Russian advances. It took months of Ukraine’s appeals before Western countries last week pledged modern battle tanks, and Kyiv wants jets sooner rather than later.In Paris after meeting Ukrainian Defence Minister Oleksii Reznikov, French Defence Minister Sebastien Lecornu said “there was no taboo” about supplying Kyiv with fighter planes.The United States and Britain have thus far rejected the idea but repeated their willingness to continue military support to Ukraine, which Russian forces invaded in February 2022 in what Moscow called a “special military operation” to protect Russian security and Russian speakers. The invasion has killed thousands of civilians, uprooted millions and reduced cities to rubble.More recently Russia has characterized the conflict as confronting what it says is an aggressive and expansionist U.S.-led NATO military alliance.The West has so far refused to send weapons that could be used to attack deep inside Russia for fear of starting a wider war although Moscow has denounced recent Western pledges of weapons as provocations. The United States, which has provided Ukraine about $27.2 billion in military aid since Russia’s invasion, is preparing a $2.2 billion package of additional assistance. That is expected to offer Kyiv longer-range rockets for the first time and other munitions and weapons, two U.S. officials briefed on the matter told Reuters on Tuesday.RUSSIA TARGETS BAKHMUT AREABakhmut came under renewed fire as did Klishchiivka and Kurdyumivka, villages on the southern approaches to Bakhmut, the General Staff of the Ukrainian Armed Forces said in a statement on Tuesday night. Weeks of relentless pounding of Bakhmut have been similar to the drive by Russian forces to capture two cities further north – Sievierodonetsk and Lysychansk – in June and July.Russian forces on Tuesday made no headway in attempts to advance on Avdiivka, the second focal point of Russian attacks in Donetsk region, Kyiv’s military general staff said.Russian forces also tried to advance near Lyman, a town further north in Donetsk region that was recaptured by Ukrainian forces in October, the military said.Russia was reaching further west in Donetsk by firing on the town of Vuhledar and a half dozen other towns and villages, the Ukraine military said. Vuhledar is about 148 km (90 miles) away from the main fighting in and around Bakhmut.Britain’s Ministry of Defence said the Russian force in the new Vuhledar assault was at least the size of a brigade, a unit typically comprising several thousand troops.The Ukrainian military statement did not mention the village of Blahodatne, which Russia says it has captured, and sits on one of the main roads into Bakhmut about 5 km (3 miles) north.Reuters was not immediately able to verify the situation there or other battlefield reports.Zelenskiy said he had several meetings with top defence officials on Tuesday.”We are examining in detail all the key sectors and what the prospects for them are,” he said in an evening video address, without providing details. “What the occupier is preparing and how we are already responding to Russia’s preparations to wreak revenge,” a reference to the setbacks Ukrainian troops inflicted on Russian forces last year in repelling advances around the country and retaking territory that had been occupied by Russia.DIPLOMATIC TENSIONSIn Washington, the United States said Russia was violating the New START nuclear arms control treaty between the two countries. U.S. President Joe Biden’s administration has been eager to preserve the treaty but ties with Moscow are the worst in decades over Russia’s invasion of Ukraine.”Russia’s refusal to facilitate inspection activities prevents the United States from exercising important rights under the treaty and threatens the viability of U.S.-Russian nuclear arms control,” a State Department spokesperson said. Also in Washington, former British Prime Minister Boris Johnson, a staunch supporter of providing military aid to Ukraine, met with Republican lawmakers. The Republicans took over the House of Representatives from the Democrats at the start of this year and some hardline members among them have called for an end to U.S. military and other assistance to Ukraine, which amounts to tens of billions of dollars.”My mission is to demonstrate that Ukraine will win – and that there is no conceivable case for delay in further supporting the Ukrainians to win this year,” Johnson said in a statement.U.S. Secretary of State Antony Blinken will discuss Russia’s war in Ukraine with Chinese officials during a Feb. 5-6 trip to China, the White House said on Tuesday.A week after seeming to open the door for Russia and Belarus to compete at the 2024 Olympics, the International Olympic Committee (IOC) said it is standing by sanctions imposed against the countries over Russia’s invasion of Ukraine. More

