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    Biden Will Release Dead-on-Arrival Budget, Picking Fight With GOP

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    The president’s plans have little in common with the budget Republicans are set to release this spring, as the nation hurtles toward a possible default on its debt.WASHINGTON — President Biden will propose a budget on Thursday that has no chance of driving tax or spending decisions in Congress this year, but instead will serve as a statement of political priorities as he clashes with Republicans over the size of the federal government.Mr. Biden’s budget proposal, the third of his presidency, is an attempt to advance a narrative that the president is committed to investing in American manufacturing, fighting corporate profiteering, reducing budget deficits and fending off conservative attacks on safety-net programs.It is expected to include what White House officials say will be nearly $3 trillion in new deficit reduction, largely from a familiar batch of tax increases on companies and high earners, along with robust spending on the military and policies to further Mr. Biden’s attempts to support high-tech factory jobs and fight climate change.Republicans are expected to offer a starkly different budget sometime this spring, one likely to be stocked with cuts to federal health programs and aid to the poor, in an effort to eliminate the budget deficit within a decade without raising taxes. Mr. Biden is certain to reject those proposals, and they may struggle to attract enough moderate Republican votes to pass the House.The competing documents will highlight the dearth of common ground for Mr. Biden and his opposition party on fiscal policy at a high-stakes moment for the government and the global economy. That is true even though both the president and congressional Republicans are embracing the politics of promising to reduce deficits and the growth of the national debt, which topped $31 trillion late last year.Republican leaders in the House have refused to raise a congressionally imposed cap on how much the federal government can borrow unless Mr. Biden agrees to steep cuts to federal spending in exchange. Given the United States borrows huge sums of money to pay its bills, that position risks plunging the economy into crisis if the government runs out of cash and defaults on its debt later this year.Mr. Biden has refused to tie any spending cuts to raising the borrowing cap, which does not authorize any new expenditures, but said he welcomes debate over how best to ease the nation’s debt burden.The parties’ entrenched positions set Washington up for several bruising months, at least, of debt-limit discussions. Economists warn the standoff will rattle investors and poses mounting threats to the global financial system.On Wednesday, Jerome H. Powell, the chair of the Federal Reserve, urged lawmakers not to play games, saying there is no way to prevent a financial meltdown without raising the borrowing cap.“Congress raising the debt ceiling is really the only alternative,” Mr. Powell told a House committee. “There are no rabbits in hats to be pulled out on this.”Jerome H. Powell, the chair of the Federal Reserve, told a House committee: “Congress raising the debt ceiling is really the only alternative.”Haiyun Jiang/The New York TimesPresidential budgets always offer visions for the nation’s fiscal policy that compete with those of their opposition — and budgets submitted by presidents to an opposition-dominated chamber of Congress rarely serve as more than messaging documents. Often, including under Mr. Biden, much of the budget fails to pass muster with the president’s own party.Mr. Biden failed to persuade a sufficient number of Democrats to pass many of the policy priorities outlined in his previous budget requests, like free community college and federally guaranteed paid leave. More than $2 trillion in tax increases from last year’s budget were never enacted despite Democrats’ control of Congress..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Still, this year’s budget releases from Mr. Biden and House Republicans carry extra importance because of the stakes of the debt-limit fight — and the few paths to compromise on fiscal policy that the documents are expected to show.Mr. Biden’s budget will raise taxes on corporations and high earners, both to pay for his policy priorities and to reduce the growth in America’s reliance on borrowed money, including a 25 percent tax aimed at billionaires. Republicans will seek to cut taxes, including making permanent some temporary tax cuts approved under former President Donald J. Trump, and may seek to eliminate the budget deficit in 10 years by gutting huge swaths of federal