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  • Treasury takes more extraordinary measures to avoid debt default | CNN Politics

    Treasury takes more extraordinary measures to avoid debt default | CNN Politics

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    CNN
     — 

    Treasury Secretary Janet Yellen is taking another step to temporarily delay the US defaulting on its debt.

    Less than a week after announcing that the nation hit its $31.4 trillion debt ceiling set by Congress, Yellen wrote to House Speaker Kevin McCarthy on Tuesday to say that she is adding to the extraordinary measures that will allow the government to keep paying its bills on time and stall the catastrophic economic and fiscal consequences of a default.

    She will stop fully investing the Government Securities Investment Fund of the Thrift Savings Fund, part of the Federal Employees’ Retirement System, in interest-bearing securities of the US.

    This is in addition to the measures announced last week, when Yellen said Treasury will begin to sell existing investments and suspend reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund.

    These funds are invested in special-issue Treasury securities, which count against the debt limit. Treasury’s actions would reduce the amount of outstanding debt subject to the limit and temporarily allow it to continue paying the government’s bills on time and in full.

    Yellen’s actions are mainly behind-the-scenes accounting maneuvers. No federal retirees or employees will be affected, and the funds will be made whole once the impasse ends, she wrote.

    The extraordinary measures should last at least until early June, Yellen has said, though she stressed that her forecast is subject to “considerable uncertainty.”

    Despite Yellen’s warnings to Congress to act promptly, little, if any, progress toward a resolution has been made between House Republicans and the White House.

    White House press secretary Karine Jean-Pierre reiterated Monday that the Biden administration is not open to negotiating on the debt limit, pushing back against comments from West Virginia Democratic Sen. Joe Manchin that the position was “a mistake.”

    “It was done three times in the past, in the past administration under Donald Trump, so this is nothing unusual,” she told CNN during a White House briefing. “This is something that should be done without conditions, and we should not be taking hostage key programs that the American people really earned and care about – Social Security, Medicare should not be put into a hostage situation.”

    McCarthy also blasted the administration’s position, tweeting last week that he’s ready to meet to discuss “a responsible debt ceiling increase to address irresponsible government spending.” He noted that he accepts President Joe Biden’s invitation to sit down, though no such meeting has been set.

    As part of the drawn-out negotiations to win the speaker vote earlier this month, McCarthy promised his conservative members that any effort to lift the debt ceiling would be accompanied by spending cuts.

    The Senate, meanwhile, is taking a back seat in the standoff for now. Senate Republicans say they will wait to see how the House GOP maneuvers a way to raise the borrowing limit before deciding if they need to insert themselves into the process.

    Despite the current situation, Senate Republican Leader Mitch McConnell told CNN Monday that “we won’t default,” without elaborating.

    Senate Majority Leader Chuck Schumer on Tuesday laid out the severe consequences of a default, saying “every single American will pay the price.” He called on House Republicans to reveal the fiscal measures they want to take.

    “Well, I say to my Republican colleagues: If you want to talk about spending cuts, then you have an obligation – an obligation – to show the American people precisely what kind of cuts you are talking about,” he said.

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  • Fact check: McCarthy’s false, misleading and evidence-free claims since becoming House speaker | CNN Politics

    Fact check: McCarthy’s false, misleading and evidence-free claims since becoming House speaker | CNN Politics

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    Washington
    CNN
     — 

    Since winning a difficult battle to become speaker of the House of Representatives, Republican Kevin McCarthy has made public claims that are misleading, lacking any evidence or plain wrong.

    Here is a fact check of recent McCarthy comments about the debt ceiling, funding for the Internal Revenue Service, the FBI search of former President Donald Trump’s resort and residence in Florida, President Joe Biden’s stance on stoves and Democratic Rep. Adam Schiff.

    McCarthy’s office did not respond to a request for comment.

    McCarthy has cited the example of Rep. Nancy Pelosi, his Democratic predecessor as House speaker, while defending conservative Republicans’ insistence that any agreement to lift the federal debt ceiling must be paired with cuts to government spending – a trade-off McCarthy agreed to when he was trying to persuade conservatives to support his bid for speaker. Specifically, McCarthy has claimed that even Pelosi agreed to a spending cap as part of a deal to lift the debt ceiling under Trump.

    “When Nancy Pelosi was speaker, that’s what transpired. To get a debt ceiling, they also got a cap on spending for the next two years,” McCarthy told reporters at a press conference on January 12. When Fox host Maria Bartiromo told McCarthy in a January 15 interview that “they” would not agree to a spending cap, he responded, “Well Maria, I don’t believe that’s the case, because when Donald Trump was president and when Nancy Pelosi was speaker, that’s exactly what happened for them to get a debt ceiling lifted last time. They agreed to a spending cap.”

    Facts First: McCarthy’s claims are highly misleading. The deal Pelosi agreed to with the Trump administration in 2019 actually loosened spending caps that were already in place at the time because of a 2011 law. In other words, while congressional conservatives today want to use a debt ceiling deal to reduce government spending, the Pelosi deal allowed for billions in additional government spending above the pre-existing maximum. The two situations are nothing alike.

    Shai Akabas, director of economic policy at the Bipartisan Policy Center think tank, said when asked about the accuracy of McCarthy’s claims: “I’m going to steer clear of characterizing the Speaker’s remarks, but as an objective matter, the deal reached in 2019 increased the spending caps set by the Budget Control Act of 2011.”

