#debt ceiling crisis

[dreaminginthedeepsouth]

LETTERS FROM AN AMERICAN

May 3, 2023

HEATHER COX RICHARDSON

MAY 4, 2023

“No one should assume that the Fed can really protect the economy and the financial system and our reputation globally from the damage that [a U.S. default] might inflict,” Federal Reserve Chair Jerome Powell said today. “We shouldn’t even be talking about a world in which the U.S. doesn’t pay its bills. It just shouldn’t be a thing,” he added. Powell commented on the debt ceiling crisis when he was in front of the press to announce an interest rate hike of a quarter of a percentage point intended to reduce inflation further. Interest rate hikes make it more expensive to borrow money, which should cool the economy. At the same time, more expensive borrowing upsets the stock market, which tends to fall after a rate hike, as it did today. Interestingly, while Republicans are blaming Democrats for creating inflation by pumping too much money into the economy through social welfare programs, The Wall Street Journal yesterday embraced the argument that a key factor in inflation has been price gouging by corporations. A piece by Paul Hannon noted that businesses are boosting their profit margins, confident that consumers will blame supply chain issues and higher energy prices rather than the companies padding their profits. Oil giant Shell just announced almost $9.6 billion in profits in the first three months of 2023. But Powell’s management of inflation is a smaller story right now than the debt ceiling. Today, the White House Council of Economic Advisers explained three different scenarios. If the debt ceiling crisis runs right up to the edge of default and is resolved before that default, unemployment would rise by 0.1% and 200,000 jobs would be at risk. A default lasting less than a week would cost 500,000 jobs, creating a 0.3% rise in unemployment. And if the U.S. goes into a longer default, the Council of Economic Advisers says, 8.3 million people will lose their jobs and the stock market will fall by 45%. In every case, economic growth will turn negative. The White House yesterday released a fact sheet outlining the cuts Republicans are demanding before they will agree to raise the debt ceiling. In addition to costing jobs and throwing the nation into a recession, their demands will cut nearly 7,500 rail inspection days, shut down at least 375 air traffic control towers, and cut $5.2 billion from highway infrastructure projects. The cuts will eliminate nearly 200,000 child care slots, cut 1.7 million people from food security programs, and remove rental assistance from nearly 600,000 families. In short, the Republicans’ demands are a way to force the country to accept their vision of the country, one that relies on the markets and private enterprise and slashes government action to provide a basic social safety net, promote infrastructure, regulate business, and protect civil rights. So far, Senate minority leader Mitch McConnell (R-KY) has stayed out of the fight over raising the debt ceiling, both because he was out of the Senate recovering from a fall, and because he has apparently wanted to let House speaker Kevin McCarthy (R-CA) deal with the far-right extremists in the conference while appearing to give establishment Republicans plausible deniability from the extremists’ demands. But Biden is trying to pull McConnell into the negotiations to emphasize that the fight over the debt ceiling is not about him and McCarthy, but a struggle that involves the whole government. While McConnell seems to be trying to hold Senate Republicans apart from the House extremists, a story that has fallen under the radar is that Senator Steve Daines (R-MT), chair of the National Republican Senatorial Committee, the man responsible for the fundraising to get Republicans elected to the U.S. Senate, has endorsed Donald Trump. Daines is in close touch both with Trump and with the wealthiest Republican donors. Senator John Cornyn (R-TX) made it clear to Jonathan Swan and Carl Hulse of The New York Times that all the Republicans care about is winning back the majority. “I really don't care what the tactics are,“ he said. Not caring about tactics so long as you are in power might well be a problem for another Republican, former Georgia Senate candidate Herschel Walker. Senior political reporter for The Daily Beast Roger Sollenberger dropped a story tonight alleging that Walker solicited hundreds of thousands of dollars from a billionaire industrialist who believed he was donating to Walker’s Senate campaign, only to have Walker take the money personally. If this story pans out, it suggests Walker will be in legal trouble for election finance issues.

—

LETTERS FROM AN AMERICAN

HEATHER COX RICHARDSON

[elsa16744]

Debt Ceiling Crisis: Will the World’s Renowned Economic Safe Haven Default?

The United States is on track to exceed its borrowing limit in the coming days, as Treasury Secretary Janet Yellen warned Congress in early January that the country has reached its $31.4 trillion debt limitation. As a result, the Treasury would need to take “extraordinary measures” to avoid payment default. While this event risk resurfaces frequently, the political and economic repercussions differ depending on how long Democrats and Republicans take to address the issue. As the government near the deadline for raising its debt limit, the likelihood of default rises, potentially harming markets and the economy.

What exactly is a debt ceiling?

A debt ceiling is a limit imposed by Congress on the outstanding debt of the United States Federal Government. This means that Congress has already directed President Biden’s administration to spend the money, but he has restricted access to the funds required to do so.

What Happens If the United States Hits the Debt Ceiling?

