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    Democrats Push for Agreement on Tax Deduction That Benefits the Rich

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    Lawmakers are coalescing around a deal to suspend a $10,000 cap on state and local tax deductions that was imposed during the Trump administration.WASHINGTON — Democrats were readying an agreement on Tuesday that would repeal a cap on the amount of state and local taxes that homeowners can deduct as part of a broader $1.85 trillion spending bill, a move that could amount to a significant tax cut for wealthy Americans in liberal states.But some liberals quickly balked at the emerging agreement, which would suspend a $10,000 cap on the so-called SALT deduction for five years, removing a limit that Republicans included in their 2017 tax package as a way to pay for cuts for corporations and the rich. The suspension would kick in for deductions related to property taxes and state and local income taxes accrued in 2021 and would run through 2025.If it passes, the deal would be a major concession to a handful of Democrats from high-income states like New York and New Jersey who have insisted on lifting the cap, in order to win their votes for President Biden’s social policy and climate change package.But liberal Democrats have scoffed at the push to include the costly proposal in the domestic policy package, particularly as party leaders have curtailed or eliminated other spending priorities as they pare down a $3.5 trillion blueprint to appease moderate and conservative-leaning Democrats.Senator Bernie Sanders of Vermont, the chairman of the Budget Committee, blasted the repeal on Tuesday as a giveaway to the rich that went against the Democrats’ priorities.“I think there is a compromise to be reached here, a middle ground, which says that for families earning less than $400,000, they can take a complete exemption, but not families earning more than that,” said Mr. Sanders, who had released a blistering statement criticizing the agreement. “What exists is unacceptable, and one way or another it will be dealt with.”It remains unclear whether the agreement would apply broadly or if Democrats planned to impose an income cap to prevent the wealthiest Americans from receiving what amounts to a tax cut.A straight repeal of the cap for every household that claims the deduction would siphon huge amounts of revenue from the federal government: about $90 billion per year, according to budget experts.To get around that, the five-year suspension assumes that the cap is reinstated in 2026 for another five years, allowing Democrats to use a budget sleight of hand to show its removal as revenue neutral in the traditional 10-year window that lawmakers look to when considering a bill’s impact on the federal deficit.Three people with knowledge of the emerging agreement described it on the condition of anonymity and cautioned that discussions were continuing. Details of the talks were first reported by Punchbowl News.With Republicans opposed to Mr. Biden’s domestic policy plan, Democrats must win the support of all 50 senators who caucus with the party and all but three House lawmakers for the plan to become law. That effort is further complicated because Democrats are using an arcane process known as budget reconciliation, which shields fiscal legislation from the 60-vote filibuster threshold in the Senate.Those restrictions mean that any lawmaker, particularly in the Senate, could effectively tank the legislation over his or her priorities, including insisting that the bill repeal SALT. Democrats from the high-income states that have been most affected by the limit have spent the past five years searching for an opportunity to roll it back for their constituents, despite complaints that it would largely benefit the wealthy.House Democrats including Representatives Tom Suozzi of New York, Mikie Sherrill of New Jersey and Josh Gottheimer of New Jersey have made clear that they will not support the broader spending package without a SALT repeal. Mr. Gottheimer wore a large button emblazoned with the words “no SALT, no dice” to votes on Capitol Hill on Tuesday. Senator Chuck Schumer of New York, the majority leader, has also voiced support for getting rid of the cap.“We’ve been fighting for this for years,” Mr. Gottheimer said on Tuesday, adding that reinstating the full deduction would amount to giving “tax relief to families that deserve it and who got hosed in 2017.”Delaying the cap for five years in a 10-year window could effectively allow lawmakers to claim that the proposal would not have an impact on the package’s cost. Yet some Democrats appeared confident that lawmakers would act again in five years to prevent the cap from going back into effect.“It’ll be pretty clear when they get tax relief, it’s going to be hard to take that back,” Mr. Gottheimer said, referring to families in his district.The SALT limit resulted in tax increases for wealthier Americans beginning in 2018, particularly higher earners from high-tax states, and helped Democrats capture some House seats that Republicans previously held in New Jersey, California and elsewhere.The deduction is largely used by wealthy homeowners who itemize their deductions and live in states and cities with high taxes, which tend to be led by Democrats. Democrats accused Republicans of using the cap to pay for other tax cuts for the rich and to penalize liberal states.“My guess is the majority of Americans with a net worth of $50 to $300 million would get a tax cut under the Build Back Better plan with a full repeal of SALT,” Jason Furman, an economist at Harvard who was the chairman of the White House Council of Economic Advisers under President Barack Obama, said on Twitter on Tuesday. “The bill would do more for the super-rich than it does for climate change, childcare or preschool. That’s obscene.”But several lawmakers in the New York and New Jersey delegations have warned that their votes for the domestic policy package hinged on the inclusion of the provision, and Democrats have haggled for months over a possible solution.“We’re still going at it over it,” said Representative Richard E. Neal of Massachusetts, the Democratic chairman of the Ways and Means Committee, who joked on Tuesday that he had earned “a Ph.D. in the SALT deduction because it’s been argued from every perspective I can think of.”The Committee for a Responsible Federal Budget described the repeal of the SALT cap as a “regressive” tax cut, estimating that it would cost $90 billion a year in lost government revenue. The wealthiest would make out the best, with a SALT cap repeal distributing more than $300,000 per household in the top 0.1 percent of earners and only $40 for a middle-income family over the first two years.“With the SALT cap repealed and current tax rates retained, in fact, the reconciliation package might actually offer a net tax cut for most high-income households,” the group said.The right-leaning Tax Foundation estimated that repealing the cap would increase after-tax income of the top 1 percent of earners by 2.8 percent, while the bottom 80 percent would get minimal benefit.Republicans seized on the agreement on Tuesday, accusing Democrats of hypocrisy for backing an “anti-progressive” handout.“First Democrats cut out paid leave,” J.P. Freire, a spokesman for Republicans on the House Ways and Means Committee, said on Twitter. “Now they’re shoveling money to the rich.” More

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    Funding Fight Threatens Plan to Pump Billions Into Affordable Housing

