United States Politics and Government

More stories

  • 100 Shares189 Views

    in Economy

    Elizabeth Warren Calls Jerome Powell a ‘Dangerous Man’

    by

    Senator Elizabeth Warren, Democrat of Massachusetts, blasted the Federal Reserve chair, Jerome H. Powell, for his financial regulation track record and said that she would not support him if the White House renominated him, calling him a “dangerous man to head up the Fed.”Mr. Powell’s term as head of the central bank ends in early 2022, and the Biden administration is considering whether to reappoint him. Mr. Powell, a Republican, was nominated to the Fed’s Board of Governors by former President Barack Obama and elevated to chair by former President Donald J. Trump.While some prominent Democratic economists and advocacy groups support Mr. Powell, who has been intensely focused on the labor market during his term as Fed chair, some progressives openly oppose him. They often cite his track record on financial regulation — as Ms. Warren did to his face on Tuesday, as he testified before the Senate Banking Committee.“The elephant in the room is whether you’re going to be renominated,” Ms. Warren said, looking down at the Fed chair during the hearing. “Renominating you means gambling that, for the next five years, a Republican majority at the Federal Reserve, with a Republican chair who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again.”Ms. Warren, and those who agree with her, have worried that leaving Mr. Powell in place will prevent the Fed from taking a tougher stance on financial regulation. Mr. Powell has said that when it comes to regulatory matters, he defers to the Fed’s vice chair for supervision, noting that Congress created that job to lead up bank oversight following the 2008 financial crisis.“I respect that that’s the person who will set the regulatory agenda going forward,” Mr. Powell said during a news conference last week. “And furthermore, it’s fully appropriate to look for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes.”Ms. Warren’s colleague Senator Michael Rounds, a Republican from South Dakota, followed her scathing comments by saying that Mr. Powell deserved to be renominated, and that he looked forward to working with him for the next several years.The White House has so far given little indication of whom it will pick to lead the central bank.President Biden already has the opportunity to fill one open governor position at the Fed, and several other roles will soon become available: The governor seat of the Fed’s vice chair, Richard Clarida, will expire in the coming months, as will Randal K. Quarles’s position as vice chair for supervision. The openings could give the administration a chance to remake the central bank from the top with its nominations, who must pass Senate confirmation.Other lawmakers at the Senate hearing pushed Mr. Powell to focus on improving diversity at the central bank — highlighting another key concern among Democrats as the leadership shuffle gets underway.Senator Sherrod Brown, a Democrat from Ohio and the head of the Senate Banking Committee, pointed out that there had never been a Black woman on the Federal Reserve’s Board of Governors in Washington, while also referring to reporting from earlier this year that showed a dearth of Black economists at the central bank.He asked if Mr. Powell believed that the central bank should have a Black woman on its Board of Governors.“I would strongly agree that we want everyone’s voice heard around the table, and that would of course include Black women,” Mr. Powell said. “We of course have no role in the selection process, but we would certainly welcome it.”Lisa Cook, a Michigan State University economist, and William Spriggs, chief economist of the labor union AFL-CIO, are often raised as possible candidates for governor positions or leadership roles. Both are Black. Lael Brainard, a white woman who is currently a Fed governor, is frequently raised as a possible replacement for Mr. Powell if he is not renominated, and Sarah Bloom Raskin, a white woman who is a former top Fed and Treasury official, is often suggested as a replacement for Mr. Quarles.Mr. Powell, as he noted, has no formal role in selecting his future colleagues at the Fed Board.He and his colleagues at the Fed Board will, however, have a chance to weigh in on who will take over two newly open positions around the Fed’s decision-making table. The central bank has 19 total officials at full strength, seven governors and 12 regional bank presidents.Robert S. Kaplan, the Dallas Fed president, and Eric S. Rosengren, the Boston Fed president, both announced their imminent retirements on Monday, amid widespread criticism of the fact that they were trading securities in 2020 — during a year in which the Fed unrolled a widespread market rescue in response to the pandemic.Mr. Powell addressed that scandal on Tuesday, pledging to lawmakers that the Fed would change its ethics rules and saying that the Fed was looking into the trading activity to make sure it was in compliance with those rules and with the law.“Our need to sustain the public’s trust is the essence of our work,” Mr. Powell said, adding that “we will rise to this moment.”Beyond grabbing headlines, the departures will leave two regional bank jobs available at the Fed. The regional branches’ boards, except for bank-tied members, will search for and select replacement presidents. The Fed’s governors in Washington have a “yes” or “no” vote on the pick.The Fed has never had a Black woman as a regional bank president, either. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, is the first Black man to serve in one of those roles.At the Board of Governors, Mr. Quarles’s leadership term ends most imminently, on Oct. 13. His position as governor does not expire until 2032, and he has signaled that he will likely stay on as a Fed governor at least through the end of his leadership term at the Financial Stability Board, a global oversight body, in December. Mr. Powell’s leadership term ends in early 2022, though he could stay on as governor since his term in that role does not expire until 2028. Mr. Clarida will have to leave early next year unless he is reappointed. More

  • 175 Shares189 Views

    in Economy

    Janet Yellen and Jerome Powell warn that the Delta variant is slowing the recovery.

