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    What’s in the CHIPS Act, Aimed at Childcare Expansion and National Security

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    A sprawling new program for the semiconductor industry is foremost about national security, but it will try to advance other priorities as well.The Biden administration unveiled rules Tuesday for its “Chips for America” program to build up semiconductor research and manufacturing in the United States, beginning a new rush toward federal funding in the sector.The Commerce Department has $50 billion to hand out in the form of direct funding, federal loans and loan guarantees. It is one of the largest federal investments in a single industry in decades and highlights deepening concern in Washington about America’s dependence on foreign chips.Given the huge cost of building highly advanced semiconductor facilities, the funding could go fast, and competition for the money has been intense.Here’s a look at the CHIPS and Science Act, what it aims to do and how it will work.Funding chip production and researchThe largest portion of the money— $39 billion — will go to fund the construction of new and expanded manufacturing facilities. Another $11 billion will be distributed later this year to support research into new chip technologies.The bulk of the manufacturing money is likely to go to a few companies that produce the world’s most advanced semiconductors — including Taiwan Semiconductor Manufacturing Company, Samsung Electronics, Micron Technology and, perhaps in the future, Intel — to help them build U.S. facilities.Some will go to makers of older chips that are still essential for cars, appliances and weapons, as well as suppliers of raw materials for the industry and companies that package the chips into their final products.While some critics have questioned the wisdom of giving grants to a profitable industry, semiconductor executives argue that they have little incentive to invest in the United States, given the higher costs of workers and running a factory.The Global Race for Computer ChipsU.S. Industrial Policy: In return for vast subsidies, the Biden administration is asking chip manufacturers to make promises about their workers and finances, including providing affordable child care.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.A Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.The administration does not plan to fund entire projects: Biden administration officials say they plan to offer grants of between 5 to 15 percent of a company’s capital expenditures for a project, with funding not expected to exceed 35 percent of the cost. Companies can also apply for a tax credit reimbursing them for 25 percent of project construction.Limiting foreign dependenceGina Raimondo, the secretary of commerce, describes the program as foremost a national security initiative.While the United States is still a leader in designing chips, most manufacturing has been sent offshore. Today, more than 90 percent of the most technologically advanced chips, which are critical for the U.S. military and the economy, are produced in Taiwan. That has prompted concerns about the supply’s vulnerability, given China’s aggression toward Taiwan and the potential for a military invasion of the island.At the same time, China has increased its market share in less advanced chips that are still critical for cars, electronics and other products. The United States manufactures 12 percent of chips, though none of the world’s most advanced.Chip shortages during the pandemic forced factories to halt work and brought home in a tangible way how vulnerable the supply chain is to disruption. Workers at Ford Motor factories in Michigan and Indiana worked a full week just three times last year because of a chips shortage, Ms. Raimondo said in a speech at Georgetown University last week. That helped create a car shortage and raise the price of cars, stoking inflation.The Commerce Department says the program will also provide the Department of Defense and the national security community with a domestic source of the world’s most advanced chips.An Intel factory under construction in Arizona. The Biden administration unveiled the rules for its program to build up U.S. semiconductor research and manufacturing.Philip Cheung for The New York TimesBuilding chip hubsAccording to Ms. Raimondo, the goal is to build at least two U.S. manufacturing clusters to produce the most advanced types of logic chips, as well as facilities for other kinds of chips, and complex supply networks to support them.Commerce officials have declined to speculate where these facilities might be, saying they must review applications. But chip makers have already announced billions of dollars in plans for new investments around the United States.TSMC, which produces most of the world’s leading-edge chips, has been busy expanding in Arizona, while No. 2 Samsung is growing in Texas. Micron, which makes advanced memory chips, has announced big expansion plans in New York. And Intel, a U.S. technology giant that is investing heavily to try to capture a technological edge, has broken ground on a “megasite” in Ohio.Ms. Raimondo has said the vision is to restore the United States to a position of leadership in semiconductor technology, to the point where every major global chip company wants to have both research and manufacturing facilities in the United States.Still, there is skepticism about how much the program can do. One 2020 study, for example, found that a $50 billion investment in the industry would increase U.S. market share only to 14 percent.Protecting taxpayer fundsThe stakes are high for the Biden administration to prove this foray into industrial policy can work. Critics have argued that the federal government may not be the best judge of winners and losers. If the administration gets it wrong, it could face intense criticism.The Commerce Department said it would look closely at companies that applied for funding, to try to ensure that they were not being given more taxpayer dollars than they needed.In a decision that may irk some companies, the department said projects receiving grants would be required to share a portion of any unanticipated profits with the federal government, to ensure that companies gave accurate financial projections and didn’t exaggerate costs to get bigger awards.The Commerce Department also said it would dole out funding over time as companies hit project milestones, and give preference to those that pledged to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price.Companies are also barred from making new, high-tech investments in China or other “countries of concern” for at least a decade, to try to ensure that taxpayer money does not go to fund new operations in China.But analysts said it remained to be seen how difficult it would be to enforce these provisions. Company finances can be opaque, and when a company saves a dollar in the United States, it may then choose to invest it elsewhere.Helping workers by attaching big stringsThe program also includes some ambitious and unusual requirements aimed at benefiting the people who will staff semiconductor facilities.For one, the department will require companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for plant construction workers and operators. This could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost or directly subsidizing workers’ care costs. Ms. Raimondo has said child care will draw more people into the work force, when many businesses are struggling in a tight labor market.Applicants are also required to detail their engagement with labor unions, schools and work force education programs, with preference given to projects that benefit communities and workers.Other provisions will encourage companies, universities and other parties to offer more training for workers, both in advanced sciences and in skills like welding. The department said it would give preference to projects for which state and local governments were providing incentives with “spillover” benefits for communities, like work force training, education investment or infrastructure construction.This is part of the Biden administration’s “worker-centered” approach to economic policy, which seeks to use the might of the federal government to benefit workers. But some critics say it could put the program’s goal of building the most advanced semiconductor factories at risk, if it adds excessive costs to new projects. More