WASHINGTON (Reuters) – A Democratic president. A new Republican majority in the U.S. House of Representatives pushing for sharp spending cuts. A rapidly growing pile of debt – and a showdown that threatens to throw the global economy into turmoil.Sound familiar? Those elements driving the debate over raising the federal government’s $31.4 trillion debt ceiling were also in place back in 2011, taking the country to the brink of default and prompting a downgrade of the country’s top-notch credit rating. Veterans of that battle warn that this time around the politics and math are tougher, making it more difficult to find a resolution until the government is about to run out of money – or after it has.”This year is going to be much harder than 2011, because of the shrill nature of the political discourse,” said Charlie Bass, a Republican who served in the House during that time.Unlike most other developed countries, the United States puts a hard limit on how much it can borrow. Because the U.S. government spends more than it takes in, lawmakers must periodically raise the debt ceiling.As in 2011, Republicans aim to pair this year’s debt-ceiling hike with sharp spending cuts to narrow annual budget deficits that have ballooned in recent years due to tax cuts and COVID-19 relief.President Joe Biden insists that Congress must raise the debt ceiling without other conditions and has vowed not to negotiate with Republicans. He is due to meet top House Speaker Kevin McCarthy on Wednesday for talks on how to avoid a default that Treasury Secretary Janet Yellen says may come as soon as June.Both leaders lived through the 2011 showdown, Biden as vice president to Democrat Barack Obama and McCarthy as the No. 3 House Republican.Eric Cantor, who as the No. 2 House Republican spent hours with Biden trying to find a solution, said the president’s no-negotiations stance may prove unsustainable. “He was very much a conciliator at that point, so this is very different right now,” Cantor said in an interview. “I’m not sure how long it lasts.”Biden and several aides still serving under him were scarred by the 2011 negotiations, according to two officials granted anonymity to discuss views within the administration. They were initially shocked that hardline Republicans would even broach the subject after years of drama-free debt-ceiling hikes and then decided to negotiate to avoid the worst.SMALL, POWERFUL RIGHT WINGMcCarthy will have to try to balance the demands of a vocal right wing in his party with the reality of divided government.His grip on power is tenuous. Republicans hold a narrow 222-212 majority in the House, compared with their 242-193 majority in 2011, which will require moderates and conservatives to stick together.To win the speaker’s gavel after Congress convened in January, McCarthy agreed to enable any single member to call for a vote to unseat him, which could easily lead to his ouster if he seeks to work with Democrats. McCarthy also agreed to place three hardline conservatives on the Rules Committee, which sets the agenda for the House floor. That could enable them to block any compromise from even coming up for a vote.”It’s an obstacle we didn’t have to worry about in 2011,” said Brendan Buck, who served as an aide to then-Speaker John Boehner.Democrats hold a narrow Senate majority, as they did in 2011, and Republican leader Mitch McConnell is again in a position to help shape the outcome. Any agreement that emerges from that chamber will need bipartisan support, which could prove difficult for a Republican House majority to accept. Some House Republicans protested when McConnell in December 2021 cut a deal to raise the debt ceiling and avoid default.Only one in four Republicans serving in the House today held their seats in 2011 and observers said they may not be fully aware of risks involved with courting default – or the reality of divided government.”There’s some lessons that can be taught and some lessons that can only be learned,” said Jon Lieber, a former McConnell aide.Some newer Republican lawmakers have absorbed former President Donald Trump’s confrontational approach to governing, which adds another layer of risk, said Bass, the former Republican lawmaker.”I think they would rather see the United States go bankrupt, the dollar collapse, and see people’s fortunes go down the tubes all to make a political point,” he said.Steve Stivers, a Republican who served in the House from 2011 to 2021, predicts that Washington will find a solution before the Treasury Department runs out of money. “That’s what things like the debt ceiling are built for – they’re forcing mechanisms that create an artificial deadline,” he said.Others are less certain.”I think that the possibility of miscalculation runs higher today than it did in 2011,” said Neil Bradley, a former top Cantor aide. More