    by

    America’s two top economic policymakers will warn lawmakers on Tuesday that the Delta variant of the coronavirus has slowed the economic recovery but will convey optimism about the economy’s overall trajectory, according to prepared remarks.Treasury Secretary Janet L. Yellen and the Federal Reserve chair, Jerome H. Powell, will testify before the Senate Banking Committee as the U.S. economy is at a crossroads, with businesses facing labor shortages and consumers coping with rising prices amid a resurgent pandemic. Congress is also grappling with a thicket of legislative challenges in the coming days, all of which could have an impact on the economy. They include extending federal funding to avoid a U.S. government shutdown, raising the debt limit to prevent defaulting on the nation’s financial obligations and passing President Biden’s infrastructure and social safety net packages.“While our economy continues to expand and recapture a substantial share of the jobs lost during 2020, significant challenges from the Delta variant continue to suppress the speed of the recovery and present substantial barriers to a vibrant economy,” Ms. Yellen will say, according to her prepared remarks. “Still, I remain optimistic about the medium-term trajectory of our economy, and I expect we will return to full employment next year.”The testimony will offer Ms. Yellen and Mr. Powell a chance to publicly press lawmakers to take action to raise or suspend the nation’s borrowing cap and to warn of the calamitous consequences if the United States defaulted on its obligations. Ms. Yellen has cautioned that debt-limit brinkmanship is eroding confidence in the United States and that a default, which could happen as soon as mid-October, would do irreparable harm to the economy.For weeks, Ms. Yellen has been quietly pressing lawmakers to put politics aside and ensure that the United States can continue to meet its fiscal obligations. She has been in touch with Wall Street chief executives and former Treasury secretaries as she looks to keep markets calm and find allies who can help her make the case to recalcitrant Republicans, who believe Democrats must deal with the debt limit on their own.“It is imperative that Congress swiftly addresses the debt limit,” Ms. Yellen will say. “The full faith and credit of the United States would be impaired, and our country would likely face a financial crisis and economic recession.”Mr. Powell is slated to tell senators that the Fed will continue to support the economy with its monetary policies, which influence how expensive it is to borrow and spend. But he will also make it clear that Fed officials will act if a recent jump higher in prices persists.“Inflation is elevated and will likely remain so in coming months before moderating,” Mr. Powell is prepared to say, based on remarks released Monday afternoon.He will cite the lingering coronavirus pandemic as a risk to the economic outlook, according to his prepared statement.Mr. Powell has also fretted about the debt limit in recent weeks, saying during a news conference last week that default is “just not something that we should contemplate,” and that “no one should assume that the Fed or anyone else can protect the markets or the economy in the event of a failure, fully protect in the event of a failure to make sure that we do pay those debts when they’re due.”Ms. Yellen and Mr. Powell will testify again on Thursday before the House Financial Services Committee. More

  • 138 Shares99 Views

    in Economy

    The Economy Looks Solid. But These Are the Big Risks Ahead.

    by

    One concern is that political leaders will mismanage things in the world’s largest and second-largest economies.The low-hanging fruit of the pandemic economic recovery has been eaten. As a result, the expansion is entering a new phase — with new risks.For months, the world economy has expanded at a torrid pace, as industries that were shut down in the pandemic reopened. While that process is hardly complete — numerous industries are still functioning below their prepandemic levels — further healing appears likely to be more gradual, and in some ways more difficult.Reopening restaurants and performance arenas is one thing. Fixing extraordinary backups in shipping networks and shortages of semiconductors, among the most vivid examples of supply shortages holding back many parts of the economy, is harder.And a range of risks, including the hard-to-predict dynamics of Covid variants, could throw this transition to a healthy post-pandemic economy off course.One looming risk is if political leaders mismanage things in the world’s largest and second-largest economies. Namely, in the United States, a standoff over raising the federal debt ceiling could bring the nation to the brink of default. And in China, the fallout from the property developer Evergrande’s financial problems is raising questions about the country’s debt-and-real-estate-fueled growth.The Organization for Economic Cooperation and Development last week projected that the world economy would grow 4.5 percent in 2022, downshifting from an expected 5.7 percent expansion in 2021. Its forecast for the United States shows an even steeper slowdown, from 6 percent growth this year to 3.9 percent next.Of course, a year of 3.9 percent G.D.P. growth would be nothing to scoff at — that would be much faster growth than the United States has experienced for most of the 21st century. But it would represent a resetting of the economy.“We’ve had liftoff, and now we’re at cruising altitude,” said Beth Ann Bovino, chief U.S. economist at S&P Global.After the global financial crisis of 2008-9, the great challenge for the recovery was a shortfall of demand. Workers and productive capacity were abundant, but there was inadequate spending in the economy to put that capacity to work. The post-reopening stage of this recovery is the opposite image.Now there is plenty of demand — thanks to pent-up savings, trillions of dollars in federal stimulus dollars, and rapidly rising wages — but companies report struggles to find enough workers and raw materials to meet that demand.Dozens of container ships are backed up at Southern California ports, waiting their turn to unload products meant to fill American store shelves through the holiday season. Automakers have had to idle plants for want of semiconductors. Builders have had a hard time obtaining windows, appliances and other key products needed to complete new homes. And restaurants have cut back hours for lack of kitchen help.These strains are, in effect, acting as a brake that slows the expansion. The question is how much, and for how long, that brake will be applied.“The kinds of growth rates we are seeing were a bounce-back from a really severe recession, so it’s no surprise that won’t continue,” said Jennifer McKeown, head of the global economics service at Capital Economics. “The risk is that this becomes less about a natural cooling and more about the supply shortages that we’re seeing really starting to bite. That may mean that economic activity doesn’t continue to grow as we’re expecting it to, as instead there is a stalling of activity and price pressures starting to rise.”The problem is that the supply shortages have many causes, and it is not obvious when they will all diminish. Spending worldwide, and especially in the United States, shifted toward physical goods over services during the pandemic, more quickly than productive capacity could adjust. The Delta variant and continued spread of Covid has caused restrictions on production in some countries. And the lagged effects of production shutdowns in 2020 are still being felt.Then there are the risks that lurk in the background — the kinds of things that aren’t widely forecast to be a source of economic distress, but could unspool in unpredictable ways.Debt ceiling brinkmanship in Washington is a prime example. Senate Republicans insist that they will not vote to increase the federal debt limit, and that Democrats will have to do so themselves — while also planning to filibuster Democratic attempts to do so. Failure to reach some sort of agreement would risk a default on federal obligations, and could cause a financial crisis. For that reason, a deal in these cases has always ultimately been done — even if, as in 2011, it created a lot of uncertainty along the way.The risk here is that both sides could be so determined to stick to their stances that a miscalculation happens, like two drivers in a game of chicken who both refuse to swerve. And to those who are closest to American fiscal policymaking, that looks like a meaningful risk.“Chances of a default are still remote, and Congress will likely increase the debt ceiling. but the path to a deal is more murky than usual,” said Brian Gardner, chief Washington policy strategist at Stifel, in a research note. He added that the political game of chicken could spook markets in coming weeks.And on the other side of the Pacific Ocean, the Chinese government has its own challenge, as Evergrande struggles to make payments on $300 billion worth of debt.Real estate has played an outsize role in China’s economy for years. But few analysts expect the problems to spread far beyond Chinese borders. The Chinese banking and financial system is largely self-contained, in contrast to the deep global linkages that allowed the failure of Lehman Brothers in 2008 to trigger a global financial crisis.“Everyone’s learned a trick or two since 2008,” said Alan Ruskin, a macro strategist at Deutsche Bank Securities. “What you have here is the world’s second-largest economy, and one that has lifted all boats, could be slowing more materially than people anticipated. I think that’s the primary risk, rather than that financial interlinkages shift out on a global basis.”All of which could make for a bumpy autumn for the world economy, but which in the most likely scenarios would lead to a solid 2022. If, that is, everything goes the way the forecasters expect. More