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    Biden’s Semiconductor Plan Flexes the Power of the Federal Government

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    In return for vast subsidies, the Biden administration is asking the chip industry to make promises about its workers and finances.WASHINGTON — Semiconductor manufacturers seeking a slice of nearly $40 billion in new federal subsidies will need to ensure affordable child care for their workers, limit stock buybacks and share certain excess profits with the government, the Biden administration will announce on Tuesday.The new requirements represent an aggressive attempt by the federal government to bend the behavior of corporate America to accomplish its economic and national security objectives. As the Biden administration makes the nation’s first big foray into industrial policy in decades, officials are also using the opportunity to advance policies championed by liberals that seek to empower workers.While the moves would advance some of the left-behind portions of the president’s agenda, they could also set a fraught precedent for attaching policy strings to federal funding.Last year, a bipartisan group of lawmakers passed the CHIPS Act, which devoted $52 billion to expanding U.S. semiconductor manufacturing and research, in hopes of making the nation less reliant on foreign suppliers for critical chips that power computers, household appliances, cars and more. The prospect of accessing those funds has already enticed domestic and foreign-owned chip makers to announce plans for or begin construction on new projects in Arizona, Texas, Ohio, New York and other states.On Tuesday, the Commerce Department will release its application for manufacturers seeking funds under the law. It will include a variety of requirements that go far beyond simply encouraging semiconductor production.For example, the department will tell companies seeking awards of $150 million or more to guarantee affordable, high-quality child care for workers who build or operate a plant.Those projects will also be required to share a portion of any unanticipated profits with the federal government. Companies applying for awards will be required to submit detailed financial projections, with the federal government entitled to share in any “upside” profits. The Commerce Department depicted that requirement as a way to encourage companies to make their projections as accurate as possible, and not exaggerate any losses to try to secure more funding.Preference will also be given to applicants that promise to refrain from stock buybacks, which tend to enrich shareholders and corporate executives by increasing a company’s share price. The law already prohibits companies from directly using federal money to finance stock buybacks or pay dividends.Gina Raimondo, the Commerce secretary, said in an interview that the financial rules would encourage companies to ask only for funding they really need and prevent them from diverting taxpayer dollars to pad the pockets of their shareholders.“We don’t want to spend a dollar more than necessary to make these projects happen,” she said.The requirements will join a growing list of administration efforts to expand the reach of President Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy American” provisions to money from a bipartisan infrastructure law.The Global Race for Computer ChipsA Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Crackdown on China: The United States has been aiming to prevent China from becoming an advanced power in chips, issuing sweeping restrictions on the country’s access to advanced technology.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.Companies that receive chip subsidies to build new plants will be able to use some of the funding to meet the new child care requirement. That could include building company child care centers near construction sites or new plants, paying local child care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.Other provisions of the program will encourage companies, universities and other parties to offer more training for American workers, in advanced sciences but also in fields like welding. The program will encourage colleges and universities to triple their graduation of new engineers over the next decade, Ms. Raimondo said in a speech last week, while also offering high-paying jobs to tens of thousands of American workers without four-year college degrees.Ms. Raimondo outlined an ambitious vision for investing in the United States to build “a self-propelling engine of innovation and production.” The goal of the program, she said, was to create at least two manufacturing clusters for the most cutting-edge chips, as well as factories for older chips. The ultimate aim would be to spur a vibrant semiconductor ecosystem in which every leading global chip company would feel the need to have both research and manufacturing in the United States, she said.In interviews, Ms. Raimondo said the CHIPS requirements would help companies attract women to fill open jobs at a moment when many companies are struggling with a labor shortage.Chip makers, Ms. Raimondo said, “will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The rules for chip makers come on top of other requirements written into the law, including a ban on certain new investments in China. Under that restriction, chip manufacturers that take U.S. funding cannot make new, high-tech investments in China or other “countries of concern” for at least a decade, a prohibition designed to ensure that U.S. taxpayer money does not go toward building operations in China.But analysts have argued that some of these restrictions may be difficult to uphold, given that money is fungible and can pass from one part of a company to another outside of public sight. Some Republican and Democratic lawmakers have also questioned the wisdom of giving any taxpayer money to the chip industry, which is generally profitable. Executives have countered that the high cost of operating in the United States — and subsidies offered by foreign governments — make it cheaper for semiconductor companies to manufacture their products offshore.The next few months will provide the first test of how the Commerce Department balances those concerns. Ms. Raimondo