    The 2019 deal, which was criticized by many congressional conservatives, also ensured that Budget Control Act’s caps on discretionary spending – which were created as a result of a 2011 debt ceiling deal between a Democratic president and a Republican speaker of the House – would not be extended past 2021. Spending caps vanishing is the opposite of McCarthy’s suggestion that the deal “got” a spending cap.

    Pelosi spokesperson Aaron Bennett said in an email that McCarthy is “trying to rewrite history.” Bennett said, “As Republicans in Congress and in the Administration noted at the time, in 2019, Speaker Pelosi and Democrats were eager to reach bipartisan agreement to raise the debt limit and, as part of the agreement, avert damaging funding cuts for defense and domestic programs.”

    In various statements since becoming speaker, McCarthy has boasted of how the first bill passed by the new Republican majority in the House “repealed 87,000 IRS agents” or “repealed funding for 87,000 new IRS agents.”

    Facts First: McCarthy’s claims are false. House Republicans did pass a bill that seeks to eliminate about $71 billion of the approximately $80 billion in additional Internal Revenue Service funding that Biden signed into law in last year’s Inflation Reduction Act – but that funding is not going to hire 87,000 “agents.” In addition, Biden has already made clear he would veto this new Republican bill even if the bill somehow made it through the Democratic-controlled Senate, so no funding has actually been “repealed.” It would be accurate for McCarthy to say House Republicans “voted to repeal” the funding, but the boast that they actually “repealed” something is inaccurate.

    CNN’s Katie Lobosco explains in detail here why the claim about “87,000 new IRS agents” is an exaggeration. The claim, which has become a common Republican talking point, has been fact-checked by numerous media outlets over more than five months, including The Washington Post in response to McCarthy remarks earlier this January.

    Here’s a summary. While Inflation Reduction Act funding may well allow for the hiring of tens of thousands of IRS employees, far from all of these employees will be IRS agents conducting audits and investigations. Many other employees will be hired for the non-agent roles, from customer service to information technology, that make up the vast majority of the IRS workforce. And a significant number of the hires are expected to fill the vacant posts left by retirements and other attrition, not take newly created positions.

    The IRS has not yet released a detailed breakdown of how it plans to use the funding provided by the Inflation Reduction Act, so it’s impossible to say precisely how many new “agents” will be hired. But it is already clear that the total won’t approach 87,000.

    In his interview with Fox’s Bartiromo on January 15, McCarthy criticized federal law enforcement for executing a search warrant at Trump’s Mar-a-Lago resort and residence in Florida, which the FBI says resulted in the recovery of more than 100 government documents marked as classified and hundreds of other government documents. Echoing a claim Trump has made, McCarthy said of the documents: “They knew it was there. They could have come and taken it any time they wanted.”

    Facts First: It is clearly not true that the authorities could somehow have come to Mar-a-Lago at any time, without conducting a formal search, and taken all of the presidential records they were seeking from Trump. By the time of the search, the federal government – first the National Archives and Records Administration and then the Justice Department – had been asking Trump for more than a year to return government records. Even when the Justice Department went beyond asking in May and served Trump’s team with a subpoena for the return of all documents with classification markings, Trump’s team returned only some of these documents. In June, a Trump lawyer signed a document certifying on behalf of Trump’s office that all of the documents had been returned, though that was not true.

    When FBI agents and a Justice Department attorney visited Mar-a-Lago without a search warrant on that June day to accept documents the Trump team was returning in response to the subpoena, a Trump lawyer “explicitly prohibited government personnel from opening or looking inside any of the boxes that remained in the storage room,” the department said in a court filing after the August search. In other words, according to the department, the government was not even allowed to poke around to see if there were government records still at Mar-a-Lago, let alone take those records.

    In the August court filing, the department pointedly called into question the extent to which the Trump team had cooperated: “That the FBI, in a matter of hours, recovered twice as many documents with classification markings as the ‘diligent search’ that the former President’s counsel and other representatives had weeks to perform calls into serious question the representations made in the June 3 certification and casts doubt on the extent of cooperation in this matter.”

    McCarthy wrote in a New York Post article published on January 12: “While President Joe Biden wants to control the kind of stove Americans can cook on, House Republicans are certainly cooking with gas.” He repeated the claim on Twitter the next morning.

    Facts First: There is no evidence for this claim; Biden has not expressed a desire to control the kind of stove Americans can cook on. McCarthy was baselessly attributing the comments of a single Biden appointee to Biden himself.

    It is true that a Biden appointee on the United States Consumer Product Safety Commission, Richard Trumka Jr., told Bloomberg earlier this month that gas stoves pose a “hidden hazard,” as they emit air pollutants, and said, “Any option is on the table. Products that can’t be made safe can be banned.” But the day before McCarthy’s article was published by the New York Post, White House press secretary Karine Jean-Pierre said at a press briefing: “The president does not support banning gas stoves. And the Consumer Product Safety Commission, which is independent, is not banning gas stoves.”

    To date, even the commission itself has not shown support for a ban on gas stoves or for any particular new regulations on gas stoves. Commission Chairman Alexander Hoehn-Saric said in a statement the day before McCarthy’s article was published: “I am not looking to ban gas stoves and the CPSC has no proceeding to do so.” Rather, he said, the commission is researching gas emissions in stoves, “exploring new ways to address health risks,” and strengthening voluntary safety standards – and will this spring ask the public “to provide us with information about gas stove emissions and potential solutions for reducing any associated risks.”

    Trumka told CNN’s Matt Egan that while every option remains on the table, any ban would apply only to new gas stoves, not the gas stoves already in people’s homes. And he noted that the Inflation Reduction Act makes people eligible for a rebate of up to $840 to voluntarily switch to an electric stove.