  • 100 Shares99 Views

    in Economy

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

    by

    Republicans and Democrats have long sparred over raising the debt ceiling. But this time, the odds are growing that the U.S. could default.WASHINGTON — For nearly two decades, lawmakers in Washington have waged an escalating display of brinkmanship over the federal government’s ability to borrow money to pay its bills. They have forced administrations of both parties to take evasive actions, pushing the nation dangerously close to economic calamity. But they have never actually tipped the United States into default.The dance is repeating this fall, but this time the dynamics are different — and the threat of default is greater than ever.Republicans in Congress have refused to help raise the nation’s debt limit, even though the need to borrow stems from the bipartisan practice of running large budget deficits. Republicans agree the U.S. must pay its bills, but on Monday they are expected to block a measure in the Senate that would enable the government to do so. Democrats, insistent that Republicans help pay for past decisions to boost spending and cut taxes, have so far refused to use a special process to raise the limit on their own.Observers inside and outside Washington are worried neither side will budge in time, roiling financial markets and capsizing the economy’s nascent recovery from the pandemic downturn.If the limit is not raised or suspended, officials at the Treasury Department warn, the government will soon exhaust its ability to borrow money, forcing officials to choose between missing payments on military salaries, Social Security benefits and the interest it owes to investors who have financed America’s spending spree.Yet Republicans have threatened to filibuster any attempt by Senate Democrats to pass a simple bill to increase borrowing. Party leaders like Senator Mitch McConnell of Kentucky want to force Democrats to raise the limit on their own, through a fast-track congressional process that bypasses a Republican filibuster. That could take weeks to come to fruition, raising the stakes every day that Democratic leaders decline to pursue that option.The problem is further compounded by the fact that no one is quite sure when the government will run out of money. The Covid-19 pandemic continues to ravage the United States in waves, frequently disrupting economic activity and the taxes the government collects, complicating Treasury’s ability to gauge its cash flow. Estimates for what’s known as the “X-date” range from as early as Oct. 15 to mid-November..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Amid that uncertainty, congressional leaders and President Biden aren’t even attempting to negotiate a resolution. Instead, they are sparring over who should be saddled with a vote that could be used against them, raising the odds that partisan stubbornness will propel the country into a fiscal unknown.It all adds up to an impasse rooted in political messaging, midterm campaign advertising and a desire by Republican leaders to do whatever they can to protest Mr. Biden’s economic agenda, including the $3.5 trillion spending bill that Democrats hope to pass along party lines using a fast-track budget process.Republicans say they will not supply any votes to lift the debt cap, despite having run up trillions in new debt to pay for the 2017 tax cuts, additional government spending and pandemic aid during the Trump administration. Democrats, in contrast, helped President Donald J. Trump increase borrowing in 2017 and 2019.“If they want to tax, borrow, and spend historic sums of money without our input,” Mr. McConnell said on the Senate floor this week, “they will have to raise the debt limit without our help.”Thus far, Mr. Biden and Democratic leaders in Congress have declined to do so, even though employing that process would end the threat of default.Jon Lieber, a former aide to Mr. McConnell who is now with the Eurasia Group, a political-risk consultancy in Washington, wrote in a warning to clients this week that there is a one-in-five chance the standoff will push the country into at least a technical debt default — forcing the government to choose between paying bondholders and honoring all its spending commitments — this fall.“That’s crazy high for an event like this,” Mr. Lieber said in an interview, noting that the odds are significantly higher than in past standoffs. “But I feel really confident that’s the level of panic we should be having.”Republican leaders like Senator Mitch McConnell of Kentucky, the minority leader, are making no demands — suggesting no concessions that Mr. Biden and his party could offer to win their votes.Sarahbeth Maney/The New York TimesUnder President George W. Bush, Democrats, including Mr. Biden, voted in 2006 against a debt limit increase, citing Mr. Bush’s budget deficits that were swollen by tax cuts and wars in Iraq and Afghanistan. They did so despite warnings from administration officials that a default would hurt the nation’s credit rating and economy.Mr. Biden, like many other Democrats, said he could not abet Mr. Bush’s fiscal decisions. But his party did not filibuster a vote and Republicans were able to pass a debt limit increase along party lines. White House officials say Mr. Biden’s vote was symbolic, noting that the ability of Republicans to raise the debt ceiling was never in question.Leaders of both parties have, at times, made a version of the core argument in favor of raising the limit: that it is simply a way to allow the government to pay bills it has already incurred. Both parties also have shown no sign of slowing the nation’s borrowing spree, which accelerated last year as lawmakers approved trillions of dollars of aid for people and businesses struggling through the pandemic recession. Each party has recently occupied the White House and controlled Congress, but neither has come close in recent years to approving a budget that would balance — which is to say, not require additional borrowing and a debt-limit increase — within a decade.Biden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.Sarahbeth Maney/The New York TimesBiden administration officials, former Treasury secretaries from both parties and business executives from around the country have all urged lawmakers to raise the borrowing limit as soon as possible.“I think it’s scary for consumer confidence and for confidence in U.S. businesses and potential credit ratings if we don’t make sure that we raise that debt ceiling,” Andy Jassy, the chief executive officer of Amazon, said on CNBC earlier this month..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Democrats say Republicans have a responsibility to help raise the limit, noting that they helped when Mr. Trump needed to do it. White House officials called Mr. McConnell’s position hypocritical.“Republicans in Congress have spent a decade ushering in a new era where the prospect of default and a global economic meltdown has become a dangerous political football,” Michael Gwin, a White House spokesman, said in an email. “As we rebound from the deep recession caused by the pandemic, it’s more important now than ever to put partisanship aside, remove this cloud from over our economy, and responsibly address the debt limit — just like Democrats did three times under the previous administration.”Mr. Lieber and other analysts worry party leaders are talking past each other. Experts suggest it would take a week or two for Democratic leaders to steer a debt limit increase through the fast-track budget process. That could leave the government vulnerable to a sudden crisis. On Friday, the independent Bipartisan Policy Center, a Washington think tank, said the government could run out of cash to pay its bill by mid-October.Mr. Lieber said he is worried about “the risk of miscalculation of both sides,” in part because this standoff is not the same as the ones under Mr. Obama. “The Republicans aren’t asking for anything,” he said. “So their position is, there’s nothing you can do to get us to vote for a debt ceiling increase. That’s a dangerous situation.”Goldman Sachs researchers warned in a note to clients this month that the volatile nature of tax receipts this year, a product of the pandemic, makes the debt limit “riskier than usual” for the economy and markets. They said the standoff was at least as risky as in 2011, when brinkmanship disrupted bond yields and the stock market.Other financial analysts continue to believe that, as they have in the past, the sides will eventually find an agreement — largely because of the consequences of failure.“We believe Congress will raise or suspend the debt ceiling,” Beth Ann Bovino, S&P U.S. chief economist, wrote this week. “A default by the U.S. government would be substantially worse than the collapse of Lehman Brothers in 2008, devastating global markets and the economy.”In the meantime, Republicans are awaiting a vote by Democrats to raise the limit. Senator Rick Scott of Florida, who heads Republicans’ campaign arm in the Senate, told an NBC reporter he was eager to highlight Democratic support for raising the limit in midterm advertisements. More

