Most drivers will begin paying new congestion tolls on Jan. 5 to reach the heart of Manhattan, if all goes as planned. The fees are meant to relieve some of the world’s worst gridlock and pollution while raising billions of dollars for important upgrades to New York City’s subways and buses. Officials also hope to […] More
Republicans are juggling complex political and tactical questions as they plan their congressional agenda next year.Republicans are starting to sketch out how to translate President-elect Donald J. Trump’s economic agenda into law, putting plans in place to bypass Democrats and approve multiple bills reshaping the nation’s tax and spending policies along party lines.With total control of Washington, Republicans have the rare — and often fleeting — opportunity to leave a lasting mark on federal policy. Some in the party are hoping to tee up big legislation for early next year and capitalize on Mr. Trump’s first 100 days.Much of the early planning revolves around the sweeping tax cuts the party passed and Mr. Trump signed into law in 2017, many of which will expire at the end of next year. Key Republicans are holding meetings about how to maneuver a bill extending the tax cuts through the Senate, while others are consulting economists for ideas to offset their roughly $4 trillion cost.Several questions loom over the Republican effort. They range from how fast the party should move next year to deeper political disagreements over which tax and spending policies to change. The overall cost of the legislation is a central preoccupation at a time of rising deficits. And whatever Republicans put together will most likely become a magnet for other issues the party has prioritized, including immigration.Here’s what to expect.A Difficult ProcessMost legislation needs a supermajority of 60 votes to pass the Senate. But for bills focused on taxes and spending, lawmakers can turn to a process called budget reconciliation that requires only a regular majority of 51 votes in the Senate.Reconciliation is a powerful but cumbersome tool. Its rules prevent lawmakers from passing policy changes unrelated to the budget, and lawmakers are only allowed to use reconciliation a limited number of times per year. Republicans could also raise the debt limit through the process.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
A report says new approaches and increased spending are needed to ensure that government statistics remain dependable and free of political influence.Federal Reserve officials use government data to help determine when to raise or lower interest rates. Congress and the White House use it to decide when to extend jobless benefits or send out stimulus payments. Investors place billions of dollars worth of bets that are tied to monthly reports on job growth, inflation and retail sales.But a new study says the integrity of that data is in increasing jeopardy.The report, issued on Tuesday by the American Statistical Association, concludes that government statistics are reliable right now. But that could soon change, the study warns, citing factors including shrinking budgets, falling survey response rates and the potential for political interference.The authors — statisticians from George Mason University, the Urban Institute and other institutions — likened the statistical system to physical infrastructure like highways and bridges: vital, but often ignored until something goes wrong.“We do identify this sort of downward spiral as a threat, and that’s what we’re trying to counter,” said Nancy Potok, who served as chief statistician of the United States from 2017 to 2019 and was one of the report’s authors. “We’re not there yet, but if we don’t do something, that threat could become a reality, and in the not-too-distant future.”The report, “The Nation’s Data at Risk,” highlights the threats facing statistics produced across the federal government, including data on education, health, crime and demographic trends.But the risks to economic data are particularly notable because of the attention it receives from policymakers and investors. Most of that data is based on surveys of households or businesses. And response rates to government surveys have plummeted in recent years, as they have for private polls. The response rate to the Current Population Survey — the monthly survey of about 60,000 households that is the basis for the unemployment rate and other labor force statistics — has fallen to about 70 percent in recent months, from nearly 90 percent a decade ago.