The US Treasury currently has less than $400 billion in cash on hand, and the US government expects to borrow roughly $100 billion per month in 2023. When the debt grew near its limit, which Janet Yellen projected would happen on January 19, 2023, they began to save cash and delayed making payments for some services in order to gain time for negotiations. For example, the government temporarily suspends retirement programmes for government employees, with the idea that the difference will be made up when the ceiling is raised.

The department is currently taking “extraordinary measures” to keep the government running.The Treasury Department declared on January 30th that it intends to expand borrowing during the first three months of 2023 (1Q23), despite the fact that the debt will exceed the $31.4 trillion limit. The United States also intends to borrow $932 billion in 1Q23, which is $353 billion more than was forecast in October 2022, owing to a smaller cash position and an expectation of lower-than-expected income tax receipts as well as increased expenditure. Janet Yellen stated that her actions would buy time until Congress could approve legislation to either increase or suspend the nation’s borrowing ability. Janet further stated that funds and exceptional measures are unlikely to be depleted before early June.

Read More:- https://us.sganalytics.com/blog/what-is-the-debt-ceiling-what-happens-when-US-hits-the-ceiling/

[mebwalker]

The American Debt Ceiling "Ritual"

House Speaker Kevin McCarthy (R-Calif.) and President Biden in the Oval Office at the White House on May 22. (Demetrius Freeman/The Washington Post) (R-Calif. means Republican California) I reported on the debt-ceiling crisis in 2021, noting, essentially, that it is a “dangerous and idiotic ritual.” (See Opinion by Eugene Robinson, The Washington Post.) However, I would now suggest that this…

[departmentq]

“...The deal targets recipients of the Supplementary Nutrition Program, or SNAP, between the ages of 50 and 54, adding new requirements that they work 20 hours a week to receive the aid...

...Previously, work requirements to receive SNAP ended at age 50....

...People who have dependents, including children under age 18 or elderly people who rely on them, or people with disabilities, are already exempt from these work requirements, and will remain so. The deal also exempts veterans and homeless people...”

This could unintentional affect millions of people...

Remember when Gen X was “The Forgotten Generation”?

[empresa-journal]

Minting the Trillion Dollar Coin is a False Choice

The US Treasury does not need to mint (issue) a trillion dollar coin to finance the federal government in a debt ceiling crisis. Instead, the Treasury could mint just enough platinum coins to pay the bills during the crisis. Federal law (31 U.S. Code § 5112) gives the US Security of the Treasury the power to “mint and issue proof platinum coins.” Former US Mint Director Philip Diehl thinks this…

[odinsblog]

Just so we are all really clear: Republicans are using the manufactured debt ceiling “crisis” as a bargaining chip, threatening to blow up the U.S. (and world?) economy unless Biden caves in to cutting things like food benefits for women, children, the poor and the working poor. Got it? That’s their deal—either eviscerate the social safety net, or economy go boom!

No doubt, a lot of liberals are pressuring Biden to acquiesce, because 1) the economy will absolutely positively go boom! and 2) because they will blame Biden if the economy crashes

BUT..! Here’s the thing: If Biden does cave in and give Republicans even a little bit of what they are demanding, I fuckn promise you that in October and November of next year, Republican ads are going to be like: “Vote for Trump! Remember how Biden cut food benefits for women and children? Trump won’t do that”

And it will not matter how many 8k high quality videos you have showing that it was really Republicans who took the economy hostage and demanded those cuts. By time the general election rolls around in ‘24, Republicans will be airing ChatGPT AI political ads where it looks like Biden was the one asking for all the cuts to SNAP and demanding ridiculously harder work requirements

Believe that!!

Did you even see those ignorant charlatans eating from Trump’s hands on CNN?? These are bomb throwers. They enjoy blowing up the economy, especially when it hurts poor people! You cannot in good faith make any policy decision about what to do based off of what Republican voters “might think” when it’s election time! They don’t “think” AT ALL, and even if they did, they still do not care! They’re unscrupulous deplorables. They will always always always find a way to blame Biden and the Democrats, no matter what, so Biden may as well go on and do what’s right while he can, and try actually fighting against these cartoonishly evil Republicans

AND..! Do I even need to remind anyone what happens when you cave in to bullies?? If Biden caves now, then Republicans will bully every Democrat from here on out, and the programs they take hostage next time will be Social Security, Medicare and Medicaid

Caving in to the whims of Kevin pickme! McCarthy and Marjorie Traitor Greene is bad politics, and it will only get worse in the future if Biden folds now

[commonsensecommentary]

“When one looks at economic sectors where liberals today predominate—education, Big Tech, social services, and government at all levels—it can perhaps be said that a belief in the efficacy and importance of milking taxpayers for every possible penny, silencing unbelievers, and refusing to provide provable results is a matter of enlightened self-interest because reductions in today’s out-of-control local, state, and federal spending would reduce their income and push them into less lucrative jobs.”

(Prepare for the screaming when Trump and the Republican majority start cutting government spending in 2025 / From my blog archive)

[thoughtportal]

Debt Ceiling

[johnschneiderblog]

Social insecurity 

In our most recent phone call my friend Richard Prangley (shown here with his beloved Tiger collection in more tranquil times) was deeply troubled. His questions came rapid fire

“Is it true they’re going to quit sending out Social Security checks ...? How am I going to pay my bills ...?  Don’t they know people need this money to live ...?”