said companies would have to open their books to her team, and that the goal would be to try to “crowd in” private investment, rather than canceling it out.According to the funding application, companies that have secured other sources of private capital will receive “strong preference” for government aid, and applicants will need to have secured some kind of incentive from a state or local government to be eligible for the funding.Commerce officials will prioritize projects linked to state and local incentive programs that create “spillover benefits” for communities, like investments in work force, education or infrastructure, rather than policies like direct tax abatements that benefit lone companies, it said.The rules also seek to address rising concerns among American employers, including manufacturers, that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women.Mr. Biden pushed Congress to address those concerns over the past two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.But Mr. Biden did persuade lawmakers to approve an assortment of new spending programs seeking to bolster American manufacturing. Now, the Commerce Department is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill, the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or five percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Child Care Employment at the University of California, Berkeley.Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than eight million slots were available.That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse, N.Y., area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities is nearly three times the size of the actual care capacity in the region.In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.Commerce Secretary Gina Raimondo, center, with Gov. Kathy Hochul of New York, said that the child care requirements should help companies hire mothers, easing a labor shortage.Sarah Silbiger for The New York TimesIn a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.Only about three in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.Some American manufacturers have already turned to on-site care facilities to help meet workers’ needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.Chad Moutray, the director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote. More

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    To Tap Federal Funds, Chip Makers Will Need to Provide Child Care

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    The move seeks to help more women join the work force as industry leaders complain of labor shortages.WASHINGTON — The Biden administration plans to leverage the federal government’s expansive investment in the semiconductor industry to make progress on another goal: affordable child care.On Tuesday, the Commerce Department will announce that any semiconductor manufacturer seeking a slice of nearly $40 billion in new federal subsidies will need to essentially guarantee affordable, high-quality child care for workers who build or operate a plant.Last year, a bipartisan group of lawmakers passed the CHIPS Act, which devoted $39 billion to directly boost U.S. semiconductor factories as part of $52 billion in subsidies for the industry, in hopes of making the nation less reliant on foreign suppliers for critical chips that power computers, video games, cars and more.Companies that receive the subsidies to build new plants will be able to use some of the government money to meet the new child care requirement. They could do that in a number of ways, in consultation with Commerce officials, who will set basic guidelines but not dictate how companies ensure workers have access to care they can afford.That could include building company child-care centers near construction sites or new plants, paying local child-care providers to add capacity at an affordable cost for workers, directly subsidizing workers’ care costs or other, similar steps that would ensure workers have access to care for their children.American employers, including manufacturers, are increasingly raising concerns that a lack of access to affordable child care is blocking millions of Americans from looking for work, particularly women. President Biden pushed Congress to address those concerns over the last two years, proposing hundreds of billions of dollars for new child care programs, but he was unable to corral support from even a majority of Senate Democrats.But Mr. Biden did convince lawmakers to approve a range of new spending programs seeking to boost American manufacturing. Now, Commerce is trying to utilize a centerpiece of those efforts, which aims to expand American semiconductor manufacturing, to make at least a small dent in his large goals for the so-called care economy.The Global Race for Computer ChipsA Ramp-Up in Spending: Amid a tech cold war with China, U.S. companies have pledged nearly $200 billion for chip manufacturing projects since early 2020. But the investments have limits.Crackdown on China: The United States has been aiming to prevent China from becoming an advanced power in chips, issuing sweeping restrictions on the country’s access to advanced technology.Arizona Factory: Internal doubts are mounting at Taiwan Semiconductor Manufacturing Company, the world’s biggest maker of advanced chips, over its investment in a new factory in Phoenix.CHIPS Act: Semiconductor companies, which united to get the sprawling $280 billion bill approved last year, have set off a lobbying frenzy as they argue for more cash than their competitors.It joins a growing list of administration efforts to expand the reach of Mr. Biden’s economic policies beyond their primary intent. For instance, administration officials have attached stringent labor standards and “Buy America” provisions to money from a bipartisan infrastructure law. The child care requirement will be flexible for chip makers, but it will almost certainly divert some subsidy dollars that are meant to expand factory capacity and create jobs.The Commerce Department is expected to release its application on Tuesday, allowing companies to begin making a case for federal subsidies that the industry lobbied hard to secure from Congress.The prospect of accessing those funds has already enticed domestic and foreign-owned chip makers to announce billions of dollars in plans for new investments in Arizona, central New York and elsewhere.But even as they ramp up investments, companies are complaining of difficulties in finding workers to build and operate manufacturing facilities.America’s child care industry has not fully rebounded from the pandemic recession. It is still about 58,000 workers, or 5 percentage points, short of its prepandemic peak, according to an analysis of Labor Department data by the Center for the Study of Childcare Employment at the University of California-Berkeley.Shortly before the pandemic, the Bipartisan Policy Center in Washington surveyed 35 states and found more than 11 million children had a potential need for child care — yet fewer than 8 million slots were available.That shortage is particularly acute in some of the areas where manufacturers are set to begin building new chip plants spurred by the new legislation. Commerce Department officials calculate that in the Syracuse area, where Micron announced a $100 billion chip making investment last year after Mr. Biden signed