spending. Mr. Biden will continue to push his vision of an expanded and empowered government hand in the economy, with new spending for child care, education and more. Republicans will seek to slash federal agencies and much of the health coverage provided by the Affordable Care Act, though it may be difficult for Speaker Kevin McCarthy of California to assemble a package of cuts that will satisfy hard-liners and centrists in his caucus alike.Leaders on both sides of the aisle are embracing the contrasts in their approach.Mr. Biden “is willing to do what Republicans are not: lower the deficit in a realistic, responsible way without cutting benefits that tens of millions of people rely on,” Senator Chuck Schumer of New York, the majority leader, said in a brief speech on Wednesday. “Unlike Republicans, the president is also asking the richest of the rich to pay a little more of their fair share in taxes,” he added.Senator Mitch McConnell of Kentucky, the Republican leader, told reporters this week that Mr. Biden’s budget was “replete with what they would do if they could.”“Thank goodness the House is Republican,” Mr. McConnell said. “Massive tax increases, more spending, all of which the American people can thank the Republican House for, will not see the light of day.”Speaker Kevin McCarthy faces a challenge in coming up with cuts that will satisfy both hard-liners and centrists in the Republican caucus.Julia Nikhinson for The New York TimesRepublicans largely ignored the growth in deficits under Mr. Trump, including approving his tax cuts, which cost the federal government $2 trillion, and when joining with Democrats to pass trillions of dollars in economic aid amid the pandemic recession. Republicans joined Democrats three times to raise or suspend the debt limit without any spending cuts when Mr. Trump was in office. But after winning control of the House in November, Republican leaders have returned to warning that America’s debt load is hurting the U.S. economy and refusing to raise the debt limit unless Mr. Biden agrees to pare back federal spending.The Congressional Budget Office projects the budget deficit will grow slightly this fiscal year, from $1.375 trillion to $1.41 trillion, then continue to rise for the course of the decade, topping $2 trillion in 2032.Those increases are being driven in part by the rising costs of Medicare and Social Security as members of the baby boom generation retire, and by the growing cost of servicing the nation’s $31.4 trillion debt following a series of rapid interest rate increases by the Fed in a bid to tame high inflation. Mr. Powell told lawmakers on Wednesday that “it isn’t that the debt today is unsustainable. It’s that the path is unsustainable.”The director of the budget office, Phillip L. Swagel, briefed lawmakers about deficit projections on Wednesday at the Capitol, warning they would eventually need to raise taxes, cut spending or both in order to mitigate rising debt. The office’s projections “suggest that, over the long term, changes in fiscal policy would need to be made to address the rising costs of interest and mitigate other adverse consequences of high and rising debt,” Mr. Swagel wrote in a slide deck presented to lawmakers.From 2024 to 2033, the budget office projects, deficits will total more than $20 trillion, driving gross federal debt to nearly $52 trillion.Mr. Biden’s proposals, if enacted in full, would reduce that growth by about 15 percent. They are not likely to be. Republicans have tried already this year to repeal tax increases and the Medicare prescription drug savings measures he signed last year.Through new laws he has signed and executive actions he has issued, Mr. Biden has approved policies that would add about $5 trillion to the national debt over a decade, according to estimates by the Committee for a Responsible Federal Budget in Washington. Those include his 2021 economic aid law and debt relief for certain student loan borrowers, which is under challenge at the Supreme Court.It is unclear how Mr. Biden settled on the ultimate figure of nearly $3 trillion for his budget’s deficit reduction, or to what extent he agrees with Republicans who claim that the nation’s current levels of debt and deficits pose a risk to the economy.Karine Jean-Pierre, the White House press secretary, did not directly answer a reporter’s questions this week on how Mr. Biden arrived at his preferred level of deficit reduction or whether the path of growth in the national debt is hurting the economy.“The president understands his fiscal responsibility. He understands how important it is to lower the deficit,” Ms. Jean-Pierre said.“He’s going to put forward a fiscal budget that is going to be responsible,” she added.Catie Edmondson More