The ruling, on charges brought by the National Labor Relations Board, involved actions at two Staten Island warehouses before union votes last year.Amazon violated labor law in advance of unionization elections last year at two warehouses on Staten Island, a federal administrative judge has ruled.The judge, who hears cases for the National Labor Relations Board, ruled on Monday that Amazon supervisors had illegally threatened to withhold wage and benefit increases from employees at the warehouses if they voted to unionize. The judge, Benjamin W. Green, also ruled that Amazon had illegally removed posts on a digital message board from an employee inviting co-workers to sign a petition being circulated by the Amazon Labor Union. The union sought to represent workers at both warehouses.The ruling ordered Amazon to stop the unfair labor practices and to post a notice saying it would not engage in them.In the same ruling, the judge dismissed several accusations brought in a complaint by the labor board’s prosecutors, including charges that Amazon indicated take-home pay would fall if workers unionized; that Amazon promised improvements in a program that subsidizes workers’ educational expenses if they chose not to unionize; and that Amazon indicated that workers would be fired if they unionized and failed to pay union dues.The judge found that these accusations were either overstated or, in the final instance, that the action was not illegal.Amazon can appeal the ruling to the labor board in Washington.“We’re glad that the judge dismissed 19 — nearly all — of the allegations in this case,” Mary Kate Paradis, an Amazon spokeswoman, said in a statement, adding: “The facts continue to show that the teams in our buildings work hard to do the right thing.”The union declined to comment.The violations occurred at a vast Amazon warehouse known as JFK8, where workers voted to unionize in an election whose results were announced in April, and at a smaller, nearby warehouse known as LDJ5, where workers voted down a union the next month.In the weeks before the elections, Amazon summoned employees at the warehouses to dozens of anti-union meetings at which supervisors questioned the credibility of the Amazon Labor Union, emphasized the costliness of union dues and warned that workers could end up worse off under a union.The judge’s ruling set aside a broader question brought by labor board prosecutors: whether employers can force workers to attend such meetings.The meetings are legal under labor board precedent and common among employers facing union campaigns. But the board’s general counsel, Jennifer Abruzzo, has argued that the precedent is in tension with federal labor law and had sought to challenge it.Judge Green concluded that he lacked the authority to overturn the precedent. “I am required to apply current law,” he wrote. Ms. Abruzzo’s office can file an appeal asking the labor board in Washington to overturn the precedent. More

American and Indian officials are working toward new partnerships in defense technology, advanced telecom and semiconductors.Officials from the United States and India agreed on Tuesday to expand cooperation on advanced weaponry, supercomputing, semiconductors and other high-tech fields, as the Biden administration looks to strengthen its connections with Asian allies and offset China’s dominance of cutting-edge technologies.The agreements followed two days of high-level meetings in Washington between government officials and executives from dozens of companies, the first under a new dialogue about critical and emerging technologies that President Biden and India’s prime minister, Narendra Modi, announced in Tokyo in May.Jake Sullivan, the U.S. national security adviser, told reporters on Tuesday that the goal was for technological partnerships to be “the next big milestone” in the U.S.-Indian relationship after a 2016 agreement on nuclear power cooperation. He described the effort as a “big foundational piece of an overall strategy to put the entire democratic world in the Indo-Pacific in a position of strength.”The agreements will be a test of whether the Biden administration can realize its proposal for “friendshoring” by shifting the manufacturing of certain critical components to friendly countries. Biden officials have expressed concerns about the United States’ continued heavy reliance on China for semiconductors, telecommunications parts and other important goods. In recent months they have clamped down on the sale of advanced semiconductor technology to China, in an effort to stymie an industry that the White House says could give China a military advantage.Many companies have found it difficult to obtain the factory space and skilled workers they would need to move their supply chains out of China. India has a highly skilled work force and a government that wants to attract more international investment, but multinational companies seeking to operate there continue to complain of onerous regulations, inadequate infrastructure and other barriers.Our Coverage of the Investment WorldThe decline of the stock and bond markets this year has been painful, and it remains difficult to predict what is in store for the future.2023 Predictions: There are plenty of forecasts coming for where the S&P 500 will be at the end of the year. Should you be paying attention to them?May I Speak to a Human?: Younger investors who are navigating market volatility and trying to save for retirement are finding that digital investment platforms lack the personal touch.Tips for Investors: When you invest and where matters for taxes. But a few rules of thumb can stave off some nasty surprises.Both Mr. Biden and Mr. Modi are also propelling closer U.S.