the new law, the need for slots in child care facilities is nearly three times the size of the actual care capacity in the region.In Phoenix, where semiconductor manufacturing is booming, child care costs consume about 18 percent of a typical construction or manufacturing worker’s salary. That share is higher than the national average.Commerce Secretary Gina Raimondo, center, with Gov. Kathy Hochul of New York, said that the child care requirements should help companies hire mothers, easing a labor shortage.Sarah Silbiger for The New York TimesGina Raimondo, the Commerce secretary, said in an interview that the child-care requirements should help companies cope with a tight labor market by making it easier for them to attract and retain caregivers who have been kept from working by difficulties finding care for their children.In a speech last week, Ms. Raimondo called efforts to attract more women to the work force “a simple question of math” for industries complaining of labor shortages. “We need chip manufacturers, construction companies and unions to work with us toward the national goal of hiring and training another million women in construction over the next decade to meet the demand not just in chips, but other industries and infrastructure projects as well,” she said.Only about 3 in 10 U.S. manufacturing workers are women. Ms. Raimondo said the CHIPS Act would fail if the administration did not help companies change those numbers, by bringing in women who have children.“You will not be successful unless you find a way to attract, train, put to work and retain women, and you won’t do that without child care,” Ms. Raimondo said in an interview.The Commerce requirement would represent a relatively small step toward Mr. Biden’s much larger, and as-yet unfulfilled, child care ambitions.Mr. Biden unveiled a $4 trillion economic agenda in the months after he took office. It was split into two parts. One focused on physical investments: repairing bridges and water pipes, laying broadband cable, spurring a shift to low-emission sources of energy and catalyzing new manufacturing capacity to compete on a global stage. It was a source of repeated legislative success for the president, who signed a bipartisan infrastructure bill, the CHIPS bill and a climate, health and tax bill that passed with only Democratic votes.But Mr. Biden failed to persuade centrist holdouts in his party, like Senators Kyrsten Sinema of Arizona and Joe Manchin III of West Virginia, to back most of the provisions in the second half of his agenda. Those were largely the president’s plans to invest in people: federally guaranteed paid leave; subsidized care for children, the disabled and older Americans; universal prekindergarten; free community college for all, and more.The lopsided nature of Mr. Biden’s success threatens to exacerbate existing gender disparities in the economy. Some economists warn they could hinder future economic growth. Many of Mr. Biden’s people-focused programs were deliberately aimed at boosting female participation in the work force.It could be years before Democrats have another opportunity to pass those programs. Republicans won control of the House of Representatives last fall and roundly oppose Mr. Biden on new spending proposals and the tax increases on corporations and high earners that he has called for to cover that spending. Progressive groups and liberal lawmakers largely concede there is little chance of a child care bill making its way to Mr. Biden’s desk before the 2024 election.When it became clear last year that sweeping plans to expand and subsidize child care would not make it into the climate, health and tax bill that marked the culmination of Mr. Biden’s economic efforts in Congress, Ms. Raimondo gathered aides around a conference table. She told them, she said, that “if Congress wasn’t going to do what they should have done, we’re going to do it in implementation” of the bills that did pass.Some American manufacturers have already turned to on-site care facilities to help meet workers needs. The automaker Toyota has provided 24-hour care at a factory in Kentucky since 1993 and one in Indiana since 2004.Chad Moutray, director of the Center for Manufacturing Research at the Manufacturing Institute, which is affiliated with the National Association of Manufacturers, wrote in a report late last year that child care availability is part of the reason women do not seek more jobs in manufacturing.“Women represent a sizable talent pool that manufacturers cannot ignore,” he wrote. More

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    IRS Decision Not to Tax Certain Payments Carries Fiscal Cost

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    The Biden administration has opted not to tax state payments to residents, a decision that could add to the nation’s fiscal woes.WASHINGTON — More than 20 state governments, flush with cash from federal stimulus funds and a rebounding economy, shared their windfalls last year by sending residents one-time payments.This year, the Biden administration added a sweetener, telling tens of millions taxpayers they did not need to pay federal taxes on those payments.That decision by the Internal Revenue Service, while applauded by some tax experts and lawmakers, could cost the federal government as much $4 billion in revenue at a time when Washington is struggling with a ballooning federal deficit and entering a protracted fight over the nation’s debt limit.The I.R.S.’s ruling came after bipartisan pressure from lawmakers and was the latest move by the agency to forgo revenue this tax season.In December, the I.R.S. delayed by a year a new requirement that users of digital wallets like Venmo and Cash App report income on 1099-K forms if they had more than $600 of transactions. That requirement, which was part of the American Rescue Plan of 2021, was projected to raise nearly $1 billion in tax revenue per year over a decade. The last-minute decision to delay it followed intense lobbying from business groups and political backlash directed at the Biden administration, which was accused of breaking its pledge not to raise taxes on people making less than $400,000.Taken together, the moves by the I.R.S. run counter to two big economic issues bedeviling Washington — rapid inflation and concerns about the government’s ability to avoid defaulting on its debt.Allowing residents to avoid paying taxes on their state rebates means more money in their pockets to spend at a moment when the Federal Reserve is trying to rein in consumer and business spending to cool rising prices. A report released on Friday showed that, despite the Fed’s efforts to slow the economy, personal spending sped up in January.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    U.S. Could Default on Debt as Early as Summer, New Estimate Says

