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    House G.O.P. Unveils Debt Limit Bill Lifting Borrowing Cap for One Year

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    The proposal would impose work requirements on food stamp and Medicaid recipients and repeal funding to beef up tax enforcement.WASHINGTON — House Republican leaders on Wednesday unveiled their proposal to lift the debt ceiling for one year in exchange for spending cuts and policy changes, as they scrounged for the votes to pass the fiscal blueprint in an effort to force President Biden to the negotiating table.Speaker Kevin McCarthy said in a speech on the House floor that he would put the legislation to a vote next week. He urged his conference to unite around the measure in an attempt to speed up discussions with the White House amid growing anxiety about a looming default deadline, given the United States could run out of money to pay its bills within a few months.Even if Mr. McCarthy can get his own Republican caucus behind the bill, which is not at all guaranteed, it would be dead on arrival in the Democratic-controlled Senate. Mr. McCarthy described the effort as a way to get the White House and Democrats to engage on spending cuts at a moment when the nation’s debt has grown to about $31.4 trillion.“Now that we’ve introduced a clear plan for responsible debt limit increase,” Mr. McCarthy said, Democrats “have no more excuse” not to negotiate.But Mr. Biden seemed in no mood to negotiate. He lashed out at Mr. McCarthy and Republicans in a speech at a Maryland union hall that he was giving just as the House Republicans released their proposals.The president accused the speaker and his party of seeking to slash spending in ways that will hurt Americans while protecting tax cuts for the country’s wealthiest people. Mr. Biden denounced the bill in some of his most aggressive language yet, saying it would gut critical programs and hurt the most vulnerable.“That would mean cutting the number of people who administer Social Security and Medicare, meaning longer wait times,” he said. “Higher costs for child care, significantly higher — preschool, colleges. Higher costs for housing, especially for older Americans, people with disabilities, families and children, veterans.”The legislation would suspend the debt ceiling — which caps the amount that the United States is authorized to borrow — until March 2024 or until the debt grows to $32.9 trillion, teeing up another fiscal confrontation just as the 2024 presidential campaign hits a critical period. In exchange for temporarily suspending the cap, House Republicans are demanding that total federal spending be frozen at last year’s levels and that Congress claw back unspent pandemic relief funds and enact stricter work requirements on food stamp and Medicaid recipients.In his speech, Mr. Biden angrily demanded that Mr. McCarthy agree to an increase in the debt limit without conditions, and insisted that he will not negotiate about spending under the threat of the first default of America’s financial obligations.“They say they’re going to default unless I agree to all these wacko notions they have,” Mr. Biden said, repeatedly referring to Mr. McCarthy and his party as “MAGA Republicans.” He said Mr. McCarthy’s actions mean that Congress may fail to increase the debt limit in time to prevent a default.“Let’s be clear,” Mr. Biden said. “If he fails, the American people will be devastated.”House G.O.P. leaders also added measures to the legislation at the request of the hard-right Freedom Caucus to repeal key tenets of Mr. Biden’s landmark health, climate and tax law, including tax credits incentivizing the reduction of greenhouse gas emissions and clawing back the $80 billion allocated to the Internal Revenue Service. While the Republican conference has said it wants to cut spending to reduce the deficit, eliminating the I.R.S. funding would actually reduce government revenues from tax collections, effectively costing the government money, according to congressional scorekeepers.The bill would also bar the administration from enacting its student loan forgiveness plan and includes a bill already passed by House Republicans to expand domestic mining and fossil fuel production.All told, the plan amounts to a significant watering down from some of the party’s objectives outlined earlier this year, including balancing the federal budget in 10 years. But facing mounting external pressure to avert a catastrophic default as early as June, Republicans framed the bill as a sensible solution to begin negotiations.Mr. McCarthy said on Wednesday that the legislation would save taxpayers $4.5 trillion, though no independent agencies have yet assessed the economic impact of the legislation. Analysis by the nonpartisan congressional scorekeeper for tax legislation last year found that repealing Mr. Biden’s full health, climate and tax law would actually increase the deficit.“Whatever goes to the Senate, you can never” negotiate “up,” said Representative Ralph Norman of South Carolina, a member of the Freedom Caucus who has never voted to raise the debt ceiling. “You can always negotiate down.”Mr. Biden excoriated Republicans for seeking to protect wealthy people even as they demand cuts that he said will have the biggest negative effect on lower-income Americans.“MAGA officials are separately pushing for more tax giveaways and overwhelming benefits to the wealthiest Americans and biggest corporations,” Mr. Biden said. “Folks, this time the same old trickle down, dressed up MAGA clothing is worse than ever.”President Biden lashed out at Mr. McCarthy and Republicans in a speech at a Maryland union hall.Doug Mills/The New York TimesIt was unclear whether Mr. McCarthy had yet secured the votes to pass the legislation. Republicans, plagued by internal divisions, have so far been unable to coalesce the conference around a full budget blueprint. And a small handful of hard-right Republicans, including Representatives Tim Burchett of Tennessee and Eric Burlison of Missouri, have balked at the prospect of raising the debt ceiling at all.Still, some of the conference’s most conservative lawmakers expressed cautious optimism about the plan, indicating that Mr. McCarthy is not — as of yet — facing an organized bloc of hard-right opposition to what would amount to House Republicans’ opening offer.Russell T. Vought, the former Trump administration budget director who now leads the far-right Center for Renewing America and has been advising Republicans on their debt limit strategy, praised the proposal as “an important first step towards reining in our unsustainable levels of federal spending along with the woke and weaponized bureaucracy waging war on the American people.”The proposal Mr. McCarthy unveiled on Wednesday also appeared tailored to assuage the concerns raised by Republicans facing tough re-election fights in swing districts over enacting stronger work requirements for food stamps and Medicaid.Republican leaders ultimately backed away from including harsher measures, including a move that would have substantially narrowed an exemption from work requirements for food stamp recipients in households with children under 18, excusing only those whose households include children under the age of 7.That did not stop Democrats, who are demanding that Republicans vote to raise the debt ceiling without any conditions, from crowing about the fissures in the House G.O.P. conference.“We’re getting closer and closer to when we have to act to avoid default,” said Senator Chuck Schumer of New York, the majority leader. “For all the speeches, for all the letters, for all the wish lists and meetings with this family or that family, the underlying facts haven’t changed: At this point, Speaker McCarthy does not have a plan for avoiding a catastrophic default on the debt.”Jim Tankersley More