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    A federal voucher program is at risk of being sharply scaled back as the White House seeks to slash its social policy package to appease two centrist senators.SAN FRANCISCO — Audrey Sylve, a retired bus driver, has spent 13 agonizing years on a waiting list for a federal voucher that would help cover rent for an apartment in one of America’s most expensive housing markets.This summer it seemed that help was finally on the way.In late July, congressional Democrats introduced a $322 billion plan to bolster low-income housing programs as part of the $3.5 trillion social spending plan embraced by President Biden. At its center is a $200 billion infusion of aid for the country’s poorest tenants, which would allow another 750,000 households to participate in a program that currently serves two million families.Affordable-housing advocates saw it as a once-in-a-generation windfall that would allow local governments to move thousands of low-income tenants like Ms. Sylve, 72, off waiting lists and to expand aid to families at the highest risk of homelessness.But optimism has given way to anxiety. Low-income housing, and the voucher program in particular, are among those most at risk of being sharply scaled back as the White House seeks to slash the package to accommodate the demands of two centrist Democrats, Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona, according to several people involved in the talks.Congressional negotiators are seeking to cut the overall size of the 10-year package, in coordination with the White House, to between $1.9 trillion and $2.3 trillion. Housing is just one of several high-price priorities on the chopping block in the negotiations.Yet proponents say no other proposal is likely to have as immediate an effect on the lives of the country’s most vulnerable as the increase in rental assistance because it addresses a foundational problem: securing an affordable place to live when rents everywhere are outpacing earnings.“I’m all for funding early childhood education, child care and the expansion of health care with education, but we cannot be successful with any of that unless people have safe and secure housing,” said Representative Maxine Waters, a California Democrat who leads the House Financial Services Committee, which drafted the original plan.Supporters of the expansion say every penny is required to begin addressing a crisis that threatens to undermine recent gains in the fight to reduce poverty. They fear it will be elbowed aside by other programs, such as universal child care, that enjoy broader political support because they benefit middle-class, and not just poor, people.“Better health care or increased educational access doesn’t do much for families sleeping in their car or under a bridge, or for the millions more on the verge,” said Diane Yentel, president of the National Low Income Housing Coalition, which is pressuring the White House to fund the program as it was drafted. “There are no ‘savings’ to be had here.”The financial services industry, which puts together the complex public-private financing packages used to build most affordable developments, has already factored in a significantly scaled-back congressional compromise.“Much of the proposed $400 billion in housing-related grants and tax subsidies is likely to be cut from the reconciliation bill,” analysts from Goldman Sachs wrote in an email last week. That figure bundled the $332 billion package, which also includes increases for public housing authorities and an affordable housing construction fund, with a smaller package of tax breaks in the bill.White House officials say they have made no decisions. Ms Waters and her counterpart in the Senate, Sherrod Brown, a Democrat of Ohio, said they would not accept any deal that cut the housing plan more than any other proposal.“We’re not going to scale back. We’re not going to lose our way on this,” Mr. Brown, chairman of the Banking Committee, said in an interview. “And we’re not going to compromise the mission of transforming the fight on poverty.”The White House is looking for ways to win support for its package from Senators Kyrsten Sinema and Joe Manchin III.Stefani Reynolds for The New York TimesOver the past two decades, the federal government has stopped bankrolling construction of government-run public housing projects. Instead, it has shifted resources to voucher programs, which bridge the financial gap between what a poor tenant can afford to pay and what a landlord might reasonably expect to get on the open market.Demand far outstrips supply: One recent study found that the federal government has provided funding for only a quarter of the vouchers needed to help house eligible families — and many housing authorities have simply stopped taking names to avoid leaving tenants in the lurch.Even if the voucher increase somehow makes it past Mr. Manchin and Ms. Sinema, it would represent only a down payment on an enormous unmet need for housing aid exacerbated by rocketing real estate values in most major cities.California’s estimated share of the new aid would bankroll only a fraction of the new vouchers needed to meet the demand, said Matthew Schwartz, president of the California Housing Partnership, a nonprofit that works with community groups to finance low-income housing projects.But it would be a significant improvement, Mr. Schwartz said, particularly on top of a $22 billion affordable-housing plan that Gov. Gavin Newsom signed into law this summer.Joseph Villarreal, executive director of the housing authority of Contra Costa County, outside San Francisco, is less concerned about the future than fulfilling the promises he has made in the past. He saw the new cash in personal terms, as a way to fulfill a commitment more than a decade in arrears.“It would be horrible if any, much less the majority, if this voucher money gets cut from the proposal,” he said.Mr. Villarreal’s organization, which serves as a pass-through for federal funding, maintains 51 separate waiting lists for the vouchers — some for specific developments, others for targeted demographic groups, with 47,000 families in limbo. “It weighs on me,” he said of the lists.Ms. Sylve, who said she was scraping by on a small pension and Social Security, was one of 6,000 chosen from 40,000 qualified Contra Costa County applicants in a lottery to be added to the slow-moving queue for the program, which is still known by its historical name, Section 8.A few years ago she was told that a voucher was about to become available, but that fell through, and she has spent much of the past 13 years hopping from apartment to apartment. Last spring, Ms. Sylve moved in with her daughter across the bay in San Francisco, because the neighborhood around her apartment had become too dangerous.“They give you hope, and that’s the hardest part,” Ms. Sylve said. “But you keep hoping, year after year after year.”A survey of 44 large housing authorities across the country conducted by the Center on Budget and Policy Priorities, a left-leaning Washington think tank, painted a grim picture of the voucher program. A total of 737,000 people were on waiting lists, and 32 of the authorities are refusing to take new applications, with a few exceptions for particularly vulnerable populations.The situation on the West Coast was especially dire, with eight times as many people lingering on waiting lists as receiving aid in San Diego, where the list has topped 108,000. Long waiting lists are also a staple in Washington, Philadelphia, Houston, Honolulu, Little Rock, Ark., and New York, which closed its list years ago.Will Fischer, director for housing policy for the center, said bolstering the voucher program was the most important single move the federal government could make to address the homelessness crisis.“Look, the public housing money is urgently needed — but it would be for existing units, for families who already have a place to live,” he said. “And most of the other funding in the proposal actually serves people a little bit higher up the income scale.”Representative Ritchie Torres, a Bronx Democrat whose district is among the poorest in the country, said housing always seemed to be listed as the third, fourth or fifth priority of many liberal lawmakers.When House Democrats peppered Mr. Biden with questions about the social spending package at a meeting in the Capitol this month, Mr. Torres — a former chairman of the New York City Council housing committee — was stunned when he realized no one had asked the president about rental aid, and spoke up.Mr. Biden responded by promising he would “protect” housing, without elaborating, Mr. Torres said. 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    As Democrats Trim Spending Bill, Some Americans Fear Being Left Behind