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    The Bipartisan Policy Center said the nation could run out of cash this summer or early fall if Congress did not raise the debt limit.WASHINGTON — The United States faces a default sometime this summer or early fall if Congress does not raise or suspend the debt ceiling, a Washington think tank warned on Wednesday.The projection from the Bipartisan Policy Center is the latest estimate of when the government could run out of cash to pay its bills. The nation, which borrows huge sums to help pay for everything from military salaries to Social Security benefits, hit its $31.4 trillion borrowing cap on Jan. 19. Since then, the Treasury Department has been employing what are known as extraordinary measures to ensure that the government has enough to pay what it owes, including payments to bondholders.“We anticipate that those emergency measures, as well as the cash that Treasury has on hand, will most likely be exhausted at some point during the summer or early fall,” Shai Akabas, the center’s director of economic policy, said during a briefing on Wednesday morning.Last week, the nonpartisan Congressional Budget Office projected that the department’s ability to prevent the United States from defaulting on its debt could be exhausted between July and September. That estimate was slightly more favorable than what Treasury Secretary Janet L. Yellen suggested when she told Congress last month that her department’s ability to keep financing the country’s obligations could be exhausted in June.The day when the United States runs out of cash — known as the X date — depends largely on how much the Treasury Department collects in 2022 tax revenue, the Bipartisan Policy Center said. The group warned that moment could be “too close for comfort” given the vagaries around tax receipts.“There is a possibility that the cash balance in early to mid-June will be so low that it will necessitate action,” Mr. Akabas said. He added that given “the considerable uncertainty in our nation’s current economic outlook,” it was impossible to know for certain when the X date might happen.“Policymakers have an opportunity now to inject certainty into the U.S. and global economy by beginning, in earnest, bipartisan negotiations around our nation’s fiscal health and taking action to uphold the full faith and credit of the United States well before the X date,” he said.Ms. Yellen’s extraordinary measures to keep the government running have included redeeming some existing investments and suspending new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Once those measures are exhausted, the United States will need to borrow more money or face default. She has urged Congress to raise or suspend the debt limit.It remains unclear how quick or easy it would be to do that. Republican lawmakers have insisted that President Biden agree to undefined spending cuts to win their votes to raise the cap, arguing that the borrowing binge is putting the United States on a path to fiscal disaster. Mr. Biden has insisted that he will not negotiate spending cuts as part of any debt limit legislation, saying that the cap has to be raised to fund obligations that Congress — including Republicans — have already approved. More

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    China’s Economic Support for Russia Could Elicit More Sanctions

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    U.S. officials pledged to crack down on shipments to Russia that can be used for both civilian and military purposes, but that has proved hard to police.WASHINGTON — President Biden and his top officials vowed this week to introduce additional sanctions aimed at impeding Russia’s war efforts against Ukraine. But the administration’s focus is increasingly shifting to the role that China has played in supplying Russia with goods that have both civilian and military uses.As one of the world’s biggest manufacturers of products like electronics, drones and vehicle parts, China has proved to be a particularly crucial economic partner for Russia.Beijing has remained officially unaligned in the war. Yet China, along with countries like Turkey and some former Soviet republics, has stepped in to supply Russia with large volumes of products that either civilians or armed forces could use, including raw materials, smartphones, vehicles and computer chips, trade data shows.Administration officials are now expressing concern that China could further aid Russia’s incursion by providing Moscow with lethal weapons. While there is no clear evidence that China has given weapons and ammunition to Russia, Secretary of State Antony J. Blinken warned in recent days that China may be preparing to do so.President Biden, speaking in Kyiv on Monday, said the United States and its partners would announce new measures targeting sanctions evasion this week. He did not specify whether those actions would be directed at Moscow or its trading partners.“Together we have made sure that Russia is paying the price for its abuses,” he said the next day in Warsaw.And in a speech on Tuesday at the Council on Foreign Relations, Wally Adeyemo, the deputy Treasury secretary, said the United States would be working “to identify and shut down the specific channels through which Russia attempts to equip and fund its military.”“Our counterevasion efforts will deny Russia access to the dual-use goods being used for the war and cut off these repurposed manufacturing facilities from the inputs needed to fill Russia’s production gaps,” he said.The comments came on the same day that Wang Yi, China’s top diplomat, visited Moscow.The actions that the United States has taken against Russia in partnership with more than 30 countries constitute the broadest set of sanctions and export controls ever imposed against a major economy. But this regime still has its limits.One year into the war, the Russian economy is stagnant, but not crippled. The country has lost direct access to coveted Western consumer brands and imports of the most advanced technology, like semiconductors. But individuals and companies around the world have stepped in to provide Russia with black market versions of these same products, or cheaper alternatives made in China or other countries.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors, a U.S. official said.Maxim Shipenkov/EPA, via ShutterstockIn particular, the United States and its allies appear to have had limited success in stopping the trade of so-called dual-use technologies that can be used in both military equipment and consumer goods.The United States included many types of dual-use goods in the export controls it issued against Russia last February, because the goods can be repurposed for military uses. Aircraft parts that civilian airlines can use, for example, may be repurposed by the Russian Air Force, while semiconductors in washing machines and electronics might be used for tanks or other weaponry.The Chinese Spy Balloon ShowdownThe discovery of a Chinese surveillance balloon floating over the United States has added to the rising tensions between the two superpowers.Tensions Rise: In the aftermath of the U.S. downing of a Chinese spy balloon on Feb. 4 and three unidentified flying objects a week later, the nations have traded accusations over their spying programs.U.S.-China Meeting: Secretary of State Antony Blinken held a confrontational meeting with his Chinese counterpart on Feb. 18 in Munich, resuming diplomatic contact between Washington and Beijing.A ‘Military-Civil Fusion’: The international fracas over China’s spy balloon program has thrown a light on Beijing’s efforts to recruit commercial businesses to help strengthen the Chinese military.Unidentified Objects: As more objects were shot down after the balloon incident, experts warned that there was an “endless” array of potential targets crowding America’s skies. Here’s a look at some of them.Top U.S. officials warned their Chinese counterparts against supporting Russia’s war effort after the invasion of Ukraine last year, saying there would be firm consequences. While China has been careful not to cross that line, it has provided support for Russia in other ways, including through active trade in certain goods..