-Indian cooperation in efforts to build out the industrial and innovation bases of their countries, Mr. Sullivan said.The partnerships announced on Tuesday include an agreement between the U.S. and Indian national science agencies to cooperate on artificial intelligence and advanced wireless technology, as well as in other areas.The countries also pledged to speed up their efforts to jointly produce and develop certain defense technologies, including jet engines, artillery systems and armored infantry vehicles. The United States said it would look to quickly review a new proposal by General Electric to produce a jet engine with India.Officials also said they would work together to facilitate the build-out of an advanced mobile network in India and look for new cooperation in semiconductor production, including efforts to help India bolster chip research and production that would complement major investments in the industry in the United States.The new dialogue would include efforts to work through regulatory barriers, as well as visa restrictions that have prevented talented Indians from working in the United States, the countries said.But experts said India would need to continue to reform its permitting and tax system to lure more foreign manufacturing companies. And the United States would need to reform restrictions on transferring defense-related technology outside the country, they said, if it hopes to work with India to produce jet engines and other advanced weapons.Analysts also noted that many of the technology partnerships would hinge on new connections between the countries’ private sectors, meaning that the agreements could go only so far.India’s frequent purchases of Russian military equipment and close ties with Russia also present another wrinkle to the planned partnership. But Biden officials said they believed that the cooperation could accelerate India’s move away from Russia, to the benefit of its relationship with the United States.On Monday, Mr. Sullivan, Commerce Secretary Gina Raimondo and India’s national security adviser, Ajit Doval, met with more than 40 company executives, university presidents and others, including executives from Lockheed Martin, Tata, Adani Defense and Aerospace, and Micron Technology.A semiconductor event last year in Bengaluru, India. A technology partnership “has the potential to take U.S.-India ties to the next level,” Tanvi Madan of the Brookings Institution said.Munsif VengattilReuters“It has the potential to take U.S.-India ties to the next level,” Tanvi Madan, a senior fellow at the Brookings Institution, said of the initiative. The trick, she added, will be “getting from potential and promises to outcomes.”“Many of the decisions to collaborate or not will be made in the private sector, and companies will be assessing the business case as much as, if not more than, the strategic case,” Ms. Madan said.India has traditionally been known as a difficult partner for the United States in trade negotiations. In the talks that the Biden administration is currently carrying out in Asia, known as the Indo-Pacific Economic Forum, India bowed out of the trade portion of the deal, though it has continued to negotiate in areas like clean energy, supply chains and labor standards.But analysts said the Indian government was far more motivated on national security matters, and particularly tempted by the prospects of working with the United States to cultivate cutting-edge tech industries.“We both have a common purpose here, which is the fear that China is going to eat our lunch in all the sectors unless we find areas to cooperate and collaborate,” said Richard M. Rossow, a senior adviser at the Center for Strategic and International Studies. More