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    President Biden had an ambitious agenda to remake the economy. But under the duress of negotiations and Senate rules, he has shelved a series of proposals, some of them indefinitely.WASHINGTON — Democrats in Congress are curbing their ambitions for President Biden’s economic agenda, and Jennifer Mount, a home health care aide, worries that means she will not get the raise she needs to pay more than $3,000 in medical bills for blindness in one eye.Edison Suasnavas, who came to the United States from Ecuador as a child, has grown anxious about the administration’s efforts to establish a pathway to citizenship, which he hoped would allow him to keep doing molecular tests for cancer patients in Utah without fear of deportation.And Amy Stelly wonders — thanks to a winnowing of Mr. Biden’s plans to invest in neighborhoods harmed by previous infrastructure projects like highways that have harmed communities of color — whether she will continue to breathe fumes from a freeway that she says constantly make her home in New Orleans shudder. She has a message for the president and the Democrats who are in the process of trying to pack his sprawling agenda into a diminishing legislative package.“You come up and live next to this,” Ms. Stelly said. “You live this quality of life. We suffer while you debate.”Mr. Biden began his presidency with an expensive and wide-ranging agenda to remake the U.S. economy. But under the duress of negotiations and Senate rules, he has shelved a series of his most ambitious proposals, some of them indefinitely.He has been thwarted in his efforts to raise the federal minimum wage and create a pathway to citizenship for undocumented immigrants. He has pared back investments in lead pipe removal and other efforts that would help communities of color. Now, as the president tries to secure votes from moderates in his party, he is reducing what was originally a $3.5 trillion collection of tax cuts and spending programs to what could be a package of $2 trillion or less.That is still an enormous spending package, one that Mr. Biden argues could shift the landscape of the economy. But a wide range of Americans who have put their faith in his promises to reshape their jobs and lives are left to hope that the programs they are banking on will survive the cut; otherwise, they face the prospect of waiting years or perhaps decades for another window of opportunity in Washington.“The problem now is this may be the last train leaving the station for a long time,” said Jason Furman, an economist at the Harvard Kennedy School who was a top economic adviser to President Barack Obama. “It could be five, 10, 20 years before there’s another shot at a lot of these issues.”President Biden entered the White House with an expensive and ambitious agenda to remake the U.S. economy. He has pared back those plans.Tom Brenner for The New York TimesMr. Furman and other former Obama administration officials saw firsthand how quickly a presidential agenda can shrink, and how presidential and congressional decisions can leave campaign priorities unaddressed for years. Mr. Obama prioritized an economic stimulus package and the creation of the Affordable Care Act over sweeping immigration and climate legislation in the early years of his presidency.Stimulus and health care passed. The other two did not. A similar fate now could befall Mr. Biden’s plans for home care workers, paid leave, child care subsidies, free prekindergarten and community college, investments in racial equity and, once again, immigration and climate change.If Mr. Biden is able to push through a compromise bill with major investments in emissions reduction, “he’s got an engine that he’s working with” to fight climate change, said John Podesta, a former top aide to Mr. Obama and President Bill Clinton. “If he can’t get it, then I think, you know, we’re really kind of in soup, facing a major crisis.”Republicans have criticized the spending and the tax increases that would help fund it, claiming that the Democratic package would hurt the economy. Democrats “just have an insatiable appetite to raise taxes and spend more money,” Representative Steve Scalise, Republican of Louisiana, said on “Fox News Sunday” this week. “It would kill jobs.”Amy Stelly said she wondered whether she would continue to breathe fumes from the Claiborne Expressway, which is near her home in New Orleans.Edmund D. Fountain for The New York TimesThe threat of Republican filibusters has blocked Mr. Biden’s plans for gun and voting-rights legislation.For now, though, the president’s biggest problem is his own party. He is negotiating with progressives and moderates over the size of the larger tax and spending package. Centrists like Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona have pushed for the price tag to fall below $2 trillion. Mr. Manchin has said he wants to limit the availability of some programs to lower- and middle-income earners. Progressive groups are jockeying to ensure that their preferred plans are not cut entirely from the bill.The House has proposed investing $190 billion in home health care, for example, less than half of what Mr. Biden initially asked for. If the price tag continues to decrease, Democrats would almost certainly have to choose between two concurrent aims: expanding access to older Americans in need of caretakers or raising the wages of those workers, a group that is disproportionately women of color.Another proposal included in Mr. Biden’s original infrastructure bill was an investment of $20 billion to address infrastructure that has splintered communities of color, although the funding was slashed to $1 billion through a compromise with Republican senators.Ms. Stelly thought the funds, plus the president’s sweeping proposals to address climate change — which might also be narrowed to appease centrist Democrats — would finally result in elected officials addressing the highway emissions that have filled her lungs and darkened the windows of her home.Ms. Stelly, an urban designer, has since limited her expectations. She said she hoped the funding would be enough to at least issue another study of the highway, which claimed dozens of Black-owned businesses and the once-thriving neighborhood of Tremé.The Claiborne Expressway bisects the residential neighborhood of Tremé in New Orleans. Ms. Stelly said she hoped the funding would be enough for another study on the effects of the highway.William Widmer for The New York TimesSome Democrats are eager to pack as much as they can into the bill because they fear losing the House, the Senate or both in the midterm elections next year. Mr. Podesta has urged lawmakers to see the package as a chance to avoid those losses by giving Democratic incumbents a batch of popular programs to run on, and also giving the president policy victories that could define his legacy.Mr. Biden has promoted some of his policies as ways to reverse racial disparities in the economy and lift families that are struggling in the coronavirus pandemic from poverty.Ms. Mount, who immigrated to the United States from Trinidad and Tobago, said she was appreciative of her job helping older Americans and the disabled eat and bathe and assisting them in their homes. But her wages for her long hours — working about 50 hours a week for $400, at times — have made it effectively impossible to stay on top of payments for basic needs.She had hoped Mr. Biden’s plan to raise the minimum wage or salaries for home health care aides meant she would no longer need to choose between her electric bills and her medical expenses. She said the treatment had improved her blindness, but without a salary increase for her field, she is more convinced that she will be working for the rest of her life.