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    As Possible Debt Limit Crisis Nears, Wall Street Shrugs

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    Few investors have focused on the possibility that Congress will not raise the nation’s borrowing limit in time to avoid an economically catastrophic default.WASHINGTON — Speaker Kevin McCarthy chose the New York Stock Exchange on Monday to deliver his most detailed comments yet on House Republicans’ demands for raising the nation’s borrowing limit. But his comments made little impression on Wall Street, where investors continue to trade stocks and Treasury bonds under the assumption that Congress and President Biden will find a way to avoid a calamitous government default.The lack of a market panic about the talks reflects a been-there, done-that attitude that investors have increasingly taken to partisan showdowns over taxes, spending and the government’s ability to pay its bills on time, which lawmakers often resolve at the last possible moment.But there are reasons to believe that this time could play out differently, starting with the chaos in Mr. McCarthy’s caucus — and new warnings that lawmakers might have less time to raise the $31.4 trillion limit than previously thought.The next few weeks will more precisely determine how quickly the government will exhaust its ability to pay bondholders, employees, Social Security recipients and everyone else it sends money to on a regular basis. That’s because data on the government’s tax receipts for the year will come into sharper focus after Tuesday’s deadline for people to file individual income tax returns for 2022.On Tuesday, Goldman Sachs economists sounded a warning that the potential default date could be much sooner than previous forecasts — which typically pegged the date in July or August — if revenue comes in soft. “While the data are still very preliminary, weak tax collections so far in April suggest an increased probability that the debt limit deadline will be reached in the first half of June,” they wrote.Republicans are refusing to raise the borrowing cap unless Mr. Biden agrees to reduce government spending and slow the growth of the national debt, a position that risks plunging the United States into recession if the Treasury Department runs out of money to pay all its bills on time. But Mr. McCarthy has struggled to unite his Republicans around specific cuts, even though he said Monday that he will put such a plan on the House floor next week.Moderates in the Republican caucus are wary of deep cuts to popular domestic programs, like education and national parks, that would be spurred by his proposal to cap domestic spending growth at a level well below the current inflation rate. Fiscal hawks, including a faction that resisted Mr. McCarthy’s appointment as speaker and could effectively force a vote to oust him at any time, have pushed for far more aggressive reductions. They include lawmakers who have never voted to raise or suspend the debt limit, even under President Donald J. Trump, who signed three suspensions of the limit into law.Mr. McCarthy detailed his plan to fellow Republicans on Tuesday. As outlined on Monday, it would raise the limit for about a year. It would also return most domestic spending to fiscal year 2022 levels and cap its growth over a decade. Mr. McCarthy also wants to add work requirements for recipients of federal food assistance and reduce federal regulations on fossil fuel development and other projects, which he says will increase economic growth.It is unclear if enough Republicans would vote for that package to ensure its passage in the House. Senate Democrats would almost certainly reject it, as would Mr. Biden, who has said repeatedly that he expects Congress to raise the borrowing limit with no strings attached.Mr. Biden has shown no indication that he will intervene to speed up discussions over raising the limit, or seek to broker any deals in Congress to do so. The president has said he will negotiate taxes and spending levels separately from the borrowing limit. But he and his aides are refusing to engage further with Mr. McCarthy on fiscal policy until Republicans rally around a budget plan.Mr. Biden slammed Mr. McCarthy’s plan in a speech on Tuesday, saying he has “proposed huge cuts to important programs that millions of Americans count on.” Mr. Biden said that Mr. McCarthy had “threatened to become the first speaker to default on our debt unless he gets the cuts he wants.”The only market thus far to reflect stress about the debt limit is the one most attuned to it: credit default swaps, which price the risk of the government failing to make scheduled payments to bondholders. Mr. McCarthy shrugged off that stress in a question-and-answer session after his speech on Monday.“Markets go up and down,” he said.Stock and bond markets were unfazed after Mr. McCarthy’s comments. They have in recent months been far more reactive to any evidence about what the Federal Reserve will do next in its campaign to tame high inflation by raising interest rates.Some White House officials privately say they expect Republicans to step up their efforts to raise the limit if and when investors begin to worry more about negotiations. That’s what happened in 2011, when a showdown between congressional Republicans and President Barack Obama nearly ended in default. Stocks plunged, and borrowing costs rose for corporations and home buyers. The damage took months to repair.Some Republicans are similarly hopeful that a wake-up on Wall Street will push Mr. Biden to change his negotiating stance, including Representative Patrick McHenry of North Carolina, the chairman of the House Financial Services Committee.“I don’t think market participants have any idea of how bad off these negotiations are right now, which should give them pause and concern, and actually should bring the president to the table,” he said.Catie Edmondson More