    Defending his plan to bar Democratic Rep. Adam Schiff from sitting on the House Intelligence Committee, a committee Schiff chaired during the Democratic majority from early 2019 to the beginning of this year, McCarthy criticized Schiff on January 12 over his handling of the first impeachment of Trump. Among other things, McCarthy said: “Adam Schiff openly lied to the American public. He told you he had proof. He told you he didn’t know the whistleblower.”

    Facts First: There is no evidence for McCarthy’s insinuation that Schiff lied when he said he didn’t know the anonymous whistleblower who came forward in 2019 with allegations – which were subsequently corroborated – about how Trump had attempted to use the power of his office to pressure Ukrainian President Volodymyr Zelensky to investigate Biden, his looming rival in the 2020 election.

    Schiff said last week in a statement to CNN: “Kevin McCarthy continues to falsely assert I know the Ukraine whistleblower. Let me be clear – I have never met the whistleblower and the only thing I know about their identity is what I have read in press. McCarthy’s real objection is we proved the whistleblower’s claim to be true and impeached Donald Trump for withholding millions from Ukraine to extort its help with his campaign.” Schiff also made this comment to The Washington Post, which fact-checked the McCarthy claim last week, and has consistently said the same since late 2019.

    The New York Times reported in 2019 that, according to an unnamed official, a House Intelligence Committee aide who had been contacted by the whistleblower before the whistleblower filed a formal complaint did not inform Schiff of the person’s identity when conveying to Schiff “some” information about what the person had said. And Reuters reported in 2019 that a person familiar with the whistleblower’s contacts said the whistleblower hadn’t met or spoken with Schiff.

    McCarthy could have fairly repeated Republican criticism of a claim Schiff made in a 2019 television appearance about the committee’s communication with the whistleblower; Schiff said at the time “we have not spoken directly with the whistleblower” even though it soon emerged that the whistleblower had contacted the committee aide before filing the complaint. (A committee spokesperson said at the time that Schiff had been merely trying to say that the committee hadn’t heard actual testimony from the whistleblower, but that Schiff acknowledged his words “should have been more carefully phrased to make that distinction clear.”)

    Regardless, McCarthy didn’t argue here that Schiff had been misleading about the committee’s dealings with the whistleblower; he strongly suggested that Schiff lied in saying he didn’t know the whistleblower. That’s baseless. There has never been any indication that Schiff had a relationship with the whistleblower when he said he didn’t, nor that Schiff knew the whistleblower’s identity when he said he didn’t.

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  • Manchin says it’s a ‘mistake’ for White House to want Democrats to address debt ceiling without GOP | CNN Politics

    Manchin says it’s a ‘mistake’ for White House to want Democrats to address debt ceiling without GOP | CNN Politics

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    Washington
    CNN
     — 

    Democratic Sen. Joe Manchin of West Virginia said Sunday that it’s a “mistake” for the White House to want Democrats to deal with the debt ceiling without negotiating with congressional Republicans.

    “I think it’s a mistake because we have to negotiate. This is a democracy that we have. We have a two-party system, if you will, and we should be able to talk and find out where our differences are. And if they are irreconcilable, then you have to move on from there and let people make their decisions,” Manchin, a key Senate moderate, told CNN’s Dana Bash on “State of the Union.”

    “Using the debt ceiling and holding it hostage hasn’t worked in the past,” Manchin continued, adding that he “respectfully” disagrees with his party’s No. 2 Democrat in the chamber, Majority Whip Dick Durbin, on not negotiating with Republicans.

    “Every American has to live within a budget. If they don’t, they’re in trouble financially. Every business that’s successful has to live within a budget. Every state has to live within a budget. Shouldn’t the federal government have some guardrails that, say, ‘Hey, guys … you’re overreaching here and you’re overspending?’ But then pick your priorities. That’s all,” he added.

    The US hit the debt ceiling set by Congress on Thursday, forcing the Treasury Department to start taking “extraordinary measures” to keep the government paying its bills and escalating pressure on Capitol Hill to avoid a catastrophic default.

    The battle lines for the high-stakes fight have already been set. Hard-line Republicans, who have enormous sway in the House because of the party’s slim majority, have demanded that lifting the borrowing cap be tied to spending reductions. Manchin suggested Sunday he was open to spending cuts.

    The White House, however, has countered that it will not offer any concessions or negotiate on raising the debt ceiling. And with the solution to the debt ceiling drama squarely in lawmakers’ hands, fears are growing that the partisan brinksmanship could result in the nation defaulting on its debt for the first time ever – or come dangerously close to doing so.

    GOP Rep. Brian Fitzpatrick of Pennsylvania said Sunday on Fox News that the White House position against negotiating with House Republicans on spending cuts, in exchange for raising the debt ceiling, is “very irresponsible.” He said the first step in addressing the debt ceiling situation is for Speaker Kevin McCarthy to sit down with Biden.

    Rep. Josh Gottheimer, a New Jersey Democrat, said in the same interview that he believes the White House will ultimately sit down with McCarthy, which he called “a good thing.”

    Fitzpatrick and Gottheimer are the co-chairs of the bipartisan Problem Solvers Caucus in the House.

    As to whether Social Security and Medicare should be part of these negotiations, Manchin shared his interest in wanting to create a committee that would make the two programs “more financially secure and stable.” But he said no one who currently receives these benefits should receive any cuts.