“I have to make a choice: Do I go to the grocery store or pay my mortgage? Do I pay my water bill or pay my electric bill?” said Ms. Mount, who lives in Philadelphia. “With that, retirement looks B-L-E-A-K, all uppercase. What do I have there for retirement?”When Mr. Biden initially proposed two years of free community college, Ms. Mount, 64, was encouraged about future opportunities for her six grandchildren in the United States. But she fears that effort could also be cut.“That’s politics from on top,” she said. “At times, they always seem detached.”Protesters gathered in front of the White House in August in support of the DACA program, which protects young immigrants from deportation.Andrew Caballero-Reynolds/Agence France-Presse — Getty ImagesSome measures that Democrats have long promised voters have run afoul of Senate rules that dictate which policies the administration should include in bills that use a special process to bypass the filibuster, including a minimum-wage increase and a plan to offer citizenship to immigrants brought to the United States as children.When the Senate parliamentarian rejected the strategy, it made Mr. Suasnavas, who has lived in the United States since he was 13, consider the prospect of eventually being deported; he would have to leave behind his job as a medical technology specialist, and his 6-year-old daughter and 2-year-old son.“We’ve been having the hopes that politicians in Washington — Democrats and Republicans — will see not only the economic impact we can bring to the country but also we’re still people with families,” said Mr. Suasnavas, 35. “Our hearts have been broken so many times that it feels like another wound in your skin.” More

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    Finance Executives Say Risk of Default Is Already Damaging the Economy

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    Shortly after the C.E.O.s met with President Biden, Senator Mitch McConnell said he would allow Democrats to raise the debt ceiling enough to push a potential default to December.Finance executives met with President Biden as an Oct. 18 debt-ceiling deadline inched closer, warning that a U.S. default would threaten the global economy. Senate Republicans have promised to filibuster a long-term suspension of the borrowing limit.Doug Mills/The New York TimesPresident Biden met with finance executives on Wednesday as he continued to try to put maximum pressure on Senate Republicans to raise the debt ceiling before Oct. 18, the date the Treasury Department has said the United States would go into default.Shortly after the meeting, Senator Mitch McConnell, the minority leader, seemed to relent from his opposition to allowing Democrats to lift the ceiling in the short term through regular channels. He said he would “allow Democrats to use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”The White House dismissed Mr. McConnell’s statement as an informal offer and said the president would rather Republicans allow a vote on a spending bill to go forward.The executives all warned that the economy would be threatened should the country default on its debts for the first time in history.“It’s already beginning to cause some damage in the economy,” Jane Fraser, the chief executive of Citigroup, told the president. “It will hurt consumers. It will hurt small businesses.”“It’s not an exaggeration to say that even small distortions in the Treasury market can cost taxpayers tens of billions of dollars over many years,” she added, referring to the market for bonds issued by the Treasury Department.Mr. Biden, seeking to convey the consequences to everyday Americans, asked the executives to explain what would happen if the United States went into default for only a day or two.“Certainly, as we know, there are hundreds of millions of investors that are involved in the markets today that have put their hard-earned savings into the markets,” said Adena Friedman, the chief executive of Nasdaq. “And we would expect that the markets will react very, very negatively.”Mr. McConnell of Kentucky had long said Democrats must use a more complicated process known as reconciliation to overcome Republican opposition to raising the debt ceiling. In his statement on Wednesday, he reiterated that the reconciliation process was the only option he supported for a longer-term increase in the limit, unless “Democrats abandon their efforts to ram through another historically reckless taxing and spending spree.”The financial sector had been projecting a grim two weeks ahead. A report released by Goldman Sachs said that there was little reason to believe Congress would meet the Oct. 18 deadline, but that “the public and financial market response would likely force a quick political resolution.”Senate Democrats are still weighing their options for a path forward. Jen Psaki, the White House press secretary, told reporters on Wednesday that the White House did not want to keep prolonging things with an extension. “We don’t need to go through a cumbersome process that every day brings additional risks,” Ms. Psaki said.Asked why the White House does not support a short-term debt ceiling increase that could, at least temporarily, calm financial markets, Ms. Psaki replied, “Why not just get it done now?” She said Mr. Biden and Mr. McConnell had not yet spoken about the debt limit.The budget process of reconciliation would most likely involve two marathons of politically charged votes that Mr. Biden has predicted would be “fraught with all kinds of potential danger for miscalculation.” Democrats say there is no guarantee that Republicans wouldn’t drag those votes out to inflict procedural and political discomfort.Understand the U.S. Debt CeilingCard 1 of 9What is the debt ceiling? More

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    Fed Chair Jerome Powell Faces Reappointment Amid Tumult