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    Biden Signs Executive Order That Aims to Make Child Care Cheaper

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    As President Biden prepares to announce his re-election campaign, he is seeking to make progress on a promise that has stalled in his first two years in office.President Biden said the executive order will make child and elder care more accessible for families.Doug Mills/The New York TimesWASHINGTON — President Biden signed an executive order on Tuesday directing federal agencies to find ways to make child care cheaper and more accessible, seeking to make progress on a promise he made that stalled in his first two years in office.In a ceremony in the White House Rose Garden, Mr. Biden described the order as one of the most sweeping efforts by any president to streamline the delivery of child care.“Almost every federal agency will collectively take over 50 actions to provide more peace of mind for families and dignity for care workers,” the president said to applause from an audience of families, administration officials, members of Congress and others.“The cost of care is too high for seniors in nursing homes, for working families with young children,” Mr. Biden added, wearing his aviator sunglasses on the brisk Washington afternoon. At the same time, he said, “pay for care workers is too low.”White House officials said the executive order was designed to address both sides of that problem by enacting new regulations and tweaking policies without needing vast new amounts of public funding.“The child care and long-term care systems in this country just don’t work well,” said Susan E. Rice, the director of the White House’s Domestic Policy Council. “The order includes more than 50 directives to nearly every agency to take action on fixing our child care and long-term care system.”Ms. Rice said the order would direct some agencies to lower co-pays for services. Other provisions will seek to make Medicare and Medicaid dollars go further. Still others will examine new ways to improve care for veterans and Native American tribes.She said the order “marshals the full resources of the federal government” to improve access to high-quality, affordable care.But the order does not deliver on the goal Mr. Biden himself identified at the beginning of his presidency, when he proposed $225 billion to fully cover child care for low-income Americans and an additional $200 billion for universal preschool.Those proposals failed to win support in Congress, and Mr. Biden abandoned them in favor of plans to bolster infrastructure and environmental spending.Now, as the president prepares to announce his re-election campaign, he is seeking to make progress on some big promises that have so far gone unfulfilled.In his remarks on Tuesday, Mr. Biden stressed that the executive order will help make it easier for families to afford to care for their children and their elderly parents, even without the kind of large investment he once envisioned.“If you live in a major American city, you can pay more than $17,000 a year, as all of you know, per child for child care in order to be able to go to work,” he said. “For a lot of families, that’s more than you pay for your rent.”He also used his remarks as an opportunity to contrast his policies with those of Republicans in Congress. He noted that on Monday, Speaker Kevin McCarthy proposed severe cuts in spending on domestic programs, excluding defense.Mr. Biden accused Mr. McCarthy and “MAGA Republicans” of supporting the wealthy by advocating cuts that will affect lower-income Americans, while they continue to support tax cuts for wealthy people put in place under President Donald J. Trump several years ago.“Critical programs for hardworking Americans that they count on will be slashed starting next year if he has his way,” Mr. Biden said of Mr. McCarthy.On Monday, Ms. Rice said Mr. Biden had not given up on winning approval for far greater government spending on child care.“We need to make serious investments,” she said, noting that Mr. Biden’s current budget would add billions of dollars of child care spending. “But in the meantime, we’re going to do everything we can to increase access to care and support care workers and family caregivers.”Some of the directives in Mr. Biden’s new order will not immediately produce results. One, for example, directs the Department of Health and Human Services “to consider issuing several regulations and guidance documents to improve the quality of home care jobs.” Officials said it would take time for those regulations to be developed, drafted and enacted.Other provisions might come more quickly. The Department of Veterans Affairs is “directed to consider expanding its veteran directed care program” to all of its medical centers. That program helps veterans hire personal care assistance. More

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    Republican Economists Line Up Behind Biden Nominee