  • 125 Shares149 Views

    in Economy

    Treasury's Janet Yellen Is Being Tested by Debt Limit Fight

    by

    The Treasury secretary must wade into a standoff between Democrats and Republicans over raising the debt limit.WASHINGTON — When Janet L. Yellen was Federal Reserve chair in 2014, she faced a grilling from Republicans about whether the federal government had a plan if the nation’s borrowing limit was breached and measures to keep paying the country’s bills were exhausted.Ms. Yellen, appearing at a congressional hearing, outlined a dire scenario in which financial institutions might try to make payments that they could not cover, because the Treasury Department was out of money, leading to a cascade of bounced checks. She pushed back against the notion held by some Republicans that an economic meltdown could be averted, warning that there was no secret contingency plan.“To the best of my knowledge, there is no written-down plan,” Ms. Yellen said at the time, adding that it was beyond her remit at the Fed. “That’s a matter that is entirely up to the Treasury.”Fending off such a calamity is now squarely the responsibility of Ms. Yellen, who is confronting the biggest test she has faced in her eight months as President Biden’s Treasury secretary. Mr. Biden chose Ms. Yellen to help steer the economy out of the pandemic downturn. But in the face of congressional dysfunction, she has been thrust into a political role, trying to convince reticent Republican lawmakers that their refusal to lift the debt cap — which limits the government’s ability to borrow money — could lead to a financial collapse.It is not a comfortable spot for Ms. Yellen, an economist by training who is now trying to navigate the rough political waters that she tends to avoid by countering legislative gamesmanship with economic logic.Over the past month, Ms. Yellen has reached out to Democrats and top Republican leaders, including Senator Mitch McConnell of Kentucky, the minority leader, and Representative Kevin Brady of Texas, the top Republican on the Ways and Means Committee. She has used those calls to convey the economic risks, warning that the Treasury’s ability to stave off default is limited and that failure to lift or suspend the debt cap by sometime next month would be “catastrophic.”Ms. Yellen has reminded Republicans in the calls that they have been willing to join Democrats in lifting the debt ceiling in the past, and that raising the cap allows the U.S. to pay its existing bills and does not authorize new spending.Thus far, Republicans seem unmoved by Ms. Yellen’s overtures.In a call with Ms. Yellen last week, Mr. Brady said he told the secretary that he would be happy to work with her on a bipartisan framework focused on financial stability and curbing government spending but, barring that, Democrats should not expect Republicans to help them address the debt limit.“They are playing a dangerous political game with our economy and it’s absolutely unnecessary,” Mr. Brady said on Wednesday.Mr. McConnell conveyed a similar message during a telephone conversation with Ms. Yellen last week, his spokesman said. Mr. McConnell’s former chief of staff, Brian McGuire, said the Kentucky Republican would not be persuaded by pressure tactics and suggested that the Treasury secretary should direct her economic warnings at Democrats.“If I were advising Secretary Yellen, I’d suggest she be highly skeptical of the Democratic strategy on the debt limit,” said Mr. McGuire, who was Treasury’s assistant secretary for legislative affairs from 2019 to 2020.On Thursday, Ms. Yellen appeared at a news conference with Speaker Nancy Pelosi of California and Senator Chuck Schumer of New York, the majority leader. Ms. Pelosi assailed Republicans for refusing to join Democrats in covering costs that both parties have incurred, including the $1.5 trillion tax cuts that Republicans passed during the Trump administration.“This is a credit-card bill that we owe,” Ms. Pelosi said.Democrats wanted to pair the federal debt limit increase with legislation to keep the government funded through early December, which would require Republican support in the Senate. With no such agreement in sight, the White House’s Office of Management and Budget on Thursday alerted federal agencies to review their shutdown plans, given funding is scheduled to lapse next week.Democrats do have another legislative option for raising the borrowing cap — they could pair it with the $3.5 trillion spending bill that they are aiming to pass along party lines using a fast-track process known as budget reconciliation. However, that would impose procedural hurdles they are trying to avoid, and Democrats have yet to agree on what the spending bill should include or how to pay for it. Party leaders claimed progress toward a deal on Thursday, saying they had agreed upon an array of possible ways to pay for it. But they offered no details about what programs would be included or what the total cost would eventually be, and what they called a “framework agreement” appeared to be modest.With the debt limit increase becoming so contentious, Ms. Pelosi signaled for the first time on Thursday that Democrats could ultimately strip it from the government funding bill because of Republican opposition.“We will keep our government open by Sept. 30, which is our date, and continue the conversation about the debt ceiling, but not for long,” she said.Ms. Yellen, who has kept a low public profile in the last month, did not make a statement at the news conference and took no questions.In private, she has tried to amp up the pressure. Ms. Yellen has personally warned the chief executives of the nation’s largest banks and financial institutions about the very real risk of default. Over the past several days she has spoken to Jamie Dimon of JPMorgan Chase, David M. Solomon of Goldman Sachs, Brian T. Moynihan of Bank of America and Laurence D. Fink of BlackRock, telling them about the disastrous impact a default would have, according to people familiar with the calls.The banking industry traditionally wields significant influence with Republicans; the biggest financial services lobbying groups wrote a letter to top lawmakers earlier this month urging them to take action.“Any default would negatively impact the general economy, disrupt the operations of our financial markets, undermine confidence, and raise funding costs in the future,” they wrote.Ms. Yellen has also sought the counsel of her predecessors, including Steven T. Mnuchin, Jacob J. Lew, Timothy F. Geithner and Henry M. Paulson. Mr. Paulson, who served under President George W. Bush and maintains strong ties with Republican lawmakers, has echoed Ms. Yellen’s concerns about the impact of a default in conversations with Mr. McConnell, according to a person familiar with the matter.Earlier this week, six former Treasury secretaries sent a letter to top lawmakers, warning that a default would blunt economic growth, roil financial markets and sap confidence in the United States.“Failing to address the debt limit, and allowing an unprecedented default, could cause serious economic and national security harm,” they wrote in the letter that was published by Ms. Yellen’s Treasury Department.Ms. Yellen’s task has been complicated by the fact that while she can readily convey the economic risks of default, the debt limit has become wrapped up in a larger partisan battle over Mr. Biden’s entire agenda, including the $3.5 trillion spending bill.Republicans, including Mr. McConnell, have insisted that if Democrats want to pass a big spending bill, then they should bear responsibility for raising the borrowing limit. Democrats call that position nonsense, noting that the debt limit needs to be raised because of spending that lawmakers, including Republicans, have already approved.“This seems to be some sort of high-stakes partisan poker on Capitol Hill, and that’s not what her background is,” said David Wessel, a senior economic fellow at the Brookings Institution who worked with Ms. Yellen at Brookings.While lawmakers squabble on Capitol Hill, Ms. Yellen’s team at Treasury has been trying to buy as much time as possible. After a two-year suspension of the statutory debt limit expired at the end of July, Ms. Yellen has been employing an array of fiscal accounting tools known as “extraordinary measures” to stave off a default.Uncertainty over the debt limit has yet to spook markets, but Ms. Yellen is receiving briefings multiple times a week by career staff on the state of the nation’s finances. They are keeping her informed about the use of extraordinary measures, such as suspending investments of the Exchange Stabilization Fund and suspending the issuing of new securities for the Civil Service Retirement and Disability Fund, and carefully reviewing Treasury’s cash balance. Because corporate tax receipts are coming in stronger than expected, the debt limit might not be breached until mid- to late October, Ms. Yellen has told lawmakers.A Treasury spokeswoman said that Ms. Yellen is not considering fallback plans such as prioritizing debt payments if Congress fails to act, explaining that the only way for the government to address the debt ceiling is for lawmakers to raise or suspend the limit. However, she has reviewed some of the ideas that were developed by Treasury during the debt limit standoff of 2011, when partisan brinkmanship brought the nation to the cusp of default.A new report from the Bipartisan Policy Center underscored the fact that if Congress fails to address the debt limit, Ms. Yellen will be left with no good options. If the true deadline is Oct. 15, for example, the Treasury Department would be approximately $265 billion short of paying all of its bills through mid-November. About 40 percent of the funds that are owed would go unpaid.“Realistically, on a day-to-day basis, fulfilling all payments for important and popular programs would quickly become impossible,” the report said, pointing to Social Security, Medicare, Medicaid, defense, and military active duty pay.Tony Fratto, a Treasury official during the Bush administration, lamented that Ms. Yellen is operating without any leverage. Democrats, he said, appeared to have miscalculated when they thought that Republicans would be too ashamed to block a debt limit vote after supporting a suspension of the borrowing cap when President Donald J. Trump was in office.“I think that was in the ‘hope’ category,” Mr. Fratto said. “This is Washington in 2021 — your hopes will be dashed.”Lananh Nguyen More