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    Mr. Powell is facing down progressive pushback and an ethics scandal as the White House considers his future.As Jerome H. Powell’s term as the chair of the Federal Reserve nears its expiration, President Biden’s decision over whether to keep him in the job has grown more complicated amid Senator Elizabeth Warren’s vocal opposition to his leadership and an ethics scandal that has engulfed his central bank.Mr. Powell, whose four-year term as chair expires early next year, continues to have a good chance of being reappointed because he has earned respect within the White House for his aggressive use of the Fed’s tools in the wake of the pandemic recession, people familiar with the administration’s internal discussions said.But the decision and the timing of an announcement remain subject to an unusually high level of uncertainty, even for a top economic appointment. The White House will most likely announce Mr. Biden’s choice in the coming weeks, but that, too, is tenuous.The administration is preoccupied with other major priorities, including passing spending legislation and lifting the nation’s debt limit. But the uncertainty also reflects growing complications around Mr. Powell’s renomination. Ms. Warren, Democrat of Massachusetts, has blasted his track record on big bank regulation and last week called him a “dangerous man” to lead the central bank.She has also taken aim at Mr. Powell for not preventing top Fed officials from trading securities in 2020, a year in which the central bank rescued markets, potentially giving the officials privileged information. Two regional presidents traded for their own profit in assets that the Fed’s actions could have influenced, according to recent disclosures. And Richard H. Clarida, the Fed’s vice chair, moved money from bond funds into stock funds in late February 2020, just before the Fed hinted that it would rescue markets and the economy. “It is not clear why Chair Powell did not takes steps to prevent these activities,” Ms. Warren said during a Senate floor speech on Tuesday, after sending a letter on Monday calling for the Securities and Exchange Commission to investigate whether the transactions amounted to insider trading. “The responsibility to safeguard the integrity of the Federal Reserve rests squarely with him.”Asked on Tuesday whether he had confidence in Mr. Powell, the president said he did but that he was still catching up on events.The White House’s decision over Mr. Powell’s future is pending at a critical moment for the U.S. economy. Millions of jobs are still missing compared with before the pandemic, and inflation has jumped higher as strong demand clashes with supply chain disruptions, presenting dueling challenges for the Fed chair to navigate. The Fed’s next leader will also shape its involvement in climate finance policy, a possible central bank digital currency and the response to the central bank’s ethics dilemma.“This is starting to feel like an incredibly consequential time for the Fed,” said Dennis Kelleher, the chief executive of Better Markets, a group that has been critical of the Fed’s deregulatory moves in recent years and has criticized it for insufficient ethical oversight.The administration is under pressure to make a prompt decision, in part because the Fed’s seven-person Board of Governors in Washington will soon face a spate of openings. One governor role is already open. Mr. Clarida’s term ends early next year, leaving another vacancy, and Randal K. Quarles’s term as the board’s vice chair for supervision will expire next week, although his term as a governor runs through 2032.By announcing key picks soon, the Biden administration could ensure that someone was ready to step into Mr. Quarles’s leadership role. And nominating several officials at once could give the president a chance to show that he is heeding the concerns of Democrats in Congress, who want to see more diversity at the Fed and officials who favor tougher bank regulation.But the ethics scandal threatens to complicate the picks.Recent financial disclosures showed that Robert S. Kaplan at the Federal Reserve Bank of Dallas traded millions of dollars in individual stocks last year, and that Eric S. Rosengren at the Federal Reserve Bank of Boston traded real estate-tied securities even as he warned publicly about problems in that sector. The trades have drawn criticism because they occurred during a year in which the Fed hugely influenced a wide range of financial markets.Both men resigned from their roles as regional presidents amid the controversy, though Mr. Rosengren said he was leaving for health reasons.Attention has now turned to Mr. Clarida. All of his trades were in broad funds, not individual securities, and have been public since May, but have drawn attention amid the current reckoning. He sold a stake in a bond fund totaling at least $1 million and moved that money into stock funds on Feb. 27, 2020. The transaction gave him more exposure to stocks shortly before the Fed rolled out policies that goosed such investments.The Fed has said Mr. Clarida’s trades were part of a planned portfolio rebalancing, but declined to specify when the planning happened.Mr. Powell kicked off an internal ethics review last month. A Fed spokesperson said on Monday that an independent government watchdog would carry out an investigation into whether senior officials broke relevant ethics rules or laws.But some progressives have seized on the problems to bolster their case that Mr. Powell should not be reappointed. Jeff Hauser, the founder and executive director of the Revolving Door Project, which has urged Mr. Biden to keep corporate influence out of his administration, has pointed out that the Fed chair himself moved money around last year, listing 26 transactions, albeit all in broad-based funds. He also noted that Lael Brainard, a Fed governor and a longtime favorite to replace Mr. Powell if he is not reappointed, did not report any transactions year.“If you’re trying to go above and beyond, and be beyond reproach, not trading is the better option,” Mr. Hauser said.Senator Elizabeth Warren has called for the Securities and Exchange Commission to investigate whether top Fed officials engaged in insider trading in 2020.Stefani Reynolds for The New York TimesIt is not clear how much the blowback will ultimately fall on Mr. Powell. During his testimony to a Senate committee last week, lawmakers asked him about the ethics issues without explicitly blaming him for them.The trades were not historically abnormal. Mr. Kaplan transacted in stocks throughout his tenure, including when Mr. Powell’s predecessor, Treasury Secretary Janet L. Yellen, led the central bank. Ms. Yellen’s vice chair, Stanley Fischer, bought and sold individual stocks, his 2017 disclosures showed. Ms. Brainard herself has in the past made broad-based transactions. It was the Fed’s more expansive role in 2020 that spurred the backlash.Agencies often need a “wake-up call” to notice evolving problems with their oversight rules, said Norman Eisen, a senior fellow at the Brookings Institution and an ethics adviser in President Barack Obama’s White House.“My own view is that Chair Powell is pivoting briskly to address the weaknesses in the Fed’s ethics system,” he said. Ms. Warren cited regulation, not ethics issues, upon first announcing that she would not support Mr. Powell. Democrats have raised concerns for years about the deregulatory approach that the Fed has embraced under Mr. Quarles’s leadership. Mr. Powell has largely deferred to his vice chair for supervision as the central bank made bank stress tests more transparent and enabled big banks to become more intertwined with venture capital.Critics say reappointing Mr. Powell amounts to retaining that more hands-off regulatory approach. And some progressive groups suggest that if Mr. Powell stays in place, Mr. Quarles will feel emboldened to stick around: He has hinted that he might stay on as a Fed governor once his leadership term ends.That would mean four of seven Fed Board officials — a majority — would remain Republican-appointed. Two other governors — Michelle W. Bowman and Christopher J. Waller — were nominated by President Donald J. Trump.During Mr. Powell’s Senate testimony last week, Ms. Warren said renominating him as chair meant “gambling that, for the next five years, a Republican majority at the Federal Reserve, with a Republican chair who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again.”Even without Ms. Warren’s approval, Mr. Powell would most likely draw enough support to clear the Senate Banking Committee, the first step before the full Senate could vote on his nomination, because of his continued backing from the committee’s Republicans. But having a powerful Democratic opponent whose support the administration needs on other legislative priorities is not helpful.The Fed chair does have some powerful allies in the administration, including Ms. Yellen, the Treasury secretary. But the decision rests with Mr. Biden.“I know he will talk to many people and consider a wide range of evidence and opinions,” Ms. Yellen said on CNBC on Tuesday. More