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    Jared Bernstein, the president’s choice for chair of the Council of Economic Advisers, won praise for his work that led to a provision in the Trump tax cuts in 2017.WASHINGTON — Nearly every living economist who led the White House Council of Economic Advisers in a Republican administration — including the three chairs under President Donald J. Trump — signed a letter urging Congress to confirm President Biden’s new nominee to lead the council, Jared Bernstein.The letter, obtained by The New York Times, praises Mr. Bernstein for engaging with economists across ideological lines and for his work drafting the original proposal for the opportunity zones program that was included in the 2017 tax package that Mr. Trump signed into law.The Senate Banking Committee is scheduled to hold a hearing on Mr. Bernstein’s nomination on Tuesday. Democrats had worried about his chances of clearing a committee vote after Senator John Fetterman, Democrat of Pennsylvania, was hospitalized in February for treatment of depression. They had stepped up efforts to court Republican senators to support Mr. Bernstein. Mr. Fetterman has since returned to work in the Senate.Mr. Bernstein has been a member of the council since the start of Mr. Biden’s administration. The president tapped him to succeed Cecilia Rouse, who stepped down at the end of last month to return to her post at Princeton University. Before then, Mr. Bernstein was an adviser to Mr. Biden when he was the vice president, a longtime fixture at liberal think tanks in Washington and a frequent sparring partner with conservative economists on cable news.He also worked with Kevin Hassett, a conservative economist who went on to head the council under Mr. Trump, to draft a white paper for the Economic Innovation Group think tank about a novel effort meant to steer investment to impoverished parts of the United States. Those were the so-called opportunity zones, which were included in the 2017 tax law.The program designates areas in every state where investors in real estate, operating businesses or other projects are eligible for significant tax advantages, including potentially not having to pay capital gains taxes on profits from their investments in those areas.Republicans have championed the zones since the law was passed. Some critics, including in Washington think tanks, have criticized them for delivering investments to some areas that were already gentrifying rapidly. Recent research has shown a widening share of zones attracting investment in the years since they were established.Mr. Hassett, who spearheaded the letter to members of the Banking Committee on Mr. Bernstein’s behalf, and his fellow former heads of the council cited the idea for the zones as one example of Mr. Bernstein’s outside-the-box thinking on economics.Mr. Bernstein has “established a reputation for producing informative, data-driven analysis and developing creative policy ideas,” the former heads of the council wrote.Along with Mr. Hassett, two other acting heads of the council under Mr. Trump signed the letter: Tomas Phillipson and Tyler Goodspeed. Other signatories included Michael J. Boskin, who led the council under President George H.W. Bush, and three chairs under President George W. Bush: Ben S. Bernanke, N. Gregory Mankiw and R. Glenn Hubbard.Mr. Hassett said he had been unable to reach the only other living past chair of the council under a Republican, Alan Greenspan, to ask him to sign the letter.In an interview, Mr. Hassett praised Mr. Bernstein’s collegiality and suggested that he would continue a bipartisan tradition of council chairs seeking advice from their predecessors from both political parties.“I disagree with Jared about a lot, and Jared and I have been disagreeing about things for 20 years,” Mr. Hassett said. “But he really is a fundamentally good person who tries to figure things out with an open mind, and who changes his mind.” More

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    Why Ron DeSantis Is Taking Aim at the Federal Reserve