  • 150 Shares129 Views

    in Economy

    In Push to Tax the Rich, White House Spotlights Billionaires’ Tax Rates

    by

    A White House analysis using an unconventional methodology says the wealthiest Americans pay far less in taxes than others.WASHINGTON — President Biden is leaning into his push to increase taxes on the rich as he seeks to unify Democrats in the House and Senate behind a $3.5 trillion bill that would expand federal efforts to fight climate change, reduce the cost of child care, expand educational access, reduce poverty and more.“I’m sick and tired of the super-wealthy and giant corporations not paying their fair share in taxes,” Mr. Biden wrote on Twitter on Wednesday, amplifying an argument that Democratic strategists believe will help sell his economic agenda to the public and potentially lift the party’s candidates in midterm elections. “It’s time for it to change.”To buttress that argument, White House economists published on Thursday a new analysis that seeks to show a gap between the tax rate that everyday Americans face and what the richest owe on their vast holdings.The analysis suggests that the wealthiest 400 households in America — those with net worth ranging between $2.1 billion and $160 billion — pay an effective federal income tax rate of just over 8 percent per year on average. The White House is basing that tax rate on calculations using data on high earners’ income, wealth and taxes paid from the Internal Revenue Service and the Federal Reserve’s Survey of Consumer Finances.The analysis, from researchers at the Office of Management and Budget and the Council of Economic Advisers, is an attempt to bolster Mr. Biden’s claims that billionaires are not paying what they actually should owe in federal taxes, and that the tax code rewards wealth, not work..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“While we have long known that billionaires don’t pay enough in taxes, the lack of transparency in our tax system means that much less is known about the income tax rate that they do pay,” administration officials wrote in a blog post the budget office released accompanying the analysis.The White House’s calculation of what the wealthiest pay in taxes is well below what other analyses have found. The difference comes from the White House officials’ decision to count the rising value of wealthy Americans’ stock portfolios — which is not taxed on an annual basis — as income. It finds that between 2010 and 2018, those top 400 households, when including the rising value of their wealth, earned a combined $1.8 trillion and paid an estimated $149 billion in federal individual income taxes.Most measures of tax rates do not use the White House method of counting asset gains as annual income.The independent Tax Policy Center in Washington estimated this year that in 2015, the highest-earning 1,400 households in the country paid an average effective tax rate of about 24 percent, compared with an average rate of about 14 percent for all taxpayers.The White House economists — Greg Leiserson, senior economist at the Council of Economic Advisers, and Danny Yagan, the chief economist at the budget office — wrote that their calculation of low tax rates for the very wealthy flows from two types of preferential treatment for certain income in the tax code. The federal government taxes income from wages at a higher rate than income from investments, and most wealthy households report a significantly larger share of their income from capital gains and dividends than typical taxpayers do..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Mr. Leiserson and Mr. Yagan noted that “the wealthy can choose when their capital gains income appears on their income tax returns and even prevent it from ever appearing.”“If a wealthy investor never sells stock that has increased in value, those investment gains are wiped out for income tax purposes when those assets are passed on to their heirs under a provision known as stepped-up basis,” they wrote.Mr. Biden has proposed changing both those tax treatments. He would raise the capital gains rate to match the rate paid on wage income. And he would eliminate the stepped-up basis provision for wealthy heirs.But Democrats in Congress have already pushed back on both efforts. The House Ways and Means Committee approved a tax plan this month for the spending bill that left the stepped-up basis provision intact and raised the capital gains rate by much less than Mr. Biden proposed.Administration officials did not provide, in their analysis or accompanying blog post, any estimate of how much more the wealthy would pay in taxes if Mr. Biden’s full tax plan was implemented. More