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.The United States has cracked down on some of the companies and organizations providing goods and services to Russia. In January, it imposed sanctions on a Chinese company that had provided satellite imagery to the Wagner mercenary group, which has played a large role in the battle for eastern Ukraine. In December, it added two Chinese research institutes to a list of entities that supply the Russian military, which will restrict their access to U.S. technology.But tracking by research firms shows that trade in goods that the Russian military effort can use has flourished. According to the Observatory of Economic Complexity, an online data platform, shipments from China to Russia of aluminum oxide, a metal that can be used in armored vehicles, personal protective equipment and ballistic shields, soared by more than 25 times from 2021 to 2022.Shipments of minerals and chemicals used in the production of missile casings, bullets, explosives and propellants have also increased, according to the Observatory of Economic Complexity. And China shipped $23 million worth of drones and $33 million worth of certain aircraft and spacecraft parts to Russia last year, up from zero the prior year, according to the group’s data.Data from Silverado Policy Accelerator, a Washington nonprofit, shows that Russian imports of integrated circuits, or chips, which are crucial in rebuilding tanks, aircraft, communications devices and weaponry, plummeted immediately after the invasion but crept up over the past year.In December, Russia’s imports of chips had recovered to more than two-thirds of their value last February, just before the war began, according to Silverado. China and Hong Kong, in particular, together accounted for nearly 90 percent of global chip exports to Russia by value from March to December.Shipments from China to Russia of smart cards, light-emitting diodes, polysilicon, semiconductor manufacturing equipment and other goods have also risen, the firm said.Secretary of State Antony J. Blinken said he had shared concerns with Wang Yi, China’s top diplomat, that Beijing was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine.Pool photo by Stefani ReynoldsRelations between the United States and China have soured in recent weeks after the flight of a Chinese surveillance balloon across the United States early this month. But divisions over Russia are further straining geopolitical ties. A meeting between Mr. Blinken and Mr. Wang, his Chinese counterpart, on the sidelines of the Munich Security Conference on Saturday night was particularly tense.U.S. officials have been sharing information on China’s activities with allies and partners in their meetings in Munich, a person familiar with the matter said.On “Face the Nation” on Sunday, Mr. Blinken said he had shared concerns with Mr. Wang that China was considering providing weapons and ammunition to aid Russia’s campaign in Ukraine, and that such an action would have “serious consequences” for the U.S.-Chinese relationship.“To date, we have seen Chinese companies — and, of course, in China, there’s really no distinction between private companies and the state — we have seen them provide nonlethal support to Russia for use in Ukraine,” Mr. Blinken said.“The concern that we have now is, based on information we have, that they’re considering providing lethal support,” he added. “And we’ve made very clear to them that that would cause a serious problem for us and in our relationship.”U.S. officials have emphasized that China by itself is limited in its ability to supply Russia with all the goods it needs. China does not produce the most advanced types of semiconductors, for example, and restrictions imposed by the United States in October will prevent Beijing from buying some of the most advanced types of chips, and the equipment used to make them, from other parts of the world.Russia is unable to produce precision missiles today because the country no longer has access to leading-edge semiconductors made by the United States, Taiwan, South Korea and other allied sources, a senior administration official said on Monday.“While we are concerned about Russia’s deepening ties with them, Beijing cannot give the Kremlin what it does not have, because China does not produce the advanced semiconductors Russia needs,” Mr. Adeyemo said during his remarks. “And nearly 40 percent of the less advanced microchips Russia is receiving from China are defective.”But Ivan Kanapathy, a former China director for the National Security Council, said that most of what Russia needed for its weapons were less advanced chips, which are manufactured in plenty in China.“The U.S. government is very well aware that our export control system is designed in a way that really relies on a cooperative host government, which we don’t have in this case,” Mr. Kanapathy said.He added that it was “quite easy” for parties to circumvent export control through the use of front companies, or by altering the names and addresses of entities. “China is quite adept at that.” More

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    Biden Labor Secretary to Depart to Run N.H.L. Players Union

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    Martin J. Walsh, a former mayor of Boston, was regarded as an unusually visible labor secretary.Labor Secretary Martin J. Walsh is leaving the Biden administration to become executive director of the National Hockey League Players’ Association, the union announced on Thursday.Mr. Walsh, a former Boston mayor who had led the city’s powerful Building and Construction Trades Council, helped to bolster the Biden administration’s pro-union credentials and usher in a period of more aggressive workplace regulation after the relatively hands-off approach during the Trump administration.Mr. Walsh said in a statement that he would leave the Labor Department in mid-March.Alongside President Biden, who has been more vocal about supporting unions than any other president in decades, Mr. Walsh was arguably the administration’s most visible proponent of unions. He joined Mr. Biden and Vice President Kamala Harris in meeting union organizers at the White House, and he served as vice chairman of an administration task force exploring how the federal government could increase union membership.Although union membership fell to 10.1 percent of the work force last year, the lowest rate on record, the country added nearly 300,000 union members amid a wave of worker organizing at major corporations including Starbucks, Amazon and Apple. (The rate fell because the work force grew even more rapidly.) Mr. Walsh cheered on the trend and warned employers to respect workers’ desire to unionize and refrain from coercive tactics.