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    Florida’s governor has been blasting Jerome H. Powell, the Fed chair, while spreading misinformation about central bank digital currency.WASHINGTON — Gov. Ron DeSantis of Florida, who is preparing to take a widely anticipated leap into a 2024 presidential campaign, appears to have discovered something that populists throughout history have found to be true: Bashing the Federal Reserve is good politics.Mr. DeSantis has begun to criticize Jerome H. Powell, the Fed chair, in speeches and news conferences. He has alleged without evidence that the Biden administration is about to introduce a central bank digital currency — which neither the White House nor the politically independent Fed has decided to do — in a bid to surveil Americans and control their spending on gas. He has quoted the Fed’s Twitter posts disparagingly.His critiques echo a familiar playbook from the Trump administration. Former President Donald J. Trump often blasted the central bank during the 2016 campaign and while he was in office, as policymakers lifted interest rates and slowed economic growth. Mr. Trump at one point called Mr. Powell — his own pick for Fed chair — an “enemy,” comparing him to President Xi Jinping of China.Because the central bank is responsible for controlling inflation, it is often blamed both for periods of rapid price increases and for the economic damage it inflicts when it raises rates to bring that inflation under control. That can make it an easy political target.And populist skepticism of government control of money dates back centuries in America. The nation’s first and second attempts at creating a central bank failed partly because of such concerns. The Fed, set up in 1913, was designed as a decentralized institution with quasi-private branches dotted around the country in part to avoid concentrating too much power in one place. It has been the subject of conspiracy theories and political attacks ever since.“In many ways, it is not surprising at all,” said Sarah Binder, a political scientist at George Washington University who has studied politics and the Fed. Mr. DeSantis is placing himself to Mr. Trump’s right, she said, “and it sounds like many populist right-side critiques of the Fed, of monetary control, that we’ve heard throughout history.”Mr. Powell has stated that the Fed “would not proceed” on a digital currency “without support from Congress.”T.J. Kirkpatrick for The New York TimesWhile Mr. DeSantis’s Fed-bashing is not new, some of his remarks have strayed into misinformation, said Peter Conti-Brown, a lawyer and Fed historian at the University of Pennsylvania.“The Fed can and should take this seriously,” Mr. Conti-Brown said.While the Fed is independent of and largely insulated from the White House, it does ultimately answer to Congress. And a lack of popular support could curb the Fed’s room to maneuver: If the government decided that pursuing a digital currency was a good idea, for instance, the backlash could make it more difficult to do so.Mr. DeSantis’s tone could also offer hints about the future. Starting from the early 1990s, presidential administrations have largely respected the Fed’s independence, avoiding commenting on monetary policy. Mr. Trump upended that tradition. President Biden has returned to a hands-off approach, but the recent criticism offers an early hint that the détente may not last if a Republican wins in 2024.Mr. DeSantis has faulted Mr. Powell’s policies for failing to control inflation, recently calling the Fed chair a “complete disaster.”In Mr. Powell, the potential presidential candidate has a rare opportunity to criticize Mr. Trump and Mr. Biden simultaneously: The Fed leader was first nominated to the central bank by President Barack Obama, then made chair by Mr. Trump and renominated as chair by Mr. Biden.Mr. DeSantis has focused much of his attention on a central bank digital currency, or C.B.D.C., which would operate like electronic cash but with backing from the federal government. The Fed has been researching both the potential uses and technical feasibility of a digital currency, but has not yet decided to issue one. Mr. Powell has made clear that the Fed “would not proceed with this without support from Congress.”The digital money that Americans use today — whether they are swiping a credit card or completing a Venmo transaction — is issued by banks. Physical cash, by contrast, comes directly from the Fed. A central bank digital currency would effectively be the digital version of a dollar bill.Many people who think the Fed should seriously consider issuing a central bank digital currency suggest that it could help improve access to banking services. Some have argued that it is important to develop the technology: America’s global competitors, including China, are researching and issuing digital money, so there is a risk of falling behind.Yet critics have worried about the privacy concerns of a centralized digital dollar. And the dollar is the most important reserve currency in the world, so any technological issues with a digital offering could be catastrophic. That is why the Fed has pledged to proceed carefully — and why the idea of issuing a digital currency in America is only in its formative research stages.Though there is no plan to issue a digital currency, Mr. DeSantis on March 20 proposed state legislation to “protect Floridians from the Biden administration’s weaponization of the financial sector through a central bank digital currency.”He then warned during an April 1 speech, with no factual basis, that Democrats wanted to use a digital currency to “impose an E.S.G. agenda,” referring to environmental and social goals like curbing consumption of fossil fuels or tightening gun control.Mr. DeSantis “is heading off any attempt to control people’s behavior through centralized digital currency,” his press secretary, Bryan Griffin, said in response to a request for comment.Mr. DeSantis’s claims echo those on right-wing social media, and they are in line with the interests of important Republican donors: Many banks and cryptocurrency firms are adamantly opposed to the idea of a central bank digital currency, worried that it would take away business.Florida, in particular, has been friendly to the digital currency industry, with lawmakers passing favorable legislation.And people with stakes in cryptocurrency are among Mr. DeSantis’s top political donors. Kenneth Griffin, the billionaire hedge fund executive and crypto skeptic turned advocate, gave $5 million to a political action committee that supported Mr. DeSantis’s 2022 re-election. Paul Tudor Jones, a billionaire investor who had significant shares in the now-bankrupt crypto trading platform FTX, contributed $850,000 to the group, according to campaign finance filings.Nor is it just Mr. DeSantis who is expressing opposition to the idea of a central bank digital currency: Prominent Republicans like Senator Ted Cruz of Texas and Representative Marjorie Taylor Greene of Georgia have joined in.Mr. Cruz and Representative Tom Emmer of Minnesota, the Republican whip, have introduced legislation to block the Fed from creating such a currency. Gov. Kristi Noem of South Dakota, another potential Republican presidential contender in 2024, recently vetoed a state bill that she claimed would have opened the door for a C.B.D.C.Some political figures are also incorrectly conflating a possible central bank digital currency with the central bank’s FedNow initiative, a separate effort to modernize America’s payment system to make transactions quicker and more efficient. A Fed spokesperson underlined that FedNow and the research into a possible digital currency were entirely different.Robert F. Kennedy Jr., a prominent figure in the anti-vaccine movement who recently announced his intention to run for president as a Democrat in 2024, wrongly conflated FedNow and the digital currency, claiming that it would “grease the slippery slope to financial slavery and political tyranny.”Tulsi Gabbard, a former Democratic presidential candidate and representative from Hawaii who is now independent, echoed warnings that a digital currency would undermine freedom, incorrectly stating that the government “has just begun implementing” such a currency.Incorrect statements about FedNow and digital currency have proliferated on social media, spread by influential political figures as well as conspiracy theorists.The Fed has tried to push back on the swirling misinformation.“The FedNow Service is neither a form of currency nor a step toward eliminating any form of payment, including cash,” the central bank posted on Twitter on Friday. Its six-tweet F.A.Q. made no mention of politics, but nevertheless read like a rare public rebuke from an institution that diligently avoids wading into political commentary.“The Federal Reserve has made no decision on issuing a central bank digital currency (CBDC) & would not do so without clear support from Congress and executive branch, ideally in the form of a specific authorizing law,” the Fed said — in a tweet that Mr. DeSantis quoted.“It is not merely ‘ideal’ that major changes in policy receive specific authorization from Congress,” Mr. DeSantis said in a reply.By Tuesday afternoon, the Fed had updated its F.A.Q. online to be even more explicit: The central bank “would only proceed with the issuance of a CBDC with an authorizing law.” More

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    Jobs Report Bolsters Biden’s Economic Pitch, but Inflation Still Nags