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    Biden Budget Will Propose Tax Increase to Bolster Medicare

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    The president’s plan targets Americans earning more than $400,000 a year in an attempt to increase the program’s solvency by 25 years.WASHINGTON — President Biden, as part of his budget set for release on Thursday, will propose raising and expanding a tax on Americans earning more than $400,000 as part of a series of efforts to extend the solvency of Medicare by a quarter-century.In spotlighting his Medicare plans, Mr. Biden is seeking to sharpen a contrast with Republicans and cast himself as a protector of cherished retirement programs — both for his likely re-election campaign and for a looming congressional battle with House conservatives who are demanding steep cuts in federal spending in order to raise the nation’s borrowing limit.The early release of the Medicare proposals, detailed in a White House fact sheet on Tuesday, also underscored the degree to which Mr. Biden has fully embraced the political upside of taxing high earners. That is the case even though administration officials have conceded there is little chance those tax increases will pass Congress.The proposals would affect the so-called net investment income tax, which was enacted to help offset the cost of former President Barack Obama’s signature health care law. They would increase the tax rate to 5 percent from 3.8 percent for people earning above $400,000 a year and expand the income subject to it. Independent estimates from the Urban-Brookings Tax Policy Center and the Committee for a Responsible Federal Budget suggest the changes could raise at least $350 billion, and possibly as much as $600 billion over the course of a decade. White House estimates are even higher: $700 billion in net new revenue over a decade, all from high earners.Mr. Biden is also proposing new cost savings for the government stemming from more aggressive negotiation over prescription drug prices. Those plans are almost certain to be rejected by Republicans, who won control of the House in November and roundly oppose both tax increases and Mr. Biden’s efforts to reduce pharmaceutical prices through regulation.The president’s emphasis on so-called entitlement programs is part of a sustained effort to claim a high ground with voters on both Medicare and Social Security and put Republicans in a difficult position as he clashes with conservatives on spending, taxes and debt.Health Care in the United StatesInsulin Prices: After years of mounting pressure, the drugmaker Eli Lilly said that it would significantly reduce the prices of several of its lifesaving insulin products.The Cost of Miracle Drugs: A wave of innovative medicines promise to cure devastating diseases. But when prices are too high, patients have to hunt for other ways to pay.Medicare: The Biden administration announced a rule targeting Medicare private plans that overcharge the federal government. The change strengthens the ability to audit plans and recover overpayments.‘Hospital at Home’ Movement: In a time of strained capacity, some medical institutions are figuring out how to create an inpatient level of care outside of hospitals.Medicare’s trustees estimate its hospital trust fund will be insolvent by 2028 without congressional action.Many Republicans have long supported cuts to the programs or raising their retirement ages to shore up the program’s finances and reduce federal spending. But others, aware of the potential voter backlash from touching popular programs, have grown wary of embracing the types of changes to the programs that were part of the Republican mainstream a decade ago. Former President Donald J. Trump vowed to protect both Social Security and Medicare and has urged Republicans to follow suit.Speaker Kevin McCarthy recently said he would not seek cuts to the programs in discussions with Mr. Biden over raising the debt limit, though more conservative members of his party are still pushing for reductions.“This debate over entitlements tied to the need to raise the federal debt ceiling has tied the party in knots,” said Larry Levitt, an executive vice president at the Kaiser Family Foundation, a health research group. “And I think President Biden is happy to engage in this debate and put forward proposals to sustain Medicare without cutting benefits or eligibility.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.Mr. Biden has refused to negotiate with Republicans over the debt limit, though he has said he is willing to discuss fiscal policy more broadly. He repeatedly attacked Republicans on Social Security and Medicare, vowing not to cut the programs and piling on when Republican lawmakers declared them off the table in budget talks.The president’s budget plan seeks to further that message, in part by employing accounting maneuvers to make Medicare appear more solvent by directly dedicating more federal revenues to its trust fund. The budget will dictate that both the new tax increases and the savings from spending on prescription drugs would be used to increase the trust fund that finances Medicare’s hospital benefits. It will also propose transferring the existing revenue stream from the net investment tax to feed Medicare’s trust fund.The White House anticipates that together the changes would total about $1.5 trillion over the next decade, ensuring the fund can pay Medicare’s hospital bills for an additional 25 years. The finances for the part of Medicare that pays for doctor’s visits, which is also projected to grow substantially in coming years, would be unaffected.“The budget I am releasing this week will make the Medicare trust fund solvent beyond 2050 without cutting a penny in benefits,” Mr. Biden wrote in an opinion piece for The New York Times on Tuesday. “In fact, we can get better value, making sure Americans receive better care for the money they pay into Medicare.”For the first time this year, Medicare will begin regulating the price of prescription drugs, using new powers Congress gave it in the Inflation Reduction Act, the tax, health and climate bill Mr. Biden signed late last summer. The president’s budget highlights the substantial savings that the reforms are expected to generate over time.The legislation allows Medicare to regulate the price of certain expensive drugs that have been on the market for several years. It also limits the amount all drugmakers can raise prices each year. Those reforms would save Medicare about $160 billion over a decade, according to the Congressional Budget Office.The changes to prescription drug prices accompanied changes to Medicare’s benefit that will also lower the costs of expensive drugs for its beneficiaries, by capping the total amount they can be asked to pay in a year for all their medicines and by limiting co-payments on insulin to $35 a month.Mr. Biden will propose expanding the drug negotiations by allowing the government to negotiate over a broader universe of medications. The White House estimates that those changes and other tweaks to the drug negotiation provision would save the government an additional $200 billion over 10 years, which it seeks to direct to the Medicare trust fund.The United States pays more than double the drug prices of other developed countries. But lowering those prices is projected to cause less investment in new drug technology. The Congressional Budget Office estimated that the drug price reforms that passed last year will mean about 13 fewer drugs in the next 30 years, about a 1 percent reduction. The budget proposal would likely have a larger effect.Democrats cheered the proposals. Senator Ron Wyden of Oregon, who chairs the finance committee, called them “proof positive that Medicare’s guarantee of quality health care for older Americans can be secured for the next generation without raising the eligibility age, cutting benefits or handing over the program to big insurance companies.”Mr. Biden did not propose other major new policies to reduce Medicare’s spending on health care in the coming years, according to the fact sheet. His proposal, like his previous budgets, omits a series of policies meant to reduce waste that were featured in budgets offered by Mr. Trump and Mr. Obama. The largest categories of Medicare spending — payments to doctors and hospitals — would be unchanged.Republicans are unlikely to go along. They have tried to overturn the entire Inflation Reduction Act, including the drug negotiations, which some members of the party say will hamper innovation in the pharmaceutical industry. They have also sought to roll back Mr. Biden’s tax increases on corporations and high earners.Mr. Biden’s plans drew mixed reactions from budget-focused groups in Washington on Tuesday. The Committee for a Responsible Federal Budget said it would “strongly support” the proposals but had reservations over shifting revenues from the government’s general fund to the Medicare trust fund. The National Taxpayers Union, which supports lower taxes and less federal spending, called those shifts “a gimmick, not a real reform.” More