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Current Population Survey response rate
Source: Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
Source: Keys and Mulder, National Bureau of Economic Research (2024) Note: State average is shown in counties with few or no observations. Enid, Okla., surrounded by farms about 90 minutes north of Oklahoma City, has an unwelcome distinction: Home insurance is more expensive, relative to home values, than almost anywhere else in the country. Enid […] More
Tech layoffs, fallout from Hollywood strikes and an uptick in rural joblessness challenge a state with one of the nation’s highest unemployment rates.For decades, California’s behemoth economy has outpaced those of most nations, holding an outsize role in shaping global trends in tech, entertainment and agriculture.While that reputation remains, the state has a less enviable distinction: one of the nation’s highest unemployment rates.Nationwide, the rate is 3.7 percent, and in January, the country added 353,000 jobs. California’s job growth has been slower than the nationwide average over the last year, and the unemployment rate remains stubbornly high — 5.1 percent in the latest data, a percentage point higher than a year earlier and outpaced only by Nevada’s 5.4 percent.With layoffs in the tech-centered Bay Area, a slow rebound in Southern California from prolonged strikes in the entertainment industry and varying demand for agricultural workers, California is facing economic headwinds in the new year. And residents feel it.The state has historically had higher unemployment than the U.S. average because of a work force that is younger and fast growing, said Sarah Bohn, a senior fellow at the Public Policy Institute of California. Still, she noted, the labor force shrank in California in the past six months — a troubling trend.“When looking at this shrinking, are there less opportunities and people have just stopped looking for work?” Ms. Bohn asked. “What will this mean for consumers and businesses?”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
The grant will go toward chips for the auto and defense industries, and is the largest award to date from $39 billion in government funding.The Biden administration on Monday announced a $1.5 billion award to the New York-based chipmaker GlobalFoundries, one of the first sizable grants from a government program aimed at revitalizing semiconductor manufacturing in the United States.As part of the plan to bolster GlobalFoundries, the administration will also make available another $1.6 billion in federal loans. The grants are expected to triple the company’s production capacity in the state of New York over ten years.The funding represents an effort by the Biden administration and lawmakers of both parties to try to revitalize American semiconductor manufacturing. Currently, just 12 percent of chips are made in the United States, with the bulk manufactured in Asia. America’s reliance on foreign sources of chips became an issue in the early part of the pandemic, when automakers and other manufacturers had to delay or shutter production amid a dearth of critical chips.The award to GlobalFoundries will help the firm expand its existing facility in Malta, N.Y., enabling it to fulfill a contract with General Motors to ensure dedicated chip production for its cars.It will also help GlobalFoundries build a new facility to manufacture critical chips that are not currently being made in the United States. That includes a new class of semiconductors suited for use in satellites because they can survive high doses of radiation.The money will also be used to upgrade the company’s operations in Vermont, creating the first U.S. facility capable of producing a kind of chip used in electric vehicles, the power grid, and 5G and 6G smartphones. If not for the investment, administration officials said the facility in Vermont would have faced closure.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More
Americans have continued spending despite dwindling savings and inflation. But retailers worry resuming loan payments could push some over the edge.Mykail James has a plan for when payments on her roughly $75,000 in student loans restart next month. She’ll cut back on her “fun budget” — money reserved for travel and concerts — and she expects to limit her holiday spending.“With the holidays coming up — I have a really big family — we will definitely be scaling back how much we’re spending on Christmas and how many things we can afford,” Ms. James said. “It’s just going to be a tighter income overall.”In October, roughly 27 million borrowers like Ms. James will once again be on the hook for repaying their federal student loans after a three-year hiatus. President Biden tried to use his executive powers to forgive about $400 billion in student debt last year, but the Supreme Court overruled that decision in June, and payments kick in again in October.Now, there are big questions about how those people — many of whom had expected to have at least some of their debt erased — may change their spending habits as they budget for student loan payments again. It could crimp the economy if a large share of consumers cut back simultaneously, especially because the resumption in payments comes just as the retail and hospitality industry begin to eye the crucial holiday shopping season.Most economists think that while the hit could be substantial, it will not be so big that it would plunge America into a recession. Goldman Sachs analysts expect renewed student loan payments to cost households about $70 billion per year. That would probably be enough to subtract 0.8 percentage points from consumer spending growth in the fourth quarter, helping to slow it to 1.4 percent, they estimate.Yet major uncertainties remain. Such estimates of just how big the drag will be are rough at best, it is unclear when exactly