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    WASHINGTON — Gradually slowing job gains and a growing labor force in March delivered welcome news to President Biden, nearly a year after he declared that the job market needed to cool significantly to tame high prices.The details of the report are encouraging for a president whose economic goal is to move from rapid job gains — and high inflation — to what Mr. Biden has called “stable, steady growth.” Job creation slowed to 236,000 for the month, closing in on the level Mr. Biden said last year would be necessary to stabilize the economy and prices. More Americans joined the labor force, and wage gains fell slightly. Those developments should help to further cool inflation.But the report also underscored the political and economic tensions for the president as he seeks to sell Americans on his economic stewardship ahead of an expected announcement this spring that he will seek re-election.Republicans criticized Mr. Biden for the deceleration in hiring and wage growth. Some analysts warned that after a year of consistently beating forecasters’ expectations, job growth appeared set to fall sharply or even turn negative in the coming months. That is in part because banks are pulling back lending after administration officials and the Federal Reserve intervened last month to head off a potential financial crisis.Surveys suggest that Americans’ views of the economy are improving, but that people remain displeased by its performance and pessimistic about its future. A CNN poll conducted in March and released this week showed that seven in 10 Americans rated the economy as somewhat or very poor. Three in five respondents expected the economy to be poor a year from now.As he tours the country in preparation for the 2024 campaign, Mr. Biden has built his economic pitch around a record rebound in job creation. He regularly visits factories and construction sites in swing states, casting corporate hiring promises as direct results of a White House legislative agenda that produced hundreds of billions of dollars in new investments in infrastructure, low-emission energy, semiconductor manufacturing and more.On Friday, the president took the same approach to the March employment data. “This is a good jobs report for hardworking Americans,” he said in a written statement, before listing seven states where companies this week have announced expansions that Mr. Biden linked to his agenda.But as he frequently does, Mr. Biden went on to caution that “there is more work to do” to bring down high prices that are squeezing workers and families.Aides were equally upbeat. Lael Brainard, who directs Mr. Biden’s National Economic Council, told MSNBC that it was a “really nice” report overall.“Generally this report is consistent with steady and stable growth,” Ms. Brainard said. “We’re seeing some moderation — we’re certainly seeing reduction in inflation that has been quite welcome.”.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.But analysts warned that the coming months could bring a much more rapid deterioration in hiring, as banks pull back on lending in the wake of the government bailout of depositors at Silicon Valley Bank and Signature Bank.Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote Friday that he expected job gains to fall to just 50,000 in May, and for the economy to begin shedding jobs on a net basis over the summer. But he acknowledged that the job market continued to surprise analysts, in a good way, by pulling more and more workers back into the labor force.“Labor demand and supply are moving back into balance,” Mr. Shepherdson wrote.In May, Mr. Biden wrote that monthly job creation needed to fall from an average of 500,000 jobs to something closer to 150,000, a level that he said would be “consistent with a low unemployment rate and a healthy economy.”Since then, the president has had a complicated relationship with the labor market. Job creation has remained far stronger than many forecasters — and Mr. Biden himself — expected. That growth has delighted Mr. Biden’s political advisers and helped the economy avoid a recession. But it has been accompanied by inflation well above historical norms, which continues to hamstring consumers and dampen Mr. Biden’s approval ratings.The March report showed the political difficulty of reconciling those two economic realities. Analysts called the cooling in job and wage growth welcome signs for the Federal Reserve in its campaign to bring down inflation by raising interest rates.But that cooling included a decline of 1,000 manufacturing jobs, for which some groups blamed the Fed. “America’s factories continue to experience the destabilizing influence of rising interest rates,” said Scott Paul, president of the Alliance for American Manufacturing, a trade group. “The Federal Reserve must understand that its policies are undermining our global competitiveness.”Republicans blasted Mr. Biden for falling wage growth. “Average hourly wages continue to trend down even as inflation has wiped out any nominal wage gains for more than two years,” Tommy Pigott, rapid response director for the Republican National Committee, said in a news release.Representative Jason Smith, Republican of Missouri and the chairman of the Ways and Means Committee, said the report showed that “small businesses and job creators are reacting to the dark clouds looming over the economy.”In his own release, Mr. Biden nodded to one of the clouds that could turn into an economic storm as soon as this summer: a standoff over raising the nation’s borrowing limit, which could result in a government default that throws millions of Americans out of work. Republicans have refused to budge unless Mr. Biden agrees to unspecified spending cuts.Mr. Biden has refused to negotiate directly over raising the limit. He closed his jobs report statement on Friday with a shot at congressional Republicans’ strategy. “I will stop those efforts to put our economy at risk,” he said. More

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    Can Congress Use an Archaic Process to Get Around the Debt Stalemate?