    “No cuts to anybody that’s receiving their benefits, no adjustments to that. They’ve earned it. They paid into it. Take that off the table,” Manchin said. “But everyone’s using that as a leverage.”

    The senator indicated he was open to raising the income cap for Social Security taxes.

    “I’m open to basically raising – the easiest and quickest thing we can do is raise the cap,” he said.

    Meanwhile, Manchin on Sunday also offered support for fellow Senate moderate Krysten Sinema, calling her a “formidable candidate” for reelection in 2024.

    Sinema announced last month she was leaving the Democratic Party and registering as a political independent, fueling fresh interest from Arizona Democrats to challenge her next year.

    “I would think that she needs to be supported again, yes, because she brings that independent spirit,” Manchin said.

    This story has been updated with additional information.

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  • Here’s what will happen to the economy as the debt ceiling drama deepens | CNN Business

    Here’s what will happen to the economy as the debt ceiling drama deepens | CNN Business

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    Minneapolis
    CNN
     — 

    After the United States hit its debt ceiling on Thursday, the Treasury Department is now undertaking “extraordinary measures” to keep paying the government’s bills.

    A default could be catastrophic, causing “irreparable harm to the US economy, the livelihoods of all Americans and global financial stability,” Treasury Secretary Janet Yellen has warned.

    Yellen on Friday told CNN’s Christiane Amanpour that the impacts would be felt by every American.

    “If that happened, our borrowing costs would increase and every American would see that their borrowing costs would increase as well,” Yellen said. “On top of that, a failure to make payments that are due, whether it’s the bondholders or to Social Security recipients or to our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis.”

    She added: “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans — many people — would lose their jobs and certainly their borrowing costs would rise.”

    Dire warnings of debt ceiling trouble aren’t new. Federal lawmakers have reached agreements in the past, and this Congress has some time — until at least early June, according to Yellen’s public estimates — to reach an agreement on whether to raise or suspend the debt limit.

    Many economists say they expect an agreement will be reached. However, given the current “extremely fractious political environment,” it could be a long process that would contribute to “flare-ups” in financial market volatility, Moody’s Investors Service said in a note Thursday.

    Such volatility is coming at a time when the Federal Reserve is trying to bring down inflation while navigating a soft (or softish) landing with minimal harm to the economy.

    So what happens to the economy in a worst-case scenario of default?

    It’s an understandable question with an unsatisfying answer, said Michael Pugliese, vice president and economist with Wells Fargo’s corporate and investment bank.

    “The honest truth is, no one knows,” he said. “A widespread default by the US government is not something we’ve ever experienced and not something we’ve ever even come close to experiencing.”

    While a default isn’t something that can be modeled in the way a more historically common economic event such as a recession can be, the events of 2011 could lend some perspective as to what would happen if the debt ceiling drama turns into a debacle, said Gregory Daco, chief economist at EY-Parthenon.

    “2011 was the first time in a long time that we came close to a debt ceiling breach,” he said. “And that was a time when there was a lot of political fragmentation and there was a strong desire to essentially attach spending cuts to any debt ceiling increase.”

    The current environment includes similar brinksmanship and desires to attach spending cuts, he said.

    But some fear this fight may be tougher than those in the past, a concern reinforced by the fact it took 15 ballots to elect the Speaker of the House in what is normally the easiest vote taken by a new Congress.

    The economy nearly 13 years ago was different, as well.

    At the time, the Fed was in an easy monetary policy mode and the economy in a weaker position, as it was still recovering from the Great Recession of 2008, Pugliese said. Unemployment was north of 9% in July 2011.

    That same year, Treasury projected the “X date” — the date on which it would be unable to pay its obligations on time — would fall on August 2, 2011. That ultimately was the date when Congress passed, and President Barack Obama enacted, a law increasing the ceiling.

    The actual economic impact of the debt ceiling run-up in 2011 is hard to isolate and quantify, Pugliese said, noting how the sluggish US economic recovery also experienced spillover effects from global events, notably Europe’s sovereign debt crisis.

    Still, there were some indications that the protracted congressional battle contributed to a shake-up in the economy then, he said. Real GDP growth was a weak -0.1% on a quarter-over-quarter annualized basis in the third quarter of 2011. Financial markets were roiled, consumer confidence weakened, the US economic policy uncertainty index set a new high and Standard & Poor’s credit rating agency downgraded the United States to AA+ from AAA.

    “I think you would be hard pressed to say [the debt ceiling debacle] was a positive thing,” he said. “I think of it more as one other hurdle among a lot of other hurdles for the economy as it emerged from 9% unemployment at the time.”

    This time, if the X date were to come without a resolution, there is speculation that the Treasury could prioritize principal and interest payments to prevent a technical default, Pugliese said. There are potentially other “break the glass” options from the Treasury and Federal Reserve, but those are untested and short-term solutions, he added.

    “Someone, somewhere is going to get shortchanged if the government doesn’t have all of its money, whether that’s Social Security beneficiaries, defense contractors, civil service employees, veterans, [etc.],” he said.

    Joggers run past the Treasury Department on January 18, 2023, in Washington, DC.

    Adding to the uncertainty is the current economic climate, Daco said.

    “We are going into this delicate period at a time when the US economy is clearly slowing down and at a time when the global economic backdrop is also weakening … so the economic environment against which this debt ceiling debacle is unfolding is one of increased economic softening.”

    While a self-inflicted recession would be likely after the point when an X date is hit, some upheaval could come sooner, Daco said.