The IMF consigned Britain to the economic doghouse on Tuesday. As the only leading economy likely to contract this year, the UK’s growth forecasts were revised down by the fund at the same time as it boosted those of most other countries. Even Russia is expected to grow more than the UK in 2023, in the fund’s outlook. Britain’s politicians agree that the country has a problem. Jeremy Hunt, the chancellor, has blamed “uneven and lower growth” on poor productivity, skills gaps, low business investment and regional disparities in wealth. Rachel Reeves, his counterpart in the Labour party, simply blamed “13 years of Tory failure” in the House of Commons. Is the IMF right about Britain’s economy? The fund’s forecasts will never be entirely correct about the global economy or any one country. They are best thought of as a continuous process of updating expectations in line with the most recent economic developments. The forecast for the UK reflects the country’s disastrous autumn of Trussonomics, which came too late for the IMF’s October forecasts, so it is not surprising the fund has taken a dimmer view of Britain’s prospects. Despite the downgrade, Pierre-Olivier Gourinchas, the fund’s chief economist, said the government’s economic policy was now “on the right track”. In a parallel move, the fund took better than expected economic data from the eurozone in the face of energy price rises and China’s opening up to upgrade global growth prospects. The UK forecast is not far out of line with other recent forecasts from the OECD and the private sector. But some economists queried the fund’s combination of optimism on the world and pessimism on the UK. Ben May, director of global macro research at consultancy Oxford Economics, said he thought the IMF had become too sanguine about Chinese and US economic problems on the back of better recent data. “Rather than economies simply shrugging off the slew of shocks of the past year or so, we think these knocks are taking [more] time to seep through to real activity than we had envisaged previously,” he said. Why is the UK economy growing so slowly? There are two problems, one temporary and one persistent. The temporary problem is that Britain’s recovery from the coronavirus pandemic was too strong to keep inflation down and the Bank of England thinks the country needs a period of economic retrenchment to return to price stability.

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This transitory issue is not as acute as it appeared in the autumn because wholesale gas prices have fallen sharply. The BoE is still expected to raise interest rates to 4 per cent on Thursday, signalling that it does not think the problem has been solved. The longer-term problem reflects Hunt’s concerns about capital expenditure, skills, employment and productivity growth. Although the workforce has higher levels of education than ever, productivity growth rates dropped more than in other countries after the 2008-09 financial crisis, and business investment has not grown since the 2016 Brexit referendum. On the third anniversary of Brexit on Tuesday, Jonathan Portes, professor at King’s College London, said there was scope to disagree about the effect of leaving the EU on the UK economy, but there was no doubt that “Brexit has, as economists predicted, reduced UK trade and investment”. What is the government’s plan for increasing growth? In a speech on the economy last week, Hunt said the government’s “plan for growth” would centre on “four Es”: enterprise, education, employment and everywhere — a reference to reducing regional inequalities. But there were few details, leading business groups to describe the speech as “empty”. Jagjit Chadha, director of the National Institute of Economic and Social Research, who was in the audience, said the “overall theme is encouraging but the specifics are light, particularly on education and everywhere”. Just as noteworthy as the speech was the discarding of the government’s previous growth-enhancing policies. Unlike in Kwasi Kwarteng’s 2022 “growth plan” last September, there was no 2.5 per cent annual target for GDP increases, business and personal tax cuts or planning reform to accelerate infrastructure.Compared with Boris Johnson’s 2021 “plan for growth”, there was much less emphasis on active government “investing massively in science and technology” and focusing on “levelling up”. How can the UK improve economic growth? Most outside observers have little problem with the government’s “four Es”, but find its regularly announced new growth plans a distraction. The CBI employers organisation, for example, wants greater support for business investment to go alongside higher corporate taxes and a longer-term focus on skills and barriers to work, such as affordable childcare. Rain Newton-Smith, CBI chief economist, said: “We need a plan to lift UK growth and productivity. That’s about ensuring the UK’s got the right competitive landscape to drive investment, improve participation in the labour market, enhance skills and acts to improve energy efficiency and lead the green transition.”In terms of focus, a medium-sized economy such as the UK cannot do everything and should concentrate on success in a few key sectors, said Erik Britton, managing director of Fathom Consulting. “These should be sectors we know are highly productive and where there are [positive] spillovers from R&D into other sectors. Those are the sectors the UK needs to be in and [government] needs to support,” Britton said. In the short term, the easiest way to raise the growth rate and help reduce inflation, however, will be to increase the number of people seeking work, which has fallen since the pandemic started. This is not easy. Allan Monks, UK economist at JPMorgan, said the UK had lost almost 1mn people — nearly 4 per cent of the labour force — compared with the pre-pandemic trend, a problem that is almost unique internationally. He added that the quickest solution would be to increase immigration but acknowledged that this was likely to be rejected by politicians. But he said that other policies to encourage more workers were likely to be “costly, too slow acting or still not politically viable”, limiting the chances of success, especially because the big decline in people seeking work had come from those classed as long-term sick and the over-50s who are able to retire early. More