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    Some Democrats are urging their colleagues to lay the groundwork for using an arcane procedural process to bypass Republicans and stave off economic peril.WASHINGTON — Call it an escape valve, an off-ramp or a break-glass-in-case-of-emergency option.From Pennsylvania Avenue to Wall Street to Main Street, those anxious about the political impasse over raising the federal debt limit are eying an arcane, seldom successful congressional process known as a discharge petition as a possible solution to ward off a disastrous default.The petition is just what its name implies: a signed demand, in this case bearing the signatures of a majority of the House, that can force consideration on the floor of a certain piece of legislation. The demand would be an increase in the federal debt limit — a way of staving off disaster if House Republicans refuse to agree to raise it before the Treasury Department exhausts its legal authority to borrow to pay its creditors this summer.But the process is exceedingly difficult, time-consuming and easily derailed. It has been successful only rarely in recent decades, most notably with passage of a campaign finance overhaul in 2002.That high degree of difficulty — and the economic threat posed by a federal default — has some Democrats urging their colleagues in the House to, at minimum, begin the process soon. They see it as a safeguard in the event that dormant debt talks between President Biden and Speaker Kevin McCarthy deteriorate further and the country finds itself on the brink of economic peril with no end in sight this year.Even if Congress does not ultimately need the discharge petition, they argue, lawmakers should get the ball rolling just in case — and soon.“I do think it is important to lay the groundwork for a discharge petition because it is a complicated process, so you need to plan ahead — meaning now,” said Senator Chris Van Hollen of Maryland, the former top Democrat on the House Budget Committee. “Having a backup would be a good strategy and, if necessary, would put pressure on House Republicans.”Executing a discharge petition is convoluted and politically dicey. It is a deliberately arduous exercise because it is intended to wrest control of the House floor from the majority leadership — an outcome that neither party wants to encourage on a regular basis. Since it is typically a tool of the minority, it requires wooing some members of the majority to defy their leadership and cross party lines to sign on. To force a debt limit vote, Democrats would need the support of all their members, as well as at least five Republican defectors.It is also a drawn-out process. The legislation at issue must sit in committee at least 30 legislative days — days the House is in session — before a petition to push it forward can be submitted. Then it can be brought to the floor only on specially designated days if its sponsors have the required 218 signatures.Mr. Van Hollen estimates that legislation introduced when Congress returns from recess on April 17 would not reach the point where its backers could even begin collecting signatures on a petition until June 21. It would still have a long way to go after that. The most recent prediction of when the debt ceiling will be breached is sometime between July and September.Lawmakers also noted that the House speaker can erect many procedural obstacles. For a discharge petition to succeed, they say, it is best if the speaker — in this case, Mr. McCarthy — tacitly wants the legislation to pass or is at least not adamantly opposed. In a crisis situation, as the debt limit endgame is likely to be, a discharge petition might be too cumbersome if the House leaders dug in against it.Speaker Kevin McCarthy insists Republicans will raise the debt ceiling only if President Biden and Democrats agree to spending cuts and other conditions.Al Drago for The New York Times“Look, I wouldn’t rule it out,” Representative Brendan F. Boyle of Pennsylvania, the top Democrat on the Budget Committee, said in a recent interview. But he warned that “it is really hard to do.”“Basically, in real time it works out to about two-and-a-half to three months,” said Mr. Boyle, who in the coming weeks plans to introduce legislation overhauling the debt limit process, allowing the president to raise it unless overridden by Congress. That measure could conceivably provide a basis for a discharge petition, as could other bills.Yet Democratic leaders in the House and Senate have been publicly resistant to the idea so far, mainly because they want to keep pressure on Republicans to raise the debt ceiling without conditions, as they did several times during the Trump administration without any upheaval.Mr. McCarthy and other Republican leaders insist they will raise the cap only if Mr. Biden and Democrats agree to spending cuts and other conditions — a demand that they have so far refused.Representative Hakeem Jeffries of New York, the Democratic leader, has steered clear of discharge petition discussions. Senator Chuck Schumer, Democrat of New York and the majority leader, said recently that he had no problem with readying a discharge petition but that he anticipates it will not be necessary because Democrats are succeeding in their push to box in Republicans on the issue, forcing a resolution.Other Democrats privately worry that embracing a discharge petition could backfire politically next year, allowing Republicans to paint them as employing a legislative trick to raise the debt limit over the objections of most Republicans.The concept of a discharge petition originated in the early 20th century as a way to circumvent the powerful Republican speaker at the time, Joseph Cannon. The rules have been revised multiple times, including in 1993, to make public a running tally of those who have signed.While petitions are not often successful, the prospect of one gaining enough support has forced action on major issues such as civil rights, immigration and gun rights.While Democrats have held back on initiating a petition, the possibility of one has helped calm nerves on Wall Street as bankers survey the potential outcomes of the debt limit struggle.Many economists at banks and consultancies acknowledged from the start that it was a long shot; Deutsche Bank pointed out that it was “rarely used,” and Morgan Stanley warned that it “may not be viable.”Still, it was regularly painted as an avenue out of the crisis, if an unlikely one: A discharge petition was “hardly a panacea, but it is in play,” Chris Krueger at the research group TD Cowen wrote in a research note in early January.But the possibility that it could be at all practical as a workaround is rapidly waning.“I’ve never thought the discharge petition was nearly as elegant a solution as made out by some,” Mr. Krueger said in an interview. He said he thought at this stage Congress would let negotiations get down to the wire and come to an agreement only when backlash in the news media or the financial markets became severe.“I don’t think we get into technical default scenarios,” he said, “but I think it’s going to get very uncomfortable.”Mr. Boyle said the real solution was not a discharge petition but the plan that he and other Democrats supported to remove the regular clashes over the debt limit from the congressional arena.“We have to structurally change this once and for all, because this is too dangerous a weapon to keep alive in our political system,” he said.“The future of the Republican Party is more Marjorie Taylor Greene than Mitt Romney,” Mr. Boyle added, naming the far-right congresswoman from Georgia and the more mainstream senator from Utah. “And so if we don’t permanently fix this process now, we’re going to be right back in this in a couple of years — and it might even be worse.” More

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    I.R.S. Unveils $80 Billion Plan to Overhaul Tax Collection