“As secretary of labor, I don’t appreciate that,” he said in an interview in August, when asked about complaints issued against Starbucks by the National Labor Relations Board. Workers who choose to organize “should be treated fairly and respectfully, not intimidated,” he added. Starbucks has denied violating labor law.Labor Organizing and Union DrivesTesla: A group of workers at a Tesla factory in Buffalo have begun a campaign to form the first union at the auto and energy company, which has fiercely resisted efforts to organize its employees.Apple: After a yearlong investigation, the National Labor Relations Board determined that the tech giant’s strictly enforced culture of secrecy interferes with employees’ right to organize.N.Y.C. Nurses’ Strike: Nurses at Montefiore Medical Center in the Bronx and Mount Sinai in Manhattan ended a three-day strike after the hospitals agreed to add staffing and improve working conditions.Amazon: A federal labor official rejected the company’s attempt to overturn a union victory at a warehouse on Staten Island, removing a key obstacle to contract negotiations between the union and the company.In the Inflation Reduction Act, the major climate and health bill that Mr. Biden signed last year, Mr. Walsh helped push for labor-friendly provisions, including incentives for the owners of clean energy projects to pay wages similar to union rates.When it came to regulation, Mr. Walsh’s approach was most visible in the Labor Department’s response to the Covid-19 pandemic. The Occupational Safety and Health Administration, an agency within the department, had declined to issue a new workplace rule governing Covid-19 under President Donald J. Trump.But Mr. Biden and Mr. Walsh pushed the agency to issue two so-called emergency standards — one outlining the steps employers in the health care industry would have to take to protect workers, and another requiring workers to either be vaccinated against the coronavirus or wear masks and be tested regularly. The Supreme Court blocked the latter rule, though it let stand a provision from another agency that required workers to be vaccinated at facilities that received funding from Medicare and Medicaid.After an executive order from Mr. Biden, the Labor Department also put forth a rule raising the minimum wage for federal contractors last year to $15 an hour. It proposed a rule that would make it more likely for millions of workers in industries like home care, construction and gig work to be classified as employees rather than independent contractors, guaranteeing them a minimum wage and overtime pay, and another that could raise the wages paid to construction workers on federally funded projects.It has recently cited six Amazon warehouses for creating work environments that have high risk for musculoskeletal injuries among workers. Amazon has said the accusations don’t reflect the steps it takes to ensure worker safety..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Ann Rosenthal, a longtime Labor Department lawyer who was at the department during the first year of the Biden administration, said Mr. Walsh was among the most effective of the 13 secretaries she served because of his credibility with unions and other worker advocates, his close relationship with Mr. Biden, and his political instincts and pragmatism. “He really checked all the boxes,” Ms. Rosenthal said.Mr. Walsh’s tenure at the department was not without controversy. Most prominent was the deal he helped broker in September between major freight rail carriers and a dozen unions representing more than 100,000 rail workers. The deal helped to avert a potentially crippling strike before the midterm elections and granted improvements in health benefits and wage increases of nearly 25 percent over five years.But the deal lacked paid sick days, and some workers complained that it did little to ease the grueling, unpredictable schedules that had put stress on their personal lives and health. Although members of four rail unions voted down the deal, the administration urged Congress to mandate the deal in November, and the president signed legislation enacting it. (Last week, one of the carriers, CSX, announced an agreement with unions that would provide four paid sick days a year for about 5,000 workers; a White House spokeswoman said Mr. Walsh had continued to push the rail carriers to offer paid sick leave.)Critics also complained that OSHA under Mr. Walsh didn’t go far enough in protecting workers from Covid-19. They said the agency should have devised regulations that applied to a variety of high-risk industries, such as meat processing, grocery and retail, not just health care. (The department said it had the power to ensure worker safety in these industries through other means, such as a so-called general duty clause.)Other rules, like the independent contractor rule and the one governing construction-worker wages, were proposed but not finalized during the first two years of the Biden administration — a delay that has worried some supporters.And Mr. Walsh and his administration colleagues failed in their efforts to win legislation that would have made it easier for workers to unionize, such as the Protecting the Right to Organize Act, or PRO Act, which would have blocked employers from requiring workers to attend anti-union meetings and made it possible to impose penalties on employers that violated labor law. The House passed the measure, but it stalled in the Senate.The Senate also killed a measure that would have granted consumers a $4,500 incentive to buy electric vehicles assembled at unionized plants in the country.A battery plant in Ohio that is a joint venture of General Motors and the South Korean manufacturer LG Energy Solution recently unionized. But without the kind of legislation that the Senate has balked at, unions face much longer odds in organizing at a proliferation of new battery and electric vehicle plants in the South.Mr. Walsh is a longtime fan of the Boston Bruins and has received political contributions from the hockey team’s owner. The Daily Faceoff, a hockey publication, previously reported on the contributions.The New York Times reported last month that Mr. Walsh was one of several candidates under consideration to replace Ron Klain as Mr. Biden’s chief of staff. That job eventually went to Jeffrey D. Zients. More

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    President Biden Is Not Backing Off His Big-Government Agenda

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    In his first appearance before a Republican House, the president renewed calls for large new economic programs and offered no concessions on federal spending.WASHINGTON — There were no economic pivots in President Biden’s first State of the Union address to a Republican House. He did not pare back his push to raise taxes on high earners or to spend big on new government programs. He offered no olive branches to conservatives who have accused him of running the country into crisis with government borrowing.It was a shift from Mr. Biden’s two most recent Democratic predecessors in the White House, who tacked toward a more conciliatory and limited-government approach to economic policy after losing at least one chamber of Congress. But on Tuesday night, Mr. Biden barreled ahead. The president renewed his calls for trillions of dollars of new federal programs, including for child care and community college, over the sometimes raucous objections of Republicans who have centered their fight with Mr. Biden on the issue of spending and debt. He did not name a single federal spending program he was willing to cut. He said he would work to reduce budget deficits, but by raising taxes on high earners and corporations, a position