  • 113 Shares99 Views

    in Economy

    Biden Huddles With Democrats as Divisions Threaten His Agenda

    by

    Democrats are nearing a make-or-break moment for President Biden’s agenda, with party divisions imperiling top-priority legislation and fiscal crises looming.WASHINGTON — President Biden huddled with congressional Democrats on Wednesday to try to break through a potentially devastating impasse over his multitrillion-dollar domestic agenda, toiling to bridge intraparty divisions over an ambitious social safety net bill and a major infrastructure measure as Congress raced to head off a fiscal calamity.Democrats on both ends of Pennsylvania Avenue are nearing a make-or-break moment in their bid to push through huge new policies, as an escalating fight between the progressive and moderate wings — and a multitude of other divisions within the party — threatens to sink their chances of doing so while they retain control in Washington.At the same time, even the basic functions of Congress — keeping the government from shutting down next week and from defaulting on its debt sometime next month — are in peril as Republicans refuse to support legislation that would both fund the government and increase the statutory cap on federal borrowing.The challenges are unfolding against a backdrop of mistrust and strife within Democratic ranks. Moderates are pressing for quick action on the $1 trillion bipartisan infrastructure bill; progressives are demanding approval first of a far-reaching, $3.5 trillion domestic policy plan including vast new investments in climate, education, health and social programs.Without consensus on both, Democrats, who have minuscule majorities in the House and Senate, will not have enough votes to send either to Mr. Biden’s desk. That prospect has sown alarm at the top echelons of the party.On Wednesday, John D. Podesta, who held key White House roles under Presidents Bill Clinton and Barack Obama, sent a memo to every Democrat on Capitol Hill imploring them to scale back the $3.5 trillion plan in the interest of compromise, warning that doing otherwise would risk sinking both bills and costing the party control of Congress in next year’s midterm elections.“You are either getting both bills or neither — and the prospect of neither is unconscionable,” he wrote. “It would signal a complete and utter failure of our democratic duty, and a reckless abdication of our responsibility. It would define our generation’s history and show that, when our time came, we failed, both for Americans now and in the years to come.”Mr. Biden’s long day of meetings with lawmakers reflected a recognition that “there needs to be a deeper engagement by the president” to bring Democrats together, said Jen Psaki, the White House press secretary.The president, she added, “sees his role as uniting and as working to bring together people over common agreement and on a path forward.”That path is exceedingly murky as Democrats careen toward a tangle of fiscal and political deadlines with no discernible public strategy in place, but party leaders remained publicly sanguine on Wednesday..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}“We are on schedule — that’s all I will say,” Speaker Nancy Pelosi told reporters after meeting with Mr. Biden for more than an hour. “We’re calm, and everybody’s good, and our work’s almost done.”But Democrats conceded that the process was painful.“When you’ve got 50 votes and none to lose, and you’ve got three to spare in the House, there’s a lot of give and take — that’s just the way it is,” said Senator Bernie Sanders, the Vermont independent who is chairman of the Budget Committee. “It’s tough. But I think at the end of the day, we’re going to be fine.”At the crux of the stalemate is a leadership commitment to a group of moderate Democrats that the House would take up the Senate-passed bipartisan infrastructure bill by Monday. Liberal House Democrats say they will vote down the measure until their priority legislation first clears both the House and Senate.Those Democrats say the infrastructure bill, which omitted most of their top priorities including major provisions to combat climate change, cannot be separated from the $3.5 trillion package, which contains many of those elements, such as a shift to electric power. Beyond the climate portions, the social policy measure would, among many other things, extend child care and child tax credits, expand free prekindergarten and community college and fortify Medicare.But key centrists in the Senate have balked at that package, which Democrats plan to push through using a fast-track budget process known as reconciliation that shields it from a filibuster. Senators Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona both voted to begin work on a $3.5 trillion measure, but have since warned they will not support spending that much.On Wednesday, Mr. Biden urged the holdouts to specify exactly what they would support, so Democrats could coalesce behind a plan that could pass.“Find a number you’re comfortable with, based on what you believe the needs that we still have, and how we deliver to the American people,” Mr. Manchin said, describing the president’s request. “He was very straightforward in what he asked us to do.”The internal disputes are escalating just as Congress is facing urgent deadlines. Without congressional action, at 12:01 a.m. next Friday, federal funding will lapse, shutting down the government. And at some point in October, the Treasury Department will reach its statutory borrowing limit, forcing it to halt some payments to international creditors, Social Security recipients and government contractors.Amid those looming crises, Republican leaders are practically taunting Democrats, refusing to back legislation coupling a debt-limit increase and a stopgap spending measure.