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    Democrats Move to Avert Shutdown, but Divisions Imperil Biden’s Agenda

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    Democrats prepared a spending bill to keep the government funded past a Thursday deadline, but moderates dug in harder against their ambitious social safety net bill.WASHINGTON — Democrats prepared legislation on Wednesday to avert a government shutdown this week, but they were desperately trying to salvage President Biden’s domestic agenda as conservative-leaning holdouts dug in against an ambitious $3.5 trillion social safety net and climate bill that carries many of the party’s top priorities.Congressional leaders moved to address the most immediate threat, working to complete a bill to prevent a government funding lapse at midnight on Thursday. Yet after days of intensive negotiations to bridge bitter differences in their party over Mr. Biden’s two biggest legislative priorities, the president and top Democrats appeared as far as ever from an agreement on their marquee social policy package, which the White House calls the Build Back Better plan.That, in turn, was imperiling a $1 trillion bipartisan infrastructure bill that was scheduled for a House vote on Thursday.The fate of the two measures could define the success of Mr. Biden’s presidency, and the intense negotiations surrounding them have posed a test of his skills as a deal maker, which he highlighted as a calling card during his campaign for the White House. But after days of personal meetings with lawmakers in the Oval Office and phone calls to key players, Mr. Biden remained far short of a deal.Dramatizing the challenge, Senator Joe Manchin III of West Virginia, a leading holdout on the social policy bill, issued a lengthy and strongly worded statement on Wednesday evening reiterating his opposition to the proposal as currently constituted, saying it amounted to “fiscal insanity.”“While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot — and will not — support trillions in spending or an all-or-nothing approach that ignores the brutal fiscal reality our nation faces,” Mr. Manchin wrote, denouncing an approach that he said would “vengefully tax for the sake of wishful spending.”The statement was the polar opposite of what Mr. Biden and top Democrats had hoped to extract from Mr. Manchin and other centrist critics of the bill by week’s end — a firm public commitment to eventually vote for the social policy measure, in order to placate liberals who want to ensure its enactment.Instead, it further enraged progressives who were already promising to oppose the infrastructure bill until Congress acted on the larger social policy plan, which Democrats plan to push through using a fast-track process known as budget reconciliation to shield it from a filibuster. They have been pressing to push off the infrastructure vote until after votes on the reconciliation bill — or, at the very least, after the centrist holdouts provided a firm sense of what they would accept in that package.“I assume he’s saying that the president is insane, because this is the president’s agenda,” Representative Pramila Jayapal, Democrat of Washington and the leader of the Congressional Progressive Caucus, said of Mr. Manchin. “Look, this is why we’re not voting for that bipartisan bill until we get agreement on the reconciliation bill. It’s clear we’ve got a ways to go.”“I tell you, after that statement, we probably have even more people willing to vote ‘no’ on the bipartisan bill,” she added.The impasse left unclear the fate of the infrastructure measure. While a handful of centrist Republicans plan to support it, G.O.P. leaders are urging their members to oppose it, leaving Democrats who hold a slim majority short of votes to pass the bill if progressives revolt.“The plan is to bring the bill to the floor,” Speaker Nancy Pelosi told reporters, returning to Capitol Hill after huddling at the White House with Mr. Biden and Senator Chuck Schumer of New York, the majority leader. Asked whether she was concerned about the votes, she added, “One hour at a time.”She spoke shortly after the House passed legislation lifting the statutory limit on federal borrowing until Dec. 16, 2022, an effort to avert a catastrophic federal debt default next month when the Treasury Department says it will breach the current cap.Senate Republicans blocked a Democratic effort to pair the increase with a spending bill to keep the government funded, and are likely to oppose the House-passed bill, which was approved on a nearly party-line vote of 219 to 212 on Wednesday. Still, the move signaled that Democrats were willing to act on the government funding measure separately, steering clear of a shutdown even as the debt ceiling remains unresolved for now.But much of the urgency on Wednesday was focused on salvaging the president’s agenda, after Mr. Biden and his aides cleared his schedule on Wednesday in an attempt to broker a deal among Democrats.Some Democrats have complained this week that the president has not engaged in talks to their satisfaction. He welcomed groups of progressives and moderates to the White House last week, for example, but met with each separately, as opposed to holding a group negotiating session.And efforts by Mr. Biden and his team to pressure Mr. Manchin and Senator Kyrsten Sinema of Arizona, another Democratic holdout on the reconciliation bill, appear to have fallen flat. Officials have been working for days to persuade the pair to specify how much they would be willing to spend on the package, calculating that such a commitment would allay the worries of progressives now refusing to support the infrastructure bill.Both Ms. Sinema and Mr. Manchin visited the White House on Tuesday, but after their meetings, neither they nor White House officials would enumerate the contours of a bill they could support. Top White House officials also trekked to Capitol Hill on Wednesday to huddle privately with Ms. Sinema for more than two hours.“The president felt it was constructive, felt they moved the ball forward, felt there was an agreement, that we’re at a pivotal moment,” Jen Psaki, the White House press secretary, told reporters on Tuesday, characterizing the meetings. “It’s important to continue to finalize the path forward to get the job done for the American people.”Mr. Biden held conversations with various lawmakers throughout the day on Wednesday and planned to continue them on Thursday, White House officials said.Senator Kyrsten Sinema of Arizona and other centrist holdouts haven’t provided a firm sense of what they would accept in the reconciliation bill.Sarahbeth Maney/The New York TimesPrivately, administration officials said Mr. Biden was continuing to take an encouraging role with Mr. Manchin and Ms. Sinema, and not demanding they agree to anything immediately. Both senators have yet to publicly do so, even as liberal Democrats continue to publicly fume over the reticence.In his statement on Wednesday, Mr. Manchin said he wanted to set income thresholds for many of the social program expansions Democrats have proposed. He suggested that he would be open to undoing some components of the 2017 tax cut.Moderate House Democrats, who helped secure a commitment for a vote this week on the infrastructure bill, warned that a failed vote would worsen the already deep mistrust between the two factions of the party.