Tag: Republicans

With both sides dug in and the deadline approaching, the debate has turned into a life-or-death test of political strength….reports Asian Lite News

America’s power brokers love playing chicken. But the rest of the world will watch in dread Tuesday when President Joe Biden and Republican leaders meet to negotiate the US debt ceiling — praying that one side finally blinks.

The White House summit between Biden, House Speaker Kevin McCarthy and Senate Republican leader Mitch McConnell sets in motion the deciding round of a power struggle whose outcome will impact the global economy and could upset the 2024 US presidential election.

The immediate issue is raising the debt ceiling, an arcane budgeting procedure that most years passes with little controversy. Basically, the US government always spends more than has been budgeted but, unlike in most countries, then requires congressional approval to borrow extra.

This year, McCarthy and his radicalized right-wing party have decided to say no, unless Democrats first agree to sweeping budget cuts, giving in to the Republican message that Biden has been profligate and irresponsible.

Biden, who will be joined in the White House talks by the Democratic minority leader in the House of Representatives, Hakeem Jeffries, and the Democratic majority leader in the Senate, Chuck Schumer, accuses Republicans of “hostage” taking.

He insists that the debt ceiling first be raised — as in other years — and only then can he and the Republicans discuss cutting the budget to reduce that decades-old accumulated debt, currently the world’s biggest at $31 trillion.

A dispute over sequencing might sound academic.

However, with both sides dug in and the deadline approaching, the debate has turned into a life-or-death test of political strength.

Fail to authorize more borrowing and the government will run out of money and default.

Cue worldwide panic.

Soaring interest rates, stock sell-offs, Treasury bond downgrades, and near certain US recession will be on the menu — and that’s before factoring in long-term harm to the US geopolitical brand.

“Even getting close to a breach of the US debt ceiling could cause significant disruptions,” warned a White House analysis. “An actual breach of the US debt ceiling would likely cause severe damage.”

When is doomsday? No one knows for sure.

But US coffers could run dry as early as June 1, according to the Treasury.

That’s just over three weeks from the Tuesday sit-down.

As the clock ticks away, the divide appears unbridgeable.

The White House is clinging to an “irrational, reckless” strategy and Democrats are “terrified” about allowing “clueless” Biden to negotiate, tweeted the Freedom Caucus — the group of hard-right Republicans effectively controlling the razor-thin Republican majority in the House.

Biden is not budging.

A strong economic recovery from the Covid era is one of Biden’s main cards in his bid for a second term next year. So the 80-year-old has all the more reason to steer the country clear of crisis.

Yet he’s also adamant about not caving into the Republican attempt to link budget negotiations to the debt ceiling, saying this will transform a basic, fundamental obligation into a political football.

“They’re trying to hold the debt hostage to (get) us to agree to some draconian cuts,” he told advisers Friday.

Biden repeated one of his favorite stats, noting that Republicans had voted, without imposing any conditions, to extend the debt ceiling three times during the presidency of Republican Donald Trump.

“No one’s ever not voted to increase the debt limit.” he said. “I’m going to reiterate to congressional leaders that they should do what every other Congress has done — that is, pass the debt limit, avoid the default.”

Analysts say there are several potential exit ramps from imminent default.

The two sides could simply punt, extending the debt ceiling for a few weeks, while talks continue.

They could come to a messy compromise that resolves the issue by promising yet-to-be-determined budget cuts, but condemning the nation to repeat the whole drama in an election year.

Failing all else, the White House has not ruled out invoking a constitutional power to bypass Congress altogether and unilaterally authorize more borrowing — except this would likely be challenged in court.

“I’ve not gotten there yet,” Biden said late Friday in an MSNBC interview on use of the 14th Amendment.

Short of an unexpected political truce, however, there are no easy options.

And while much of the world looks on nervously, some countries are watching in glee, the Biden administration warns.

“They love to see chaos in the American system,” White House budget director Shalanda Young said, referring to China and Russia. “They love to see that we can’t do our basic jobs.”

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Overall, the budget would increase federal spending in the twelve months starting in October to $6.8 trillion from the $6.2 trillion expected to be spent in the current fiscal year…reports Asian Lite News

President Joe Biden unveiled plans for government spending and higher taxes on the wealthy, choosing the swing state of Pennsylvania to reveal his playbook for an expected 2024 re-election bid.