    “Financial markets and private sector actors tend to react ahead of that date,” he said. “If there is the anticipation that we will get very close to that drop-dead date, then financial market volatility generally tends to increase, stock prices tend to react adversely.”

    A Treasury default would undermine the global financial system, said Louise Sheiner, policy director at the Hutchins Center on Fiscal and Monetary Policy and former senior economist with the Fed and the Council of Economic Advisers.

    “If Treasuries become something that people are worried about holding, then that has ripple effects throughout capital markets throughout the world, in ways that are really difficult to predict,” she said.

    Considering the potential consequences in the United States and abroad, Sheiner believes the debt ceiling will be lifted or suspended — eventually.

    “There’s no other way around it,” she said. “There’s no way that Congress is going to cut spending 20% in the middle of the year. It would plunge the economy into a recession. It would be a terrible policy.”

    She added: “If you care about the long-term debt, you have to actually change different laws, Social Security law, Medicare, or the tax law … you want to do that in the appropriate process, you want to do it well thought out. It’s not the kind of thing that should be done under duress.”

    CNN’s Maegan Vazquez, Matt Egan and Tami Luhby contributed to this report.

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  • Yellen warns of ‘global financial crisis’ if US debt limit agreement isn’t reached | CNN Politics

    Yellen warns of ‘global financial crisis’ if US debt limit agreement isn’t reached | CNN Politics

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    CNN
     — 

    Treasury Secretary Janet Yellen on Friday warned of the widespread global effects that could be felt if the federal government exhausts extraordinary measures and fails to raise the debt ceiling, telling CNN’s Christiane Amanpour about the ways everyday Americans could face stark consequences.

    Yellen’s warning comes after the United States on Thursday hit its $31.4 trillion debt limit set by Congress, forcing the Treasury Department to start taking extraordinary measures to keep the government paying its bills.

    While those newly deployed extraordinary measures are largely behind-the-scenes accounting maneuvers, Yellen told Amanpour that “the actual date at which we would no longer be able to use these measures is quite uncertain, but it could conceivably come as early as early June.”

    Speaking exclusively to CNN from Senegal, Yellen said that after the measures are exhausted, the US could experience at a minimum downgrading of its debt as a result of Congress failing to raise the debt ceiling. The effects of the federal government failing to make payments, she argued, could be as broad as a “global financial crisis.”

    “If that happened, our borrowing costs would increase and every American would see that their borrowing costs would increase as well,” Yellen said. “On top of that, a failure to make payments that are due, whether it’s the bondholders or to Social Security recipients or to our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis.”

    “It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans – many people would lose their jobs and certainly their borrowing costs would rise,” she continued.

    Yellen wrote a letter to House Speaker Kevin McCarthy on Thursday explaining the measures being taken, escalating pressure on Capitol Hill to avoid a catastrophic default.

    Hardline Republicans have demanded that lifting the borrowing cap be tied to spending reductions. The White House has countered by saying that it will not offer any concessions or negotiate on raising the debt ceiling. And so far, Yellen’s warnings have failed to spark bipartisan discussion, with both Republicans and Democrats reaffirming their rigid positions over the past week.

    As part of the debt issuance suspension period using extraordinary measures, the agency intends to sell existing investments and suspend reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Also, it will suspend the reinvestment of a government securities fund of the Federal Employees Retirement System Thrift Savings Plan.

    No federal retirees or employees will be affected, and the funds will be made whole once the impasse ends, Yellen said in the letter.

    “I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” she wrote.

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  • Opinion: The debt ceiling debate reveals how House Republicans are weaponizing the government | CNN

    Opinion: The debt ceiling debate reveals how House Republicans are weaponizing the government | CNN

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    Editor’s Note: Julian Zelizer, a CNN political analyst, is a professor of history and public affairs at Princeton University. He is the author and editor of 25 books, including the New York Times best-seller, “Myth America: Historians Take on the Biggest Lies and Legends About Our Past” (Basic Books). Follow him on Twitter @julianzelizer. The views expressed in this commentary are his own. View more opinion on CNN.



    CNN
     — 

    At the same time that House Republicans are setting up a committee to investigate the “weaponization” of government, they are weaponizing the government.

    Under the leadership of Speaker Kevin McCarthy, the GOP is warning President Biden that they will not vote to raise the debt ceiling when the US reaches its $31.4 trillion borrowing limit unless the administration agrees to draconian spending cuts.

    Never one to miss a good brawl, former President Donald Trump is urging his party to “play tough” on the issue to use it as leverage.

    If the crisis is not resolved and House Republicans don’t vote to raise the debt ceiling, the government won’t be able to borrow the money it needs to pay for spending that Congress has already approved. The US could be forced to default on its debt, ruining the credit rating that has made Treasury bills and notes one of the safest investments in the world. The government might have to delay paying benefits such as social security and salaries for federal workers.

    Delivering a stern warning last week, Treasury Secretary Janet Yellen stated that, “failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”

    Fearing that House Republicans are dead serious about deploying this budgetary missile – after all, the party is only a few years away from its concerted effort to overturn a presidential election – the US is expected to hit its ceiling as soon as Thursday, but the real crisis may not come until June. To keep things going, Treasury is investigating options such as shifting funds from one department to the other and temporarily stopping specific forms of federal investments.

    The fear running through Washington – and beyond – is that elected officials could prove unable to end the standoff, sending the country into default by this summer, creating global financial chaos and turmoil.

    The political battle that is unfolding is a result of Republicans becoming increasingly radicalized in what they are willing to do to achieve partisan power.