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    Debt Default Would Cripple U.S. Economy, New Analysis Warns

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    As President Biden prepares to release his latest budget proposal, a top economist warned lawmakers that Republicans’ refusal to raise the nation’s borrowing cap could put millions out of work.WASHINGTON — The U.S. economy could quickly shed a million jobs and fall into recession if lawmakers fail to raise the nation’s borrowing limit before the federal government exhausts its ability to pay its bills on time, the chief economist of Moody’s Analytics, Mark Zandi, warned a Senate panel on Tuesday.The damage could spiral to seven million jobs lost and a 2008-style financial crisis in the event of a prolonged breach of the debt limit, in which House Republicans refuse for months to join Democrats in voting to raise the cap, Mr. Zandi and his colleagues Cristian deRitis and Bernard Yaros wrote in an analysis prepared for the Senate Banking Committee’s Subcommittee on Economic Policy.Senator Elizabeth Warren, Democrat of Massachusetts, held the subcommittee hearing on the debt limit, and its economic and financial consequences, at a moment of fiscal brinkmanship. House Republicans are demanding deep spending cuts from President Biden in exchange for voting to raise the debt limit, which caps how much money the government can borrow.That debate is likely to escalate when Mr. Biden releases his latest budget proposal on Thursday. The president is expected to propose reducing America’s reliance on borrowed money by raising taxes on high earners and corporations. But he almost certainly will not match the level of spending cuts that will satisfy Republican demands to balance the budget in a decade.The report also warns of stark economic damage if Mr. Biden, in an attempt to avert a default, agrees to those demands. In that scenario, the “dramatic” spending cuts that would be needed to balance the budget would push the economy into recession in 2024, cost the economy 2.6 million jobs and effectively destroy a year’s worth of economic growth over the next decade, Mr. Zandi and his colleagues wrote.The U.S. economy could quickly shed a million jobs and fall into recession if lawmakers fail to raise the nation’s borrowing limit.Michelle V. Agins/The New York Times“The only real option,” Mr. Zandi said in an interview before his testimony, “is for lawmakers to come to terms and increase the debt limit in a timely way. Any other scenario results in significant economic damage.”Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    Republican Votes Helped Washington Pile Up Debt