“If the vote were to fail tomorrow or be delayed, there would be a significant breach of trust that would slow the momentum in moving forward on delivering the Biden agenda,” said Representative Stephanie Murphy of Florida, one of the moderates who sought to decouple the two plans.Even as they labored to work out philosophical differences in their party on the bill, Democrats suffered yet another setback on Wednesday when the Senate’s top rules enforcer rejected a second proposal to include a path to legal status for about eight million undocumented immigrants in the reconciliation bill.In a memo obtained by The New York Times, Elizabeth MacDonough, the Senate parliamentarian, wrote that the policy change “vastly outweighs its budgetary impact,” effectively disqualifying it from inclusion in a measure whose contents must have a direct impact on the federal budget.In their latest effort, Democrats had proposed moving up the date for a process known as immigration registry, which allows otherwise law-abiding undocumented immigrants who have been in the United States continuously since a certain date to adjust their status and gain a pathway to citizenship. The current date, established in 1986, is set at Jan. 1, 1972. Democrats had sought to change that date to Jan. 1, 2010.After days of personal meetings with lawmakers in the Oval Office and phone calls to key players, President Biden remained far short of a deal. Doug Mills/The New York TimesLast week, Ms. MacDonough rejected Democrats’ initial proposal to grant legal status to several categories of undocumented people, including those brought to the United States as children, known as Dreamers; immigrants who were granted Temporary Protected Status for humanitarian reasons; people working in the country under nonimmigrant visas; close to one million farmworkers; and millions more who are deemed “essential workers.”She said those changes to immigration law could not be included, under the Senate rules, in the reconciliation package because they represented a “tremendous and enduring policy change that dwarfs its budgetary impact.”Democrats said they would continue to look for alternative strategies to aid immigrants through the reconciliation process.Luke Broadwater More

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    Biden Presses Democrats to Embrace His Economic Agenda

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    The president canceled a trip to Chicago in an attempt to salvage a pair of bills containing trillions of dollars in spending on infrastructure, education, climate change and more.WASHINGTON — President Biden and his aides mounted an all-out effort on Wednesday to salvage Mr. Biden’s economic agenda in Congress, attempting to forge even the beginnings of a compromise between moderates and progressives on a pair of bills that would spend trillions to rebuild infrastructure, expand access to education, fight climate change and more.Mr. Biden canceled a scheduled trip to Chicago, where he was planning to promote Covid-19 vaccinations, in order to continue talking with lawmakers during a critical week of deadlines in the House. One crucial holdout vote in the Senate, Kyrsten Sinema, a centrist from Arizona, was set to visit the White House on Wednesday morning, a person familiar with the meeting said.Ms. Sinema was one of the Democratic champions of a bipartisan bill, brokered by Mr. Biden, to spend more than $1 trillion over the next several years on physical infrastructure like water pipes, roads, bridges, electric vehicle charging stations and broadband internet. That bill passed the Senate this summer. It is set for a vote this week in the House. But progressive Democrats have threatened to block it unless it is coupled with a more expansive bill that contains much of the rest of Mr. Biden’s domestic agenda, like universal prekindergarten and free community college, a host of efforts to reduce greenhouse gas emissions and tax breaks for workers and families that are meant to fight poverty and boost labor force participation.Ms. Sinema and another centrist in the Senate, Joe Manchin III of West Virginia, have expressed reservations over the scope of that larger bill and balked at the $3.5 trillion price tag that Democratic leaders have attached to it. Moderates in the House and Senate, led by Ms. Sinema, have resisted many of the tax increases on high earners and corporations that Mr. Biden proposed to offset the spending and tax cuts in the bill, in order to avoid adding further to the budget deficit.Mr. Biden has thus far failed to convince Ms. Sinema and Mr. Manchin to agree publicly to a framework for how much they are willing to spend and what taxes they are willing to raise to fund the more expansive bill. If Mr. Biden cannot find a way to address their concerns, while also assuaging progressives and persuading them to support his infrastructure bill, he could see the warring factions in his party kill his entire economic agenda in the span of a few days.Some Democrats have complained this week that the president has not engaged in talks to their satisfaction, though he has cleared his schedule this week in hopes of brokering a deal. He welcomed groups of progressives and moderates to the White House last week, for example, but met with each separately, as opposed to a group negotiation session.Both Ms. Sinema and Mr. Manchin visited the White House on Tuesday, but after their meetings, neither they nor White House officials would enumerate the contours of a bill they could support.“The president felt it was constructive, felt they moved the ball forward, felt there was an agreement, that we’re at a pivotal moment,” Jen Psaki, the White House press secretary, told reporters on Tuesday, characterizing the meetings. “It’s important to continue to finalize the path forward to get the job done for the American people.”White House officials said late Tuesday that Mr. Biden remained in frequent contact with a wide range of Democrats, including phone calls with progressives, and that he would have more conversations on Wednesday. More

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    U.S. Debt-Limit Brinksmanship Has Become a Political Game

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    Republicans and Democrats have long sparred over raising the debt ceiling. But this time, the odds are growing that the U.S. could default.WASHINGTON — For nearly two decades, lawmakers in Washington have waged an escalating display of brinkmanship over the federal government’s ability to borrow money to pay its bills. They have forced administrations of both parties to take evasive actions, pushing the nation dangerously close to economic calamity. But they have never actually tipped the United States into default.The dance is repeating this fall, but this time the dynamics are different — and the threat of default is greater than ever.Republicans in Congress have refused to help raise the nation’s debt limit, even though the need to borrow stems from the bipartisan practice of running large budget deficits. Republicans agree the U.S. must pay its bills, but on Monday they are expected to block a measure in the Senate that would enable the government to do so. Democrats, insistent that Republicans help pay for past decisions to boost spending and cut taxes, have so far refused to use a special process to raise the limit on their own.Observers inside and outside Washington are worried neither side will budge in time, roiling financial markets