    The measure at the center of this dangerous game of chicken is not part of the Constitution. The federal debt ceiling was enacted by Congress in 1917 through the Second Liberty Bond Act, shortly before the US entered World War I, with the goal of granting the Department of Treasury increased flexibility in handling federal finances. Before, the department had to wait until Congress authorized more money every time that the government needed it.

    For decades, raising the federal debt limit remained a routine matter. Understanding that the government had to pay its bills, even when costs ballooned during times of war, Congress would pass the measure either on a temporary or permanent basis.

    To be sure, there were times when Congress came dangerously close to being too late, such as in April 1979 when the vote was not taken until the very last minute, although technical glitches resulted in about $120 million in debt payments being late.

    A few months later, the House adopted a rule – named after Rep. Richard Gephardt – which empowered the lower chamber to automatically raise the debt ceiling when they passed a budget resolution, tying the two issues together.

    In 1982, the federal debt ceiling was codified into law. The first time that the federal government was forced to take “extraordinary measures” to keep the money flowing was in September of 1985 when Democrats and Republicans could not reach agreement on a budget. Three months later, Congress permanently raised the debt limit to $2.1 billion.

    While there were votes taken against raising the debt ceiling between the 1980s and 2011, including by Democrats such as then-Senator Joe Biden in 2006, they were symbolic. Elected officials took this stand only after knowing that there were enough votes for passage. Expressing opposition to President George W. Bush’s spending on the war in Iraq was their goal—not grounding the economy to a halt.

    The truce against weaponizing this routine procedure ended in 2011. Tea Party Republicans, a radicalized version of Gingrich-era Republicans, were determined to vote against increasing the debt ceiling unless President Barack Obama agreed to massive spending cuts. The administration realized that the new generation of conservatives was not playing around. In this game of chicken, they resolved not to blink regardless of the fallout.

    In May 2011, the Department of Treasury undertook steps to keep paying for its obligations. A few days before funds were set to run out, the administration agreed to pay the ransom. The president signed the Budget Control Act of 2011 that would implement about $920 billion in spending cuts over 10 years and created a Joint Select Committee on Deficit Reduction to make recommendations for further cuts.

    The ratings agency S&P weren’t happy with how the negotiations had unfolded, downgrading the credit rating of the US. “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed.”

    Since that confrontation, the Department of Treasury has continued to grapple with this issue, including in 2013 and 2014. Frustrated with having to navigate through these treacherous political waters, Obama warned that “the issue here is whether or not America pays its bills. We are not a deadbeat nation. And so there’s a very simple solution to this: Congress authorizes us to pay our bills.”

    Now, President Biden might face his biggest challenge yet. The new Trumpian Republicans are determined to win their faceoff with the administration. Based on reports of how McCarthy won the speakership, the Californian was willing to make concessions to the most radical members about moving forward with this strategy and following it through until the end, if necessary.

    What makes this situation so tragic is that there is no reason for this crisis to happen. While vigorous debates about government spending are certainly a legitimate part of politics, forcing a situation that could create economic chaos after Congress has already reached deals over expenditures should not be a legitimate and normal part of politics.

    More than almost any other act, this embodies the willingness of the modern GOP to use virtually any procedure of democracy—from Supreme Court appointments to the budget to the Electoral College—as a partisan weapon. House Republicans seem to be making the bet that doing what is necessary to force spending reductions is worth the risk of the financial fallout.

    At some level, they must believe that should the crisis not be resolved, voters will blame the president and not them. But in the end the people who would suffer would be voters, living in states red and blue, who would face the consequences.

    If Speaker McCarthy wants to show that he is a serious political leader, he should form a coalition with the handful of moderate Republicans and Democrats to quickly enact an increase in the debt ceiling this measure regardless of what risk that might pose to his own future.

    All of this is more reason for Congress to consider serious long-term reform. If one of the two major parties is willing to normalize the weaponization of this process, it’s time to change the way that it works, to take away the weapon being used in partisan warfare.

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  • The debt ceiling drama, explained in 2 minutes | CNN Business

    The debt ceiling drama, explained in 2 minutes | CNN Business

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    • Watch: Bannon lawyer pleads with judge to be removed from fraud case
    • Club Q shooting suspect Anderson Aldrich appears in court, charged with 12 new counts

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  • US deficit widens by $85 billion in December | CNN Business

    US deficit widens by $85 billion in December | CNN Business

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    Minneapolis
    CNN
     — 

    The US government recorded a deficit of $85 billion in December, bringing the total deficit to nearly $1.42 trillion for the 2022 calendar year, the Treasury Department reported Thursday.

    The government, which runs on a fiscal year that starts in October, is running a deficit of $421.41 billion for its fiscal first quarter of 2023, a 12% increase from the fiscal first quarter of 2022, Treasury data shows.

    December’s deficit was nearly four times as large as the $21.3 billion deficit recorded in December 2021 as spending grew and revenue fell last month. Receipts totaled $454.94 billion, while outlays were $539.94 billion in December 2022.

    Budget watchdog the Committee for a Responsible Federal Budget said the $1.4 trillion calendar year total is “staggering, considering the worst of the pandemic and the accompanying recession have been over for a long while now.”

    “We should not be borrowing $4 billion a day, an apparent debt addiction that is harmful to the economy and the budget,” Maya MacGuineas, president of the CRFB, said in a statement.

    The House Republicans’ rules package adopted earlier this week included measures aimed at reining in federal government spending and keeping a lid on taxes.