Ahead of a meeting at the White House on Wednesday, administration officials demanded that Republicans commit to avoiding a default on federal debt.WASHINGTON — President Biden will ask Speaker Kevin McCarthy, Republican of California, on Wednesday for details on what budget cuts his party is demanding in order to raise the federal debt limit and for assurances that Mr. McCarthy will not accept an economically debilitating government default, White House officials said.The demands, outlined in a memo that the White House released on Tuesday, are an attempt by Mr. Biden to force Republicans to engage in a debate over taxes, spending and debt on terms that are more favorable to the president than to newly empowered conservatives on Capitol Hill.Mr. Biden is seeking to force Mr. McCarthy to specify which programs he would cut — a list that most likely includes some spending that is popular with the public — and to calculate how much Republicans would add to the debt with additional tax cuts.In the memo, Brian Deese, the director of the National Economic Council, and Shalanda Young, the director of the Office of Management and Budget, said the president would release his annual budget on March 9 and asked when Mr. McCarthy would do the same.“It is essential that Speaker McCarthy likewise commit to releasing a budget, so that the American people can see how House Republicans plan to reduce the deficit — whether through Social Security cuts; cuts to Medicare, Medicaid and Affordable Care Act health coverage; and/or cuts to research, education and public safety — as well as how much their budget will add to the deficit with tax cuts for the wealthiest Americans and large corporations,” Ms. Young and Mr. Deese wrote.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

The divorce between Britain and the European Union has become the dark thread that, to many, explains why Britain is suffering more than its neighbors.LONDON — The third anniversary of Britain’s departure from the European Union passed without fanfare on Tuesday, and why not? Brexit has faded from the political forefront, unmentioned by politicians who don’t want to touch it and overlooked by a public that cares more about the country’s economic crisis.The severity of that crisis was underscored by the International Monetary Fund, which forecast this week that Britain will be the world’s only major economy to contract in 2023, performing even worse than heavily blacklisted Russia.The I.M.F. only indirectly attributed some of Britain’s woes to Brexit, noting that it suffered from a very tight labor market, which had constrained output. Brexit has aggravated those shortages by choking off the pipeline of workers from the European Union — whether waiters in London restaurants or fruit and vegetable pickers in fields.The effects of Brexit run through Britain’s last-in-class economy because they also run through its divided, exhausted politics. In a country grappling with the same energy shocks and inflation pressures that afflict the rest of Europe, Brexit is the dark thread that, to some critics, explains why Britain is suffering more than its neighbors.“One of the reasons for our current economic weakness is Brexit,” said Anand Menon, a professor of West European politics at King’s College London. “It’s not the main reason. But everything has become so politicized that the economic debate is carried out through political shibboleths.”Years of debate over Brexit, he said, had contributed to a kind of policy paralysis. “If you look at it, it is astounding how little actual governing has happened since 2016,” Professor Menon said. “It has been seven years, and virtually nothing has been done on a governmental level to fix the country’s problems.”Inflation, though it has eased slightly, continues to run at a double-digit rate.Neil Hall/EPA, via ShutterstockThose problems continue to proliferate. Inflation, though it has eased slightly, continues to run at a double-digit rate. Britain’s National Health Service is facing the gravest crisis in its history, with overcrowded hospitals and hourslong waits for ambulances. On Wednesday, Britain will face its largest coordinated strikes in a decade, with teachers, railway workers and civil servants walking off