Speaking at a Philadelphia union hall, the Democratic president challenged Republican opponents on fiscal responsibility, highlighting plans to cut U.S. deficits nearly $3 trillion over 10 years by raising taxes on those earning more than $400,000 a year.

Overall, the budget would increase federal spending in the twelve months starting in October to $6.8 trillion from the $6.2 trillion expected to be spent in the current fiscal year.

“For too long, working people been breaking their necks, the economy’s left them behind – working people like you – while those at the top get away with everything,” Biden told Pennsylvania blue-collar workers, a group he also targeted in his 2020 presidential campaign.

Biden’s budget proposal faces stiff opposition from Republican lawmakers emboldened by winning control of the House of Representatives in November’s midterm elections. Large parts of his agenda are unlikely ever to be enacted by this Congress.

The plan, however, is a political statement that directly challenges Republican House Speaker Kevin McCarthy’s threats to block an increase in the $31.4 trillion limit on federal borrowing unless Biden agrees to rein in federal spending.

“I want to make it clear I’m ready to meet with the speaker anytime, tomorrow, if he has his budget. Lay it down, tell me what you want to do. I’ll show you what I want to do, see what we can agree on,” Biden said.

Biden, asked for areas of possible compromise with Republicans, told reporters at the White House: “We’ll see what their budget is.” His message to Republicans who say the budget is dead on arrival was: “Watch me.”

McCarthy and other Republicans on Thursday described Biden’s budget plan as “reckless.”

The president seeks to fund higher spending and narrowing the deficit by imposing a 25% minimum tax on billionaires and nearly doubling the capital gains tax from 20%, the White House said.

He also wants to quadruple a 1% stock buyback tax, potentially picking a fight with some of the investors he would need to call on to finance any re-election campaign. The measures would roll back some corporate tax breaks enacted in 2017 under Republican former President Donald Trump.

Political messaging aside, the Biden budget makes clear one thing – the aging U.S. population means that legally mandated spending on social programs will continue to be a long-term drag. One in five Americans will be retirement age or older by 2030, the U.S. Census predicts.

The budget projects more than $1 trillion deficits every year over the next 10 years, even if Biden gets his requests for higher taxes and cost-cutting measures.

Total U.S. debt would rise to nearly 110% of annual gross domestic product in 2033, a figure that rivals the peaks during the country’s mobilization for World War II.

The administration based its budget on a muted, 0.6% inflation-adjusted growth forecast for the current calendar year.

It sees unemployment creeping up to 4.6% in 2024 as the Federal Reserve engineers a slowdown to fight inflation, and predicted that effort will succeed in getting consumer prices down by nearly two-thirds from current levels by next year. In each case, the assumptions closely track the projections of economists polled by Refinitiv. 

“President Joe Biden’s budget is a reckless proposal doubling down on the same Far Left spending policies that have led to record inflation and our current debt crisis,” McCarthy and other Republicans said in a statement.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget advocacy group, said the budget did not go nearly far enough to rein in dangerous debt levels.

“When it comes to fixing the debt, this is by no means an award-winning budget, but the president deserves at least a participation trophy,” she said in a statement.

Republicans are already preparing $150 billion in cuts to non-defense discretionary programs, including about $25 billion from the Department Education and cuts in foreign aid and programs aimed at preventing sexually transmitted diseases. They say that would save $1.5 trillion over a decade.

Biden’s proposals, meanwhile, are a sweeping endorsement of the power of the federal government to solve big problems.

He would boost military spending to stop China and Russia pushing beyond their borders, extend healthcare subsidies for the country’s aging population while funding cancer research to cut the death rate from that disease in half, support down payments for first-time homebuyers, improve rail safety after recent accidents and guarantee preschool for all the country’s four million four-year-olds.

Biden requested $886 billion in spending for national defense, a 3.2% increase over the number enacted for the 2023 fiscal year.

Aides see most of the proposals enjoying strong bipartisan support in the country, hoping they could lift the president’s low approval ratings as he gears up announce his reelection bid as soon as next month.

Biden also proposed increases in funding for crime prevention and border patrol, a nod to issues Republicans often use in barbed attacks on the administration.

The Committee for a Responsible Federal Budget, a non-partisan Washington think tank, said Biden deserved credit for for putting forward $3 trillion in deficit reduction.

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