    The measures, several of which raised concerns even among cost-conscious Republican lawmakers, are sure to lead to battles later this year with the Democratic-led Senate and President Joe Biden that could have severe consequences.

    If the two parties can’t work out an agreement to fund the government for fiscal year 2024, which starts October 1, it could result in a shutdown. And if a war over spending cuts prevents Congress from raising the $31 trillion debt limit this summer or fall, it would risk a default on US debt that would roil the national and global economies.

    –CNN’s Tami Luhby contributed to this report.

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  • GOP leaders and McCarthy holdouts defend deals as some Republicans complain they’re in the dark | CNN Politics

    GOP leaders and McCarthy holdouts defend deals as some Republicans complain they’re in the dark | CNN Politics

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    CNN
     — 

    House GOP leaders and key negotiators won’t commit to publicly releasing details about the side deals Kevin McCarthy cut in order to secure the speakership, undercutting the Republican pledge to run their chamber openly and transparently and as some rank-and-file members call for more information about the promises that were made.

    While some of the concessions were spelled out in the House rules package, which passed with support of all but one Republican on Monday night, other promises – such as adding more members of the hard-right House Freedom Caucus to committees and putting conditions on raising the national debt ceiling – were made through a handshake deal, leaving some lawmakers in the dark about the full extent of what McCarthy agreed to.

    “Operating in a vacuum doesn’t feel good,” one GOP member told CNN. “We’ve been loyal and it’s a slap in the face.”

    Rep. Nancy Mace, who represents a swing district from South Carolina, said, “It is essential” that members and the public hear from the GOP leadership about what those promises were, expressing frustration about learning about some of the promises through the press.

    “We know that there were certain members of that faction that were trying to get committee chairmanships or special committee assignments. We won’t know how that shakes out until (the House GOP Steering Committee) does its thing,” Mace told reporters, referring to the panel that sets committee assignments and will make those decisions in the coming days. “There’s still some questions that I think many of us have about what side deals may or may not have been made, what promises are made, what handshakes are made.”

    Further adding to the frustration and confusion, there was another document flying around K Street listing out all the alleged McCarthy concessions even as House GOP Whip Tom Emmer of Minnesota asserted that the document is not completely accurate.

    On Monday night, McCarthy didn’t say whether he planned to release more details of the deals when asked by CNN. On Tuesday, House Majority Leader Steve Scalise of Louisiana would not explicitly promise to divulge the information. And Texas Rep. Chip Roy – who spent hours negotiating the agreement with McCarthy – and helped bring along the votes to get him the speakership, told CNN that much of what has been revealed has been publicly reported, contending that “there is no official list.”

    “Everything in life is about – how do you come to terms and agree?” Roy said. “You look somebody in the eye and you shake their hands and you move forward, and that’s precisely what happened.”

    At a closed door meeting on Tuesday, GOP leaders walked members through a slide presentation, detailing some of their budget and spending priorities. According to a screenshot of the presentation, which was obtained by CNN, the spending agreement includes vague promises, such as “reforms” to the budget process and mandatory spending programs, which could potentially include Social Security and Medicare.

    Also, the other concessions include capping federal spending at fiscal 2022 levels, something defense hawks fear could slash Pentagon programs. Also, there’s a promise to reject “any negotiatons with the Senate” on government funding bills if they don’t meet the terms of the forthcoming House GOP budget resolution and don’t cut domestic spending. Those demands will almost certainly be a non-starter in the Democatic-led Senate, raising the prospects of a government shutdown in the fall or stop-gap measures to keep agencies funded.

    In one of the biggest concessions with major economic ramifications, the slide presentation said House Republicans “will not agree” to a raising the nation’s borrowing limit “without budget agreement or commensurate fiscal reforms.” That demand already has drawn sharp pushback from Senate Democrats and could prompt a huge fight with the White House with the prospect of a first-ever default looming sometime this year.

    In the Tuesday meeting, McCarthy walked members through the concessions that were included in the rules package, such as restoring the ability of any single member to call for a vote ousting the sitting speaker – a demand from the hard right and something that could threaten his speakership. But there are other deals, such as committee assignments for the holdouts and giving the hard right members more sway over the legislative process, that have yet to be publicly released. McCarthy has also agreed to hold votes on some of the Freedom Caucus’ legislative priorities, such as a border security bill, imposing term limits on members and a balanced budget amendment, according to lawmakers.

    Asked by CNN if the American people deserve to know the side-deals that were cut to secure the speakership for McCarthy, especially given the GOP’s claims of supporting transparent government, Scalise was non-committal.

    “The speaker talked about that today, and some of the things involved making sure that our committees are represented by a full swath of our membership,” Scalise said at a news conference. “It wasn’t any person was committed a committee.”

    The Louisiana Republican added that committee assignments have yet to be doled out, which are part of the agreement. “The committees have to produce bills that come out of committee that represent the full swath of our conference,” Scalise said. “And so that’s something the steering committee is going to take up, and those decisions haven’t been finalized yet.”

    But he still wouldn’t commit to releasing the information about McCarthy’s side deals after the committee assignments are set, which will happen over the next few weeks. Once the committees are populated, then the chairs get to pick their subcommittee chairs.

    McCarthy sought to quell some of the concerns of members, telling them during a closed-door conference meeting on Tuesday that there is no secret “three-page addendum” to the rules package, even as some lawmakers have said they have seen such a document, according to sources in the room.

    Roy insisted to reporters that all is on the up-and-up, pointing to a December proposal he and others released about their demands for more say in the legislative process. He was less clear on which of those proposals McCarthy has signed off on.