it will bite and economists are unsure what it will do to consumer confidence. There are factors that could make the impact smaller: The Biden administration has taken steps to ease the pain, allowing for people with lower incomes to repay their loans more slowly and creating a one-year grace period in which missed payments will not be reported to credit rating agencies.But the student loan payments will also restart at the same time consumers face a number of other headwinds, including shrinking savings piles, a cooler job market and higher price levels after two years of rapid inflation. It could also coincide with major strikes — Hollywood actors and writers have been locked in a work stoppage all summer, and the United Auto Workers began a targeted strike on Friday, one that economists warn could be disruptive if it lasts. Adding another source of looming uncertainty, Congress could fail to reach a funding agreement by the end of this month, forcing a government shutdown.Retailers have begun to publicly fret that the resumption of student loan payments could collide with those other developments, pushing their shoppers closer to a breaking point. Executives from companies like Walmart, Macy’s, Best Buy and Gap have all warned analysts and investors that student loan payments may put pressure on shoppers’ budgets, eating into some of their sales in the process.“I don’t think we have a very good grasp” on how the hit to consumers will play out, said Julia Coronado, the founder of MacroPolicy Perspectives, a research firm. “It’s still very unclear exactly what the impact will be.”Consumers have, so far, been surprisingly resilient in the face of rapid inflation, higher Federal Reserve interest rates and a gradually cooling economy.Retail sales came in stronger than many economists had expected in August, data released Thursday showed. Companies have regularly predicted a pullback that has been more modest than expected, as still-low unemployment and decent pay gains have proved enough to buoy shoppers.But some companies worry that student loans could pile on — finally cracking the American consumer.Marc Rosen, the chief executive of J.C. Penney said, “I do think that student loans are going to have an impact.”Gene J. Puskar/Associated PressThe resumption of student loan payments for a retailer like J.C. Penney, which caters to middle-income consumers, would be the latest, unwelcome squeeze on their budgets. Their core customer makes an annual income of $55,000 to $75,000 and has had their monthly household expenses increase by $700 from two years ago. The department-store chain said 17 percent of its credit card customers have student loans.“I do think that student loans are going to have an impact,” Marc Rosen, the chief executive of J.C. Penney, said in an interview. “It’s another thing that comes into that family that puts another stress on their budget and, again, brings back trade-offs, forces them to make other trade-offs.”Ms. James is among the many American consumers expecting to make tough decisions. The 27-year-old, who works in aerospace defense and whose parents owe additional student loans on her behalf, said she had been spending hours doing research on her options for debt relief. She’s even contemplating a job switch to the public sector, which might require a pay cut but offers a clearer path to loan forgiveness.In addition to cutting back on travel and concerts, she plans to work more on her side jobs to earn extra cash. In the past, she’s driven for UberEats and Instacart. (She said she would also continue expanding her financial education business.)Phil Esempio, a 65-year-old high school chemistry and biology teacher in Nazareth, Pa., who owes around $150,000 in student loans, also expects to rein in his budget. Coming out of the pandemic, he excitedly returned to attending live shows in places like New York City — 78 concerts last year — and eating out while he’s there with his friends.But Mr. Esempio said that his period of big spending might have been an overreaction to the end of the pandemic. As the restart of student loan payments looms, “a lot of that is being throttled back,” he said. He expects to make it to 35 shows this year. He thinks he’ll have to start paying $1,100 a month on his federal loans, which is equivalent to what he’s been paying for his private loans.If other consumers behave similarly, it could come as an unpleasant surprise to companies including Live Nation, which owns Ticketmaster. Live Nation executives on a recent earnings call predicted that people’s excitement for live events would outweigh any additional financial burdens.Still, it is possible that other retailers are being overly glum, given the Biden policies and a few other factors that could help to limit the impact of student loans restarting. In fact, Alec Phillips, a Goldman Sachs economist, said that he thought his projection for a $70 billion annual cost from the payment restart was probably pessimistic.“I don’t think that there’s a scenario where it turns out to be substantially worse,” Mr. Phillips said.Among the factors that could limit the hit, borrowers may enroll in a new income-based repayment program offered by the administration, which would decrease monthly payments for people earning low and moderate incomes. If everyone who is eligible did so, it could reduce student loan payments by around $14 billion per year, Mr. Phillips estimates.Supporters of student debt forgiveness demonstrated outside the Supreme Court in June.Olivier Douliery/Agence France-Presse — Getty ImagesAnd some borrowers may simply not pay, at least for a while. Because missing payments will not be reported to credit reporting agencies for a year — the so called “on-ramp” period — households have wiggle room, said Constantine Yannelis, an economist at the University of Chicago Booth School of Business.Finally, debt holders are more