“Don’t play Russian roulette with the economy; step up and raise the debt ceiling,” Senator Mitch McConnell of Kentucky, the Republican leader, said on Wednesday, even as he vowed not to give Democrats a single Republican vote.Senator Mitch McConnell of Kentucky, the Republican leaders, is encouraging Democrats to raise the debt ceiling even as he tells his own caucus to vote against it.Sarahbeth Maney/The New York TimesAnd House Republicans on Wednesday urged their rank-and-file members to oppose the bipartisan infrastructure bill that they said had been “inextricably linked” to the reconciliation package.“Republicans should not aid in this destructive process,” the office of Representative Steve Scalise of Louisiana, the No. 2 Republican, warned in a notice calling for “no” votes.On Wednesday, a bipartisan group of former Treasury secretaries wrote to congressional leaders in both parties to express a “deep sense of urgency” to raise the debt limit. Jerome H. Powell, the Federal Reserve chair, offered a similar plea in a news conference.“No one should assume that the Fed or anyone else can protect the markets and the economy, fully protect, in the event of a failure to make sure that we do pay those debts when they’re due,” he said..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-w739ur{margin:0 auto 5px;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-16ed7iq{width:100%;display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;-webkit-box-pack:center;-webkit-justify-content:center;-ms-flex-pack:center;justify-content:center;padding:10px 0;background-color:white;}.css-pmm6ed{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;}.css-pmm6ed > :not(:first-child){margin-left:5px;}.css-5gimkt{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:0.8125rem;font-weight:700;-webkit-letter-spacing:0.03em;-moz-letter-spacing:0.03em;-ms-letter-spacing:0.03em;letter-spacing:0.03em;text-transform:uppercase;color:#333;}.css-5gimkt:after{content:’Collapse’;}.css-rdoyk0{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;-webkit-transform:rotate(180deg);-ms-transform:rotate(180deg);transform:rotate(180deg);}.css-eb027h{max-height:5000px;-webkit-transition:max-height 0.5s ease;transition:max-height 0.5s ease;}.css-6mllg9{-webkit-transition:all 0.5s ease;transition:all 0.5s ease;position:relative;opacity:0;}.css-6mllg9:before{content:”;background-image:linear-gradient(180deg,transparent,#ffffff);background-image:-webkit-linear-gradient(270deg,rgba(255,255,255,0),#ffffff);height:80px;width:100%;position:absolute;bottom:0px;pointer-events:none;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}Beyond that issue, Democrats must find a way to salvage Mr. Biden’s agenda. They had hoped to emerge from Wednesday’s meeting with public commitments from key moderates including Mr. Manchin and Ms. Sinema to support a reconciliation bill, but by evening they still had no such statement from the two senators.Offering “Covid-safe” individually wrapped chocolate chip cookies bearing the presidential seal, Mr. Biden spent much of the day on Wednesday hosting groups of lawmakers in the Oval Office, beginning with Ms. Pelosi and Senator Chuck Schumer of New York, the majority leader.He met with nearly two dozen senators and House members from across the ideological range of his party, including liberal leaders and some of the moderates who played key roles in negotiating the infrastructure bill.By Monday, leaders hope to reach agreement on a total price for the reconciliation measure, which will likely fall below the $3.5 trillion budget blueprint, and an ironclad agreement on some key provisions that must be in the final package.So far, neither side is budging. Representative Alexandria Ocasio-Cortez, Democrat of New York, accused more conservative Democrats of making “impulsive and arbitrary demands,” while setting unnecessary deadlines like the Monday infrastructure vote.“The package, the investments and the programs that we have in there are rather nonnegotiable. That’s why we are kind of at this impasse,” she said, adding, “We are at a moment, and a test of political will.”Representative Stephanie Murphy, a moderate from Florida, said it would be “really disappointing and embarrassing” if the infrastructure bill failed because of opposition from progressives.After her meeting with Mr. Biden, Representative Pramila Jayapal of Washington, the chairwoman of the Congressional Progressive Caucus, said that “there isn’t a lot of trust” among Democrats, reiterating that liberals would follow through on their promise to vote against the infrastructure measure on Monday.But the list of moderate objections is long and varied. Representative Kurt Schrader of Oregon wants a bill that spends less than $1 trillion over 10 years. Representative Ed Case of Hawaii has said he will not accept phasing in or phasing out of programs and tax measures to mask their true costs if made permanent. Representative Kathleen Rice of New York objects to the get-tough approach to curb prescription drug prices.And the disputes go beyond ideological differences. Representative Tom Suozzi of New York says he will not vote for any version that does not substantially reinstate the state and local tax deduction, a crucial issue for high-tax states. Representative Alma Adams of North Carolina says she will oppose the bill if it does not include tens of billions of dollars more for historically Black colleges and minority-serving institutions.Democrats across the ideological spectrum said forging consensus would be a tall order.“We’ve got a hectic few days ahead,” Representative Josh Gottheimer, a moderate from New Jersey, said after emerging from his negotiating session with Mr. Biden and other lawmakers.Catie Edmondson More