and capsizing the economy’s nascent recovery from the pandemic downturn.If the limit is not raised or suspended, officials at the Treasury Department warn, the government will soon exhaust its ability to borrow money, forcing officials to choose between missing payments on military salaries, Social Security benefits and the interest it owes to investors who have financed America’s spending spree.Yet Republicans have threatened to filibuster any attempt by Senate Democrats to pass a simple bill to increase borrowing. Party leaders like Senator Mitch McConnell of Kentucky want to force Democrats to raise the limit on their own, through a fast-track congressional process that bypasses a Republican filibuster. That could take weeks to come to fruition, raising the stakes every day that Democratic leaders decline to pursue that option.The problem is further compounded by the fact that no one is quite sure when the government will run out of money. The Covid-19 pandemic continues to ravage the United States in waves, frequently disrupting economic activity and the taxes the government collects, complicating Treasury’s ability to gauge its cash flow. Estimates for what’s known as the “X-date” range from as early as Oct. 15 to mid-November..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Amid that uncertainty, congressional leaders and President Biden aren’t even attempting to negotiate a resolution. Instead, they are sparring over who should be saddled with a vote that could be used against them, raising the odds that partisan stubbornness will propel the country into a fiscal unknown.It all adds up to an impasse rooted in political messaging, midterm campaign advertising and a desire by Republican leaders to do whatever they can to protest Mr. Biden’s economic agenda, including the $3.5 trillion spending bill that Democrats hope to pass along party lines using a fast-track budget process.Republicans say they will not supply any votes to lift the debt cap, despite having run up trillions in new debt to pay for the 2017 tax cuts, additional government spending and pandemic aid during the Trump administration. Democrats, in contrast, helped President Donald J. Trump increase borrowing in 2017 and 2019.“If they want to tax, borrow, and spend historic sums of money without our input,” Mr. McConnell said on the Senate floor this week, “they will have to raise the debt limit without our help.”Thus far, Mr. Biden and Democratic leaders in Congress have declined to do so, even though employing that process would end the threat of default.Jon Lieber, a former aide to Mr. McConnell who is now with the Eurasia Group, a political-risk consultancy in Washington, wrote in a warning to clients this week that there is a one-in-five chance the standoff will push the country into at least a technical debt default — forcing the government to choose between paying bondholders and honoring all its spending commitments — this fall.“That’s crazy high for an event like this,” Mr. Lieber said in an interview, noting that the odds are significantly higher than in past standoffs. “But I feel really confident that’s the level of panic we should be having.”Republican leaders like Senator Mitch McConnell of Kentucky, the minority leader, are making no demands — suggesting no concessions that Mr. Biden and his party could offer to win their votes.Sarahbeth Maney/The New York TimesUnder President George W. Bush, Democrats, including Mr. Biden, voted in 2006 against a debt limit increase, citing Mr. Bush’s budget deficits that were swollen by tax cuts and wars in Iraq and Afghanistan. They did so despite warnings from administration officials that a default would hurt the nation’s credit rating and economy.Mr. Biden, like many other Democrats, said he could not abet Mr. Bush’s fiscal decisions. But his party did not filibuster a vote and Republicans were able to pass a debt limit increase along party lines. White House officials say Mr. Biden’s vote was symbolic, noting that the ability of Republicans to raise the debt ceiling was never in question.Leaders of both parties have, at times, made a version of the core argument in favor of raising the limit: that it is simply a way to allow the government to pay bills it has already incurred. Both parties also have shown no sign of slowing the nation’s borrowing spree, which accelerated last year as lawmakers approved trillions of dollars of aid for people and businesses struggling through the pandemic recession. Each party has recently occupied the White House and controlled Congress, but neither has come close in recent years to approving a budget that would balance — which is to say, not require additional borrowing and a debt-limit increase — within a decade.Biden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.Sarahbeth Maney/The New York TimesBiden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.“I think it’s scary for consumer confidence and for confidence in U.S. businesses and potential credit ratings if we don’t make sure that we raise that debt ceiling,” Andy Jassy, the chief executive officer of Amazon, said on CNBC earlier this 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#e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Democrats say Republicans have a responsibility to help raise the limit, noting that they helped when Mr. Trump needed to do it. White House officials called Mr. McConnell’s position hypocritical.“Republicans in Congress have spent a decade ushering in a new era where the prospect of default and a global economic meltdown has become a dangerous political football,” Michael Gwin, a White House spokesman, said in an email. “As we rebound from the deep recession caused by the pandemic, it’s more important now than ever to put partisanship aside, remove this cloud from over our economy, and responsibly address the debt limit — just like Democrats did three times under the previous administration.”Mr. Lieber and other analysts worry party leaders are talking past each other. Experts suggest it would take a week or two for Democratic leaders to steer a debt limit increase through the fast-track budget process. That could leave the government vulnerable to a sudden crisis. On Friday, the independent Bipartisan Policy Center, a Washington think tank, said the government could run out of cash to pay its bill by mid-October.Mr. Lieber said he is worried about “the risk of miscalculation of both sides,” in part because this standoff is not the same as the ones under Mr. Obama. “The Republicans aren’t asking for anything,” he said. “So their position is, there’s nothing you can do to get us to vote for a debt ceiling increase. That’s a dangerous situation.”Goldman Sachs researchers warned in a note to clients this month that the volatile nature of tax receipts this year, a product of the pandemic, makes the debt limit “riskier than usual” for the economy and markets. They said the standoff was at least as risky as in 2011, when brinkmanship disrupted bond yields and the stock market.Other financial analysts continue to believe that, as they have in the past, the sides will eventually find an agreement — largely because of the consequences of failure.“We believe Congress will raise or suspend the debt ceiling,” Beth Ann Bovino, S&P U.S. chief economist, wrote this week. “A default by the U.S. government would be substantially worse than the collapse of Lehman Brothers in 2008, devastating global markets and the economy.”In the meantime, Republicans are awaiting a vote by Democrats to raise the limit. Senator Rick Scott of Florida, who heads Republicans’ campaign arm in the Senate, told an NBC reporter he was eager to highlight Democratic support for raising the limit in midterm advertisements. More