heavily middle- and high-earning workers. Those people may have more budgetary leeway to help deal with the renewed payments, Mr. Phillips said.That is not to say that no groups will suffer. Many low-income people do have outstanding balances, just smaller ones, and Black borrowers in particular hold an outsize chunk of student debt. And the hit could come at a moment when some household budgets are already coming under stress amid high prices and high interest rates. Delinquencies on credit cards have recently jumped back above their levels from before the pandemic.The result may be a painful strain on some families — but a more muted one for the economy as a whole.The upshot is that “it will matter economically,” Mr. Yannelis said of the student loan resumption. “It is most likely not going to be huge, though, and it’s not likely to be the type of thing that would tip us into recession.” More
The strategy, which was used in 2011, could allow both sides to save face but would most likely do little to chip away at the national debt.As negotiators for the White House and House Republican leaders struggle to reach a deal over how to raise the nation’s debt limit, a solution that harks back to old budget fights has re-emerged as a potential path forward: spending caps.Putting limits on future spending in exchange for raising the $31.4 trillion borrowing cap could be the key to clinching an agreement that would allow Republicans to claim that they secured major concessions from Democrats. It could also allow President Biden to argue that his administration is being fiscally responsible while not caving to Republican demands to roll back any of his primary legislative achievements.The Biden administration and House Republican leaders have agreed in broad terms to some sort of cap on discretionary federal spending for at least the next two years. But they are hung up on the details of those caps, including how much to spend on discretionary programs in the 2024 fiscal year and beyond, and how to divide that spending among the government’s many financial obligations, including the military, veterans affairs, education, health and agriculture.What could a spending cap deal look like?The latest White House offer would hold military and other spending — which includes education, scientific research and environmental protection — constant from the current 2023 fiscal year to next fiscal year, according to a person familiar with both sides’ proposals. That move would not reduce what is known as nominal spending, which simply means the level of spending before adjusting for inflation. Republicans are pushing to cut nominal spending in the first year.One reason the White House is willing to entertain holding spending essentially flat has to do with politics. Given that Republicans control the House, getting an increase in funding for discretionary programs outside the military would have been nearly impossible. Congress would not have approved increases through the appropriations process, the normal way in which Congress allocates money to government programs and agencies.Republicans have repeatedly said that they will not accept a deal unless it results in the government spending less money than it did in the last fiscal year. They have said that simply freezing spending at current levels, as the White House has proposed, does not enact the kind of meaningful cuts many in their party have long called for.But Republican negotiators have shown some flexibility around how long they would require those spending caps to last. House G.O.P. leaders are now looking to set spending caps for six years, rather than 10. Still, that is longer than the White House is proposing, with Democrats offering to cap spending for two years.“The numbers are foundational here,” Representative Garret Graves, Republican of Louisiana and one of Speaker Kevin McCarthy’s lead negotiators, said on Sunday. “The speaker has been very clear: A red line is spending less money and unless and until we’re there, the rest of it is really irrelevant.”The approach is evoking debt limit déjà vu.If spending caps sound familiar, that is because they were employed during the last big debt limit fight in 2011.During that episode of brinkmanship, lawmakers agreed to impose limits on both military and nonmilitary spending from 2012 to 2021. The Budget Control Act caps were somewhat successful at keeping spending in check, but not entirely.A Congressional Research Service report published this year noted that during the decade that the caps were in place, Congress and the president repeatedly enacted laws that increased the spending limits. Certain types of expenditures — for emergencies and military engagements — were exempt from the caps and the federal government spent $2 trillion over 10 years on those programs. And spending on so-called mandatory programs such as Social Security was not capped, and those make up about 70 percent of total government spending.Still, the Congressional Research Service pointed out that spending was lower each year from 2012 to 2019 than had been projected before the caps were put in place.The strategy is no fiscal panacea.Caps that limit spending around current levels will help slow the growth of the nation’s debt, but will not cure the government’s reliance on borrowed money.The Congressional Budget Office said this month that annual deficits — the gap between what America spends and what it earns — are projected to nearly double over the next decade, totaling more than $20 trillion through 2033. That deficit will force the United States to continue to rely heavily on borrowed funds.Marc Goldwein, the senior policy director for the Committee for a Responsible Federal Budget, estimated that it would require $8 trillion of savings over 10 years to hold the national debt to its current levels. However, he said that did not mean that enacting spending caps would not be worthwhile.“We’re not going to fix this all at once,” Mr. Goldwein said. “So we should do as much as we can, as often as we can.”The group has called for spending caps to be accompanied by spending cuts or tax increases as a plan to reduce the national debt.Spending caps are not the only issue.Finding an agreement on the extent and duration of spending caps will be a critical part of getting a deal.But negotiators are still working to resolve several other issues, including whether to put in place tougher work requirements for social safety net programs including food stamps, Temporary Assistance for Needy Families and Medicaid, and whether to expedite permitting rules for energy projects, two key Republican priorities that White House negotiators have shown some openness to.Jim Tankersley More