  • 138 Shares129 Views

    in Economy

    House Passes Spending Bill and Debt Limit Increase Over G.O.P. Opposition

    by

    The measure now heads to the Senate, setting up a clash with Republicans, who have warned they will block any debt ceiling increase.WASHINGTON — The House on Tuesday approved legislation to keep the government funded through early December, lift the limit on federal borrowing through the end of 2022 and provide emergency money for Afghan refugees and natural disaster recovery, setting up a fiscal showdown as Republicans warn they will block the measure in the Senate.The bill is urgently needed to avert a government shutdown when funding lapses next week, and a first-ever debt default when the Treasury Department reaches the limit of its borrowing authority within weeks. But it has become ensnared in partisan politics, with Republicans refusing to allow a debt ceiling increase at a time when Democrats control Congress and the White House.In pairing the debt limit raise with the spending package, Democrats had hoped to pressure Republicans into dropping their opposition to raising the debt ceiling, a routine step that allows the government to meet its obligations. But even with crucial funding for their states on the line, no Republicans voted for the legislation.The bill passed with only Democratic votes in the closely divided House, 220 to 211.And the prospects for passage in the 50-50 Senate appeared dim, as Republicans vowed they would neither vote for the legislation nor allow it to advance in the chamber, where 60 votes are needed to move forward.The legislation, released only hours before the House vote, would extend government funding through Dec. 3, buying more time for lawmakers to negotiate the dozen annual spending bills, which are otherwise on track to lapse when the new fiscal year begins on Oct. 1. The package would also provide $6.3 billion to help Afghan refugees resettle in the United States and $28.6 billion to help communities rebuild from hurricanes, wildfires and other recent natural disasters. It would lift the federal debt limit through Dec. 16, 2022.“As this bill provides critical support for our families and communities it also addresses recent emergencies that require federal resources and incorporates feedback from members on both sides of the aisle,” said Representative Rosa DeLauro of Connecticut, the chairwoman of the House Appropriations Committee, in a speech on the House floor.Led by Senator Mitch McConnell of Kentucky, the minority leader, Republicans have warned for weeks that they had no intention of helping Democrats raise the limit on the Treasury Department’s ability to borrow. While the debt has been incurred with the approval of both parties, Mr. McConnell has repeatedly pointed to Democrats’ efforts to push multitrillion-dollar legislation into law over Republican opposition.But in remarks on Tuesday, Mr. McConnell made a purely political argument for refusing to support raising the debt ceiling, saying the party in power should shoulder the task on its own.“America must never default — we never have, and we never will,” Mr. McConnell said, speaking at his weekly news conference. “But whose obligation it is to do that changes from time to time, depending upon the government the American people have elected. Right now, we have a Democratic president, Democratic House, Democratic Senate.”“The debt ceiling will be raised, as it always should be,” he added. “But it will be raised by the Democrats.”As soon as the House vote gaveled shut, Mr. McConnell and Senator Richard C. Shelby of Alabama, the top Republican on the Senate Appropriations Committee, unveiled their own funding legislation, without the debt ceiling increase. Democrats, who joined with Republicans during the Trump administration to raise the debt ceiling, have argued that the G.O.P. is setting a double standard that threatens to sabotage the economy. Should the government default on its debt for the first time, it would prompt a financial crisis, shaking faith in American credit and cratering the stock market.Senator Mitch McConnell of Kentucky, the minority leader, has warned for weeks that Republicans had no intention of helping Democrats raise the limit.Stefani Reynolds for The New York TimesSenate Democrats are expected to take up the bill in the coming days, essentially daring Republicans to vote against it. But without 10 Republicans in support, it would fail to advance past the 60-vote filibuster threshold.Lawmakers and aides have conceded that it is likely possible for Democrats, who control both chambers and the White House, to address the debt ceiling on their own, using the same fast-track budget process they are employing to muscle through their $3.5 trillion social safety net plan over unified Republican opposition. That process, known as reconciliation, shields legislation from a filibuster.But Democratic leaders have rejected that approach, which would be a time-consuming and tricky maneuver that could imperil their marquee domestic legislation, already at risk amid party infighting over its price tag and details. Instead, they have argued that Republicans should do their part to protect American credit and avoid a catastrophic default.“Both Senate and House leadership have decided that that’s not an option they want to pursue,” said Representative John Yarmuth, Democrat of Kentucky and the chairman of the Budget Committee, on Monday. “I want to raise it to a gazillion dollars and just be done with it.”He blasted Mr. McConnell’s position on the federal borrowing limit, saying, “For him to say, ‘The debt ceiling has to be done, but we’re not going to do it’ is to me just the most ludicrous statement I’ve ever heard from a public official.”Mr. McConnell and other Senate Republicans have said they would support a stopgap spending package with the emergency relief attached, as long as the debt limit increase was removed.“I begged the White House, starting about two and a half weeks ago, not to do it, and they’re going to do it anyway,” said Senator John Kennedy, Republican of Louisiana. “It tells me that they’re not really serious about helping my state.”But Mr. Kennedy said he would still probably vote for the combined package because it provided disaster aid for his state.The drama surrounding the bill illustrated the exceedingly delicate task Democratic leaders face in the coming weeks in averting fiscal disaster and enacting both a $1 trillion infrastructure compromise and their far-reaching, $3.5 trillion social policy package. Facing immovable Republican opposition to most of their agenda and razor-thin majorities in both chambers, they must find a way to unite moderate and progressive members to cobble together the bare minimum votes needed to pass any bill.On Tuesday, House Democrats were forced to strip $1 billion that had been included in the spending legislation for Israel’s Iron Dome air defense system, after progressives — some of whom have accused Israel of human rights abuses against Palestinians — balked at its inclusion in an emergency spending package.The decision to jettison it for now infuriated some moderates in their ranks and sparked a flurry of Republican criticism. But Representative Steny H. Hoyer of Maryland, the majority leader, said he would bring up a bill to provide that funding later in the week under a suspension of the House rules.“I was for that, I’m still for it — we ought to do it,” Mr. Hoyer said on the House floor, adding that he had spoken to Yair Lapid, the Israeli foreign minister, earlier in the day and offered his commitment to ensuring that it would clear the House. Senate Republicans included the provision in their own version of the spending package, released late Tuesday.To help support the resettlement of Afghan refugees, the legislation would distribute billions of dollars across the federal government, including $1.7 billion to help provide emergency housing, English language classes, and other support to refugees. It would also provide $1.8 billion for the State Department, to cover the cost of evacuations and essential assistance for refugees.The bill provides $2.2 billion for the Pentagon, and requires a report on how the funds are spent and oversight of the treatment and living conditions for refugees at any Defense Department facility. And it requires that the administration report to Congress on military property, equipment and supplies that were either destroyed, removed from or left in Afghanistan after the withdrawal of American troops.Disaster aid, according to a summary provided by the House Appropriations Committee, is intended to address the damage caused by Hurricanes Ida, Delta, Zeta, and Laura, wildfires, droughts, winter storms, and other instances of natural devastation. More