Richard had been watching TV news reports about the looming U.S. debt-ceiling crisis, the risk of default and the possible consequences for real people like himself.

It made me wonder if the well-paid folks in D.C. truly realize what effect their game of chicken is having on people like Richard - the most vulnerable among us who depend on the government, in one way or another, for their livelihood.

I did my best to assure Richard that it was simply a matter of political posturing and that, in the end, default would be averted.

“I sure hope so,” he said. Me too.

[dreaminginthedeepsouth]

David Horsey

* * * *

McCarthy’s fake budget proposal.

         A federal budget is a massive undertaking. It proposes allocation of trillions of dollars across thousands of agencies and programs. The budget proposal made by President Joe Biden on March 13, 2023, is 1,345 pages in length. As the US approaches its debt limit in June 2023, Speaker Kevin McCarthy demands budget cuts in exchange for raising the debt limit. On Tuesday, he released his most detailed proposal yet. It could have fit on the back of a cocktail napkin. Despite its 320-page length, most of McCarthy’s proposed budget bill is devoted to reciting language from Biden legislation that would be repealed under McCarthy’s proposal.

         McCarthy’s budget is little more than a series of hostage-taking demands. For example, per Talking Points Memo, McCarthy proposes to

repeal the green energy tax credits passed in the Inflation Reduction Act, add more requirements to benefit programs like SNAP (formerly known as food stamps), cut money allocated to the Internal Revenue Service (IRS) and rescind the Biden administration’s order forgiving student debt.

         More to the point, McCarthy does not propose specific cuts. Instead, he proposes general cuts in spending to be determined by various House committees. What could go wrong?

         McCarthy’s proposal is unserious and indicates his inability to govern his caucus. See Talking Points Memo, Where Things Stand: Biden Shreds McCarthy’s Performative Debt Limit Bill.

[Robert B. Hubbell Newsletter]

[elsa16744]

Debt Ceiling Crisis - Its History and Its Future

A debt ceiling is a limit Congress imposes to regulate the U.S. Federal government’s outstanding debt. After all, devastating financial and economic stability challenges will arise if the authorities default on their borrowings. The debt management obstacles have a long history, and various leaders attempted to propose policy innovations to overcome them. This article offers a comprehensive overview of the past, the present, and the potential future of the ongoing debt ceiling crisis.

[davidnelsoncfa]

Running On Empty - Why a debt deal could be bad news for stocks

#Yellen needs to fill up the tank. When we get a deal Treasury will issue debt and add 600-$700B to the General Account. #SPY Stocks aren't going to like that #Trump #Biden #Treasury #SocialSecurity

By David Nelson, CFA  You’ve probably had this conversation with friends and family. It goes something like this. What happens to my 401k and other investments if Democrats and Republicans can’t come to a compromise over the debt ceiling? U.S. debt is a staggering 31.4 trillion and debt to GDP is at the highest levels since World War II. Unfortunately, rhetoric from both sides of the aisle has…

[tk-n-la]

A 3:49 video explaining how Congress created a "problem" that only Congress is legally permitted to "solve"

💯💯💯💯💯

[odinsblog]

Republican hostage demands include:

Increasing and not cutting the defense budget, nor the Border Patrol budget

Cut funding to the following programs and agencies by 51 percent: Supplemental Nutrition Assistance Program (SNAP), the Social Security Administration, Environmental Protection Agency, Veteran’s Assistance Program, Health and Human Services, Department of Education, Department of Housing and Urban Development, the Justice Department, the State Department, the Department of Transportation, NASA, the Labor Department, and more (source)

Rescind any student loan relief and make borrowers pay back any payments that were paused or recently forgiven

Defund the IRS so that it cannot go after wealthy tax evaders

New, harsher work requirements for Medicaid recipients

Raise the work retirement age for people enrolled in the SNAP, from 50 to 55 years old

More stringent work requirements for food stamp recipients

Deregulation of drilling and mining permitting

Repeal any tax breaks that encouraged using renewable energy sources

Pledges to increase domestic production of oil and other fossil fuels

In short, the Republican demands to raise the debt ceiling is a manufactured crisis. It’s yet another GOP wish list to attack poor people by eviscerating the social safety net, while simultaneously deregulating big businesses and defunding the government agencies that could hold polluters and exploiters accountable

👉🏿 https://www.pbs.org/newshour/politics/heres-whats-in-the-gop-bill-to-lift-the-u-s-debt-limit

👉🏿 https://www.dataforprogress.org/blog/2022/12/12/voters-want-congress-to-raise-the-debt-ceiling-and-protect-social-programs

👉🏿 https://www.cbsnews.com/amp/news/debt-ceiling-house-republicans-bill-limit-save-grow-act/

[commonsensecommentary]

More debt. And more debt. And still more debt. Soon enough, America as we know it is dead.