Congress controls how much money the United States can borrow. Here’s a look at why that is and what it means.Washington is heading for another big fight over whether to raise or suspend the nation’s debt limit, which caps the amount of money the federal government can borrow to pay its bills.This year is shaping up to be the messiest fight in at least a decade. Republicans are demanding that an increase in the borrowing limit be accompanied by spending cuts and other cost savings. President Biden has said he will oppose any attempt to tie spending cuts to raising the debt ceiling, increasing the likelihood of a protracted standoff.The president is set to meet with Republican and Democratic leaders at the White House on May 9 to discuss a path forward. But it is still unclear how quickly lawmakers will act to raise the nation’s borrowing cap.Here is what you need to know about the debt limit and what happens if no deal can be reached:What is the debt limit?The debt limit is a cap on the total amount of money that the United States is authorized to borrow to fund the government and meet its financial obligations.Because the federal government runs budget deficits — meaning it spends more than it brings in through taxes and other revenue — it must borrow huge sums of money to pay its bills. Those obligations include funding for social safety net programs, interest on the national debt and salaries for members of the armed forces.Approaching the debt ceiling often elicits calls by lawmakers to cut back on government spending. But lifting the debt limit does not actually authorize any new spending — in fact, it simply allows the United States to spend money on programs that have already been authorized by Congress.When was the debt limit reached?The United States officially hit its debt limit on Jan. 19, prompting the Treasury Department to use accounting maneuvers known as extraordinary measures to continue paying the government’s obligations and avoid a default. Those measures temporarily curb certain government investments so that the bills can continue to be paid.The ability to use those measures to delay a default could be exhausted by June. Treasury Secretary Janet L. Yellen on Monday warned lawmakers that the United States could run out of cash by June 1 if the borrowing cap isn’t raised or suspended.How much debt does the United States have?The national debt crossed $31 trillion for the first time last year. The borrowing cap is set at $31.381 trillion.Why does the United States have a debt limit?According to the Constitution, Congress must authorize government borrowing. In the early 20th century, the debt limit was instituted so that the Treasury would not need to ask Congress for permission each time it had to issue debt to pay bills.During World War I, Congress passed the Second Liberty Bond Act of 1917 to give the Treasury more flexibility to issue debt and manage federal finances. The debt limit started to take its current shape in 1939, when Congress consolidated different limits that had been set on different types of bonds into a single borrowing cap. At the time, the limit was set to $45 billion.While the debt limit was created to make government run more smoothly, many policymakers believe that it has become more trouble than it’s worth. In 2021, Ms. Yellen said she supported abolishing the debt limit.What happens if the debt limit is not raised or suspended?If the government exhausts its extraordinary measures and runs out of cash, it would be unable to issue new debt. That means it would not have enough money to pay its bills, including interest and other payments it owes to bondholders, military salaries and benefits to retirees.No one knows exactly what would happen if the United States gets to that point, but the government could default on its debt if it is unable to make required payments to its bondholders. Economists and Wall Street analysts warn that such a scenario would be economically devastating, and could plunge the entire world into a financial crisis.Will military salaries, Social Security benefits and bondholders be paid?Various ideas have been raised to ensure that critical payments are not missed — particularly payments to the investors who hold U.S. debt. But none of these ideas have ever been tried, and it remains unclear whether the government could actually continue paying any of its bills if it can’t borrow more money.One idea that has been proposed is that the Treasury Department would prioritize certain payments to avoid defaulting on U.S. debt. In that case, the Treasury would first pay the bondholders who own U.S. Treasury debt, even if it delayed other financial obligations like government salaries or retirement benefits.So far, the Treasury seems to have ruled that out as an option. Ms. Yellen has said that such an approach would not avoid a debt “default” in the eyes of markets.“Treasury systems have all been built to pay all of our bills when they’re due and on time, and not to prioritize one form of spending over another,” Ms. Yellen told reporters earlier this year. More