anathema to Republicans.The speech was not a blueprint to pass any of those proposals, which have little chance of becoming law during his first term.Instead, it was a defiant opening bid for a high-stakes clash over raising the nation’s borrowing limit. It was a no-quarter recommitment to a campaign theme aimed squarely at blue-collar voters in 2024 swing states, centered on expanding government in pursuit of what Mr. Biden calls “middle-out” economic policy.Aides say the choice to defy Republicans’ calls for Mr. Biden to change course on economic policy was deliberate, reflecting both the president’s deeply held convictions on policy and his belief that he has found a winning political message.It was also a bet that the economy, which has so far been a drag on Mr. Biden’s popularity, will ultimately prove to be a tailwind in his widely expected re-election campaign. Rapid price gains are beginning to ease, and jobs are plentiful, with the unemployment rate at its lowest point since 1969.Biden’s State of the Union AddressChallenging the G.O.P.: In the first State of the Union address of a new era of divided government, President Biden delivered a plea to Republicans for unity but vowed not to back off his economic agenda.State of Uncertainty: Mr. Biden used his speech to portray the United States as a country in recovery. But what he did not emphasize was that America also faces a lot of uncertainty in 2023.Foreign Policy: Mr. Biden spends his days confronting Russia and China. So it was especially striking that in his address, he chose to spend relatively little time on America’s global role.A Tense Exchange: Before the speech, Senator Mitt Romney admonished Representative George Santos, a fellow Republican, telling him he “shouldn’t have been there.”To that end, Mr. Biden spent much of the speech proclaiming that the American economy is faring better on his watch than his critics — or even many of his voters — concede. He dived into details about laws he has signed to invest in water pipes, semiconductor factories, electric vehicles and more, while promising those plans would bring high-paying jobs to workers without college degrees. He promised consumer-friendly crackdowns on credit card fees, social media companies and more. On Wednesday, Mr. Biden was headed to Wisconsin to promote his economic legislation, while his cabinet secretaries fanned out across the country to do the same.“We’re building an economy where no one’s left behind,” Mr. Biden said in his speech. “Jobs are coming back, pride is coming back, because choices we made in the last several years. You know, this is, in my view, a blue-collar blueprint to rebuild America and make a real difference in your lives at home.”“Here’s my message to all of you out there,” he added later. “I have your back.”Mr. Biden’s approach underscored how he has not regarded the Republican House takeover as a rebuke of his policies..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.It defied the example set by Mr. Biden’s Democratic predecessors after they lost House control in their first midterms. President Bill Clinton promised a new era of smaller government in 1995. President Barack Obama vowed in 2011 “to take responsibility for our deficit” and proposed what he called “painful cuts” to domestic spending.Mr. Biden offered no apology for his policies. He cast himself as more fiscally responsible than his immediate predecessor, former President Donald J. Trump, in claiming credit for a $1.7 trillion decline in the federal budget deficit last year. That improvement was largely the product of expiring pandemic aid programs, but Mr. Biden suggested he would take steps to keep winnowing the shortfall between what the government spent and what it earned through taxes and other revenue. He said his next budget, which will be released on March 9, would further reduce deficits by $2 trillion over a decade.In a sharp contrast with Republicans, he called for raising taxes on corporations and the wealthy as a way to show a commitment to deficit reduction in spite of his spending plans. His proposals included an expanded tax on stock buybacks and what would effectively be a sort of wealth tax on billionaires.He baited Republicans on a pair of politically cherished programs, Social Security and Medicare, drawing sustained jeers when he said some of his opponents wanted to sunset the programs. While hundreds of Republican lawmakers have signed on to plans to reduce spending on the safety net by raising retirement ages and other reductions in future benefits, Mr. Biden’s “sunset” accusation rests on the possible effects of a plan to reauthorize spending programs every five years, advanced by Senator Rick Scott of Florida, which has gained little traction among party leaders.Republicans called the speech a departure from Mr. Biden’s previous calls for unity and a disconnect on major economic issues.“While the president is busy taking a premature and undeserved victory lap, lauding legislation that Democrats passed on a party-line basis, families in West Virginia and America are struggling at every turn because many of the policies and priorities of this administration have made the American dream harder to attain,” Senator Shelley Moore Capito, Republican of West Virginia, said in a release after the address.Mr. Biden’s allies cheered. The president “delivered a bold blueprint for an economy that, at long last, puts working people first,” Liz Shuler, the president of the powerful A.F.L.-C.I.O. labor organization, said in a news release on Tuesday evening.Mr. Biden fashions himself a congressional deal maker, and on Tuesday, he outlined a handful of smaller-scale initiatives on other issues, like curbing the flow of fentanyl and regulating big tech, that might plausibly win bipartisan support in the new Congress. But the speech was not a recipe for economic compromise.The president re-upped calls for big new federal investments in child care and assistance for the elderly, community college, prekindergarten and health insurance. But he offered no plausible road to finishing the job, as he put it, on that long list of proposals, which he was unable to include in the wide array of economic legislation he signed in his first two years because of opposition from centrist Democrats in the Senate.What he did outline was a defiant negotiating posture, as he and Republican lawmakers battle over raising the $31.4 trillion federal borrowing limit, which the United States hit last month. That cap, which limits the government’s ability to borrow funds to pay for spending that Congress has already authorized, must be suspended or lifted later this year in order for the United States to continue paying its bills and avoid a financial crisis.Republicans are refusing to raise the limit unless Mr. Biden agrees to deep spending cuts. Mr. Biden has said he will refuse to bargain over the borrowing cap and on Tuesday night reminded Republicans that they had agreed to effectively increase the debt limit three times when Mr. Trump was president. Despite what both sides called a productive meeting at the White House last week between the president and Speaker Kevin McCarthy, Republican of California, Mr. Biden did not waver in that position on Tuesday.“We’re not going to be moved into being threatened to default on the debt,” Mr. Biden said.Mr. McCarthy, seated behind him, did not look pleased. More