    “There’s no back room deals … there’s no three-page addendum … there’s no official list,” Roy said. “Do you ever write down notes? Do you ever sit down and talk through like, say, ‘Hey, what are we going to do to agree on spending?’”

    As McCarthy was laboring to get the votes last week and faced demands from 20 GOP holdouts, the negotiations happened behind closed doors and were spread out among multiple rooms, leaving some to wonder if it was done so by design as many have said they have not seen the full extent of the promises made.

    Roy defended their closed-door negotiations and said everything McCarthy agreed to has come out publicly, and he ticked off some of those items – including promises to vote on bills to impose congressional term limits, secure the border and balance the budget.

    “Of course you have to go sit down behind closed doors and not debate this stuff in front of the cameras,” Roy said. “There’s nothing, to the best of my knowledge, nothing that has been part of all that that isn’t very public – including, by the way, a commitment by the speaker to work with us about how the committees are represented.”

    Rep. Don Bacon, a moderate who represents a Biden-won district in Nebraska, said he has only been briefed verbally by one of the negotiators about the additional concessions, but said he feels comfortable with what he has heard.

    “They were at least verbally briefed to me,” Bacon said. “I feel comfortable with the rules that were presented.”

    Yet the rules package adopted by the House on Monday doesn’t include some of the other deals.

    Rep. Ralph Norman of South Carolina, another one of the McCarthy holdouts, defended the handling of the situation, arguing that some of the deals McCarthy cut weren’t included in the House rules package because they don’t pertain to the rules, which specifically operates how the House governs.

    He told CNN, “There’s no secret deal,” but acknowledged he does not know the full extent of promises the speaker made in order to secure the gavel.

    “All of this stuff is a moving target and there’s nothing,” he said. “There’s nothing clandestine about it.”

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  • Here’s how the House GOP majority will try to curb federal spending and taxes | CNN Politics

    Here’s how the House GOP majority will try to curb federal spending and taxes | CNN Politics

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    CNN
     — 

    In adopting their rules package Monday, the new House Republican majority has made it clear that they want to rein in federal government spending and keep a lid on taxes.

    The package, which governs how the chamber will operate for the next two years, lays out several measures aimed at making it harder to hike spending and to increase taxes to pay for it. Some of the provisions have been in effect previously when the GOP has controlled the House.

    The measures, several of which raised concerns even among cost-conscious Republican lawmakers, are sure to lead to battles later this year with the Democratic-led Senate and President Joe Biden that could have severe consequences for the nation.

    If the two parties can’t work out an agreement to fund the government for fiscal year 2024, which starts October 1, it could result in a shutdown. And if a war over spending cuts prevents Congress from raising the $31 trillion debt limit this summer or fall, it would risk a default on US debt that would roil the national and global economies.

    “I’m worried about the types of fiscal goals that they’re setting, that they’re not going to be achievable, and they’re setting themselves up for failure,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget. “I’m also worried that instead of both parties negotiating in good faith, we’ll be stuck in one of these dangerous standoffs.”

    The package swaps the pay-as-you-go rule for a cut-as-you-go requirement, as existed the last time the GOP ran the House.

    The former mandates that any new spending or tax cuts have to be paid for by spending cuts or tax increases elsewhere. But the latter requires only new spending be paid for, making it easier to cut taxes, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

    Another provision would restore the requirement that tax rate increases be approved by a 60% supermajority vote, making such efforts harder to pass and limiting lawmakers’ options to reduce the deficit or raise spending.

    Plus, the package makes it harder for House members to game the system by proposing legislation that would not raise spending in the first decade, the typical time frame Congress considers, but would in subsequent years. It does so by establishing a point of order, or an objection, against consideration of such a bill.

    What may prompt even more chaos on Capitol Hill are the side deals that House Speaker Kevin McCarthy made with conservative members of his party last week to secure their support for his leadership. The details of those agreements have yet to be made public, which has annoyed more than a few GOP lawmakers.

    McCarthy signed off on a pledge that the Republican-led House would pair any debt ceiling increase to spending cuts, which would add even more complexity to what’s expected to be difficult negotiations within the GOP and between the two parties.

    What’s more, McCarthy agreed to approve a fiscal year 2024 budget capping discretionary spending at fiscal year 2022 levels. That would require cutting all domestic discretionary spending by roughly 25% in inflation-adjusted dollars if defense funding is protected, Akabas said.

    Just how wed to these measures conservative Republicans are will determine the depth of the dysfunction in Congress this year. McCarthy’s slim majority in the House means he needs the support of nearly everyone in the party to pass any legislation.

    “It has yet to be seen whether these are immovable policy positions or policy preferences that are the starting point for negotiations,” Akabas said.

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  • Analysis: The speaker fight is over but the chaos is just beginning | CNN Politics

    Analysis: The speaker fight is over but the chaos is just beginning | CNN Politics

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    A version of this story appeared in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.



    CNN
     — 

    This is not the end of House Speaker Kevin McCarthy’s nightmare, rather just the beginning.

    Having won the coveted job, the California Republican has leveled up to a new series of challenges with higher stakes for all Americans, and less room for error for a man who needed 15 tries to get the gavel.

    Related: Read this profile from McCarthy’s hometown

    This week Republicans must try to coalesce around the concessions McCarthy made and pass a package of rules to govern the House for the next two years. It’s an open question whether the party’s moderates, such as they are, will all buy in to the cut, cut, cut mentality McCarthy has agreed to.

    Unlike the Senate, which has