the job.Not all these problems are wholly, or even principally, a result of Brexit. But tackling any of them, experts said, will require bolder solutions than the government of Prime Minister Rishi Sunak has yet proposed. Owing largely to Brexit, Mr. Sunak’s Conservative Party remains torn by factions that thwart action on issues from urban planning to a new relationship with the European Union.Part of the problem, experts said, is that the neither the government nor the opposition Labour Party is prepared to acknowledge the negative effects Brexit has had on the economy. The government may not ring the bell of Big Ben to celebrate the anniversary, as it did on Brexit day in 2020. But to the extent that Mr. Sunak refers to Brexit, he still portrays it as an undiluted boon to the country.“In the three years since leaving the E.U., we’ve made huge strides in harnessing the freedoms unlocked by Brexit,” Mr. Sunak said in a statement marking the anniversary. “Whether leading Europe’s fastest vaccine rollout, striking trade deals with over 70 countries or taking back control of our borders, we’ve forged a path as an independent nation with confidence.”A protest on Monday against a proposed bill to limit strikes outside Downing Street in London.Andy Rain/EPA, via ShutterstockHis predecessor, Boris Johnson, also cited the early authorization and rapid deployment of a coronavirus vaccine as proof of Brexit’s value — never mind that health experts said Britain would have had the authority to approve a vaccine before its neighbors, even if it had been part of the European Union.“Let’s shrug off all this negativity and gloom-mongering that I hear about Brexit,” Mr. Johnson said in a video posted on Twitter on Tuesday afternoon. “Let’s remember the opportunities that lie ahead, and the vaccine rollout proves it.”There is little evidence that Mr. Sunak and Mr. Johnson are convincing many people. Public opinion has turned sharply against Brexit: Fifty-six percent of those surveyed thought leaving the European Union was a mistake, according to a poll in November by the firm YouGov, while only 32 percent thought it was a good idea.And the sense of disillusion is nationwide. In all but three of Britain’s 632 parliamentary constituencies, more people now agree than disagree with the statement, “Britain was wrong to leave the E.U,” according to a poll released Monday by the news website, UnHerd, and the research firm, Focaldata.The three holdouts are agricultural areas around Boston and Skegness on the country’s eastern coastline, where immigration is still a resonant issue. And even in these places, public opinion about Brexit is finely balanced.At the same time, few people express a desire to open a debate over whether to rejoin the European Union. The prospects of doing that on terms that would be remotely acceptable to either side are, for the moment, far-fetched. The Labour leader, Keir Starmer, prefers to frame his party’s message as “Making Brexit Work,” having lost an election to the Tories in 2019, whose slogan was “Get Brexit Done.”The chief executive of the N.H.S., Amanda Pritchard, from left, with Prime Minister Rishi Sunak of Britain. They were visiting the University Hospital of North Tees in Stockton-on-Tees.Pool photo by Phil NobleBritain’s problems are exacerbated by the fact that the one leader who proposed radical remedies, Liz Truss, triggered such a backlash in the financial markets that she was forced out of office in 45 days. To restore the country’s reputation with investors, Mr. Sunak has scrapped her tax cuts and adopted a fiscally austere program of higher taxes and spending cuts that the I.M.F. says will curb growth.“Although we no longer have lunatics running the asylum, we have essentially a lame-duck government that doesn’t have any semblance of a plan to restore economic growth,” said Jonathan Portes, a professor of economics at King’s College London.The trouble is that the bitter squabbling over Brexit has made obvious responses politically perilous for the prime minister. Even the I.M.F.’s projection for Britain’s growth ignited a storm of commentary on social media about whether it would help the cause of “Remainers” or reopen the Brexit debate.The fund’s assessment was not completely gloomy despite its prediction of contraction in 2023. Britain, it estimated, grew faster than Germany or France last year. After inflation cools and the burden of higher taxes eases, it said, Britain should return to modest growth in 2024.Professor Portes said that there were policies Mr. Sunak could pursue, from liberalizing planning laws to overhauling immigration rules to ease the labor shortage, that would stimulate growth. “If you put all those together,” he said, “there is a reasonable, feasible strategy that could make the next 10 years better than the last.”But he added, “Any coherent strategy involves repairing the economic relationship with Europe, and that will depend on the political dynamic.” More