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    The 10-year strategy document outlines a focus on improving customer service and cracking down on tax evasion by corporations and the wealthy.WASHINGTON — The Internal Revenue Service on Thursday unveiled an $80 billion plan to transform itself into a “digital first” tax collector focused on customer service and cracking down on wealthy tax evaders. The move lays the groundwork for an ambitious 10-year overhaul of one of the most scrutinized arms of the federal government.The effort is a key part of President Biden’s economic agenda, which aims to reduce the nation’s $7 trillion of uncollected tax revenue and use the funds to combat climate change, curb prescription drug prices and pay for other initiatives prized by Democrats.The plan is also at the heart of the White House’s goal of making tax administration fairer. The report indicates that more than half the new money will be dedicated to ensuring that rich investors and large corporations cannot avoid paying the taxes that they owe.The $80 billion is the largest single infusion of funds in the agency’s history and was included in the Inflation Reduction Act, the sweeping climate and energy legislation that Democrats pushed through last year.According to the Biden administration, the investment will yield hundreds of billions of dollars in deficit reduction. But efforts to bolster the I.R.S. have drawn strong opposition from Republicans, who have long accused the agency of improperly targeting them.The report released Thursday was requested by Treasury Secretary Janet L. Yellen, whose department oversees the tax agency.In a memorandum to Ms. Yellen that accompanied the report, Daniel I. Werfel, the new I.R.S. commissioner, said he would focus new enforcement resources on “hiring the accountants, attorneys and data scientists needed to pursue high-income and high-wealth individuals, complex partnerships and large corporations that are not paying the taxes they owe.”Daniel I. Werfel, the new I.R.S. commissioner, said the agency’s staff expansion would aim to improve its ability to collect unpaid taxes from the wealthy and big corporations.Shuran Huang for The New York TimesThe I.R.S. has about 80,000 full-time employees, about 20 percent fewer than it had in 2010 even though the U.S. population is now larger and the tax system more complex. The agency’s resources have also declined over the years, as Republicans have sought to cut its funding and, in some cases, called for its abolition. The financial strain has led to backlogs of tax filings, delayed refunds, long waits for taxpayers who call the agency with questions and plunging audit rates.In recent months, the I.R.S. has ramped up hiring to improve its customer service capacity and has been racing to complete the processing of old tax returns, most of which were filed on paper rather than electronically.The plan released on Thursday details how the I.R.S. intends to become a “digital first” organization that provides “world class” service to taxpayers. That includes the replacement of antiquated technology and the introduction of systems that will allow taxpayers greater access to their financial information, easier communication with the I.R.S. and new ways to correct errors as returns are being filed.The most sweeping and politically sensitive changes involve enforcement. The I.R.S. plans to introduce more data analytics and machine-learning technology to better detect cheating, and it aims to bolster its teams of revenue agents and tax attorneys so that the agency is not overwhelmed when auditing complicated business partnerships or corporations.The I.R.S. plan repeatedly emphasizes that it will honor Ms. Yellen’s directive that the new money not be aimed at increasing audit rates for taxpayers who earn less than $400,000 a year — a pledge meant to align with Mr. Biden’s promise not to raise taxes on low- and middle-income Americans. The plan echoes Ms. Yellen’s assurance that those audit rates will not rise above “historical levels,” but does not specify the levels, suggesting that audit rates could rise above their existing levels.In a briefing for reporters on Thursday, however, Mr. Werfel said that in the near term, audit rates for those making less than $400,000 would not rise.“We have years of work ahead of us, where we will be 100 percent focused on building capacity for higher-income individuals and corporations,” he said.But Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center, said it would be a challenge for the I.R.S. to determine whether taxpayers reporting an income under $400,000 were doing so legitimately, without being able to audit some of them initially. Ultimately, she said, the agency will need to decide on an acceptable audit rate for people under that income level.Mr. Werfel acknowledged that the I.R.S. would have to be alert in instances when taxpayers earn, for example, $5 million in a given year and $399,000 a year later.“We might take a second look at that,” he said.The plan lays out benchmarks for many of its goals, but it leaves unanswered questions.The I.R.S. is in the midst of a $15 million study to determine if it can create its own system enabling more taxpayers to file their federal returns online at no cost. This idea has met resistance from lobbying groups representing the tax preparation industry.The agency has faced criticism this year after the publication of a study that showed Black taxpayers are at least three times as likely as other taxpayers to face I.R.S. audits, even after the study accounted for the differences in the types of returns that each group is most likely to file. The plan includes using data to support “equity analyses” and says a key project will be developing procedures to evaluate the fairness of I.R.S. systems.The Treasury Department said earlier that the investment in the I.R.S. would lead to the hiring of 87,000 employees over 10 years, and has suggested that with anticipated attrition its head count could top 110,000 by the end of the decade. But the operating plan does not give an estimate for the agency’s eventual head count, and Wally Adeyemo, the deputy Treasury secretary, said on Thursday that I.R.S. did not want to be “locked in” to long-term hiring requirements before learning how new technology would affect its staffing needs.Mr. Werfel batted down claims by Republican lawmakers that the I.R.S. would be hiring thousands of armed “agents” to scrutinize middle-class taxpayers and small businesses. He said that only 3 percent of the I.R.S. work force was in the criminal investigations division, which has access to weapons, and that there were no plans to increase that percentage. The plan projects that the I.R.S. will hire more than 7,000 new enforcement employees over the next two years.Despite efforts to focus on technology and taxpayers services, the plan is likely to stoke criticism.Erin M. Collins, the national taxpayer advocate, wrote in a blog post on Thursday that the plan had the potential to transform tax administration but that the money was disproportionately invested in enforcement.“I believe Congress should reallocate I.R.S. funding to achieve a better balance with taxpayer service needs and IT modernization,” Ms. Collins, who serves as a watchdog for the I.R.S., wrote.The report notes that if the agency’s annual funding is curtailed over the coming years, some of the $80 billion might be needed to maintain its basic operations. That would force the I.R.S. to scale back its overhaul.House Republicans in January voted to pare the allocation, and Republican reaction to the report on Thursday indicated that the political fight over the I.R.S. will only intensify.“The Democrats are further weaponizing the most-feared agency in all of the federal government: the IRS,” Representative Mike Kelly, Republican of Pennsylvania and a member of the House Ways and Means Committee, said on Twitter. “Make no mistake — we are using money from hardworking American taxpayers to go after hardworking American taxpayers.”Former Gov. Nikki Haley of South Carolina, a candidate for the Republican presidential nomination, said on Twitter, “Does anyone believe the IRS won’t go after middle America?” More