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    As they escalate a debt-limit standoff, House Republicans blame President Biden’s spending bills for an increase in deficits. Voting records show otherwise.WASHINGTON — President Biden will submit his latest budget request to Congress on Thursday, offering what his administration says will be $2 trillion in plans to reduce deficits and future growth of the national debt.Republicans, who are demanding deep spending cuts in exchange for raising the nation’s borrowing cap, will almost certainly greet that proposal with a familiar refrain: Mr. Biden and his party are to blame for ballooning the debt.But an analysis of House and Senate voting records, and of fiscal estimates of legislation prepared by the nonpartisan Congressional Budget Office, shows that Republicans bear at least equal blame as Democrats for the biggest drivers of federal debt growth that passed Congress over the last two presidential administrations.The national debt has grown to $31.4 trillion from just under $6 trillion in 2000, bumping against the statutory limit on federal borrowing. That increase, which spanned the presidential administrations of two Republicans and two Democrats, has been fueled by tax cuts, wars, economic stimulus and the growing costs of retirement and health programs. Since 2017, when Donald J. Trump took the White House, Republicans and Democrats in Congress have joined together to pass a series of spending increases and tax cuts that the budget office projects will add trillions to the debt.The analysis is based on the forecasts that the C.B.O. regularly issues for the federal budget. They include descriptions of newly passed legislation that affects spending, revenues and deficits, tallying the costs of those new laws over the course of a decade. Going back to the start of Mr. Trump’s tenure, those reports highlight 13 new laws that, by the C.B.O.’s projections, will combine to add more than $11.5 trillion to the debt.Nearly three-quarters of that new debt was approved in bills that gained the support of a majority of Republicans in at least one chamber of Congress. Three-fifths of it was signed into law by Mr. Trump.Some of those bills were in response to emergencies, like the early rounds of stimulus payments to people and businesses during the pandemic. Others were routine appropriations bills, which increased spending on the military and on domestic issues like research and education.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    IRS Decision Not to Tax Certain Payments Carries Fiscal Cost

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

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

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

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    President Biden Is Not Backing Off His Big-Government Agenda

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

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    Biden Weighs State of the Union Focus on His Unfinished Agenda

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    As the president prepares for his national address, his aides debate an emphasis on his still-unrealized plans for child care, prekindergarten and more.WASHINGTON — President Biden’s top economic aides have battled for weeks over a key decision for his State of the Union address on Tuesday: how much to talk about child care, prekindergarten, paid leave and other new spending proposals that the president failed to secure in the flurry of economic legislation he signed in his first two years in office.Some advisers have pushed for Mr. Biden to spend relatively little time on those efforts, even though he is set to again propose them in detail in the budget blueprint he will release in March. They want the president to continue championing the spending he did sign into law, like investments in infrastructure like roads and water pipes, and advanced manufacturing industries like semiconductors, while positioning him as a bipartisan bridge-builder on critical issues for the middle class.Other aides want Mr. Biden to spend significant time in the speech on an issue set that could form the core of his likely re-election pitch to key swing voters, particularly women. Polls by liberal groups suggest such a focus, on helping working families afford care for their children and aging parents, could prove a winning campaign message.The debate is one of many taking place inside the administration as Mr. Biden tries to determine which issues to focus on in a speech that carries extra importance this year. It will be Mr. Biden’s first address to the new Republican majority in the House, which has effectively slammed the brakes on his legislative agenda for the next two years. And it could be a preview for the themes Mr. Biden would stress on the 2024 campaign trail should he run for a second term.Administration officials caution that Mr. Biden has not finalized his strategy. A White House official said Friday that the president was preparing to tout his economic record and his full vision for the economy.The Biden PresidencyHere’s where the president stands as the third year of his term begins.State of the Union: President Biden will deliver his second State of the Union speech on Feb. 7, at a time when he faces an aggressive House controlled by Republicans and a special counsel investigation into the possible mishandling of classified information.Chief of Staff: Mr. Biden named Jeffrey D. Zients, his former coronavirus response coordinator, as his next chief of staff. Mr. Zients replaces Ron Klain, who has run the White House since the president took office.Economic Aide Steps Down: Brian Deese, who played a pivotal role in negotiating economic legislation Mr. Biden signed in his first two years in office, is leaving his position as the president’s top economic adviser.Eyeing 2024: Mr. Biden has been assailing House Republicans over their tax and spending plans, including potential changes to Social Security and Medicare, as he ramps up for what is likely to be a run for re-election.Few of Mr. Biden’s advisers expect Congress to act in the next two years on paid leave, an enhanced tax credit for parents, expanded support for caregivers for disabled and older Americans or expanded access to affordable child care. All were centerpieces of the $1.8 trillion American Families Plan Mr. Biden announced in the first months of his administration. Mr. Biden proposes to offset those and other proposals with tax increases on high earners and corporations.Earlier this week, Mr. Biden hinted that he may be preparing to pour more attention on those so-called “care economy” proposals, which he and his economic team say would help alleviate problems that crimp family budgets and block would-be workers from looking for jobs.At a White House event celebrating the 30th anniversary of a law that mandated certain workers be allowed to take unpaid medical leave, Mr. Biden ticked through his administration’s efforts to invest in a variety of care programs in the last two years, while acknowledging failure to pass federally mandated paid leave and other larger programs.Mr. Biden said he remained committed to “passing a national program of paid leave and medical leave.”“And, by the way, American workers deserve paid sick days as well,” he said. “Paid sick days. Look, I’ve called on Congress to act, and I’ll continue fighting.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.For Mr. Biden, continuing to call for new spending initiatives aimed at lower- and middle-income workers would draw a clear contrast with the still-nascent field of Republicans seeking the White House in 2024. It would cheer some outside advocacy groups that have pushed him to renew his focus on programs that would particularly aid women and children.The State of the Union speech “presents the president with a rare opportunity to take a victory lap and, simultaneously, advance his agenda,” the advocacy group First Focus on Children said in a news release this week. “All to the benefit of children.”The efforts could also address what Mr. Biden’s advisers have identified as a lingering source of weakness in the recovery from the pandemic recession: high costs of caregiving, which are blocking Americans from looking for work. The nonprofit group ReadyNation estimates in a new report that child care challenges cost American families $78 billion a year and employers another $23 billion.“Among prime-age people not working in the United States, roughly half of them list care responsibilities as the main reason for not participating in the labor force,” Heather Boushey, a member of the White House Council of Economic Advisers, told reporters this week. She noted that the jobs rebound has lagged in care industries like nursing homes and day care centers.“These remain economic challenges and addressing them could go a long ways towards supporting our nation’s labor supply,” she said.But focusing on that unfinished economic work could conflict with Mr. Biden’s repeated efforts this year to portray the economy as strong and position him as a president who reached across the aisle to secure big new investments that are lifting growth and job creation. On Friday, the president celebrated news that the economy created 517,000 jobs in January, in a brief speech that did not mention the challenges facing caregivers.Calling for vast new spending programs also risks further antagonizing House conservatives, who have made government spending their first large fight with the president. Republicans have threatened to allow the United States to fall into an economically catastrophic default on government debt by not raising the federal borrowing limit, unless Mr. Biden agrees to sharp cuts in existing spending.“Revenue into the government has never been higher,” Speaker Kevin McCarthy, Republican of California, told reporters on Thursday, a day after he met with Mr. Biden at the White House to discuss fiscal issues and the debt limit. “It’s the highest revenue we’ve ever seen in. So it’s not a revenue problem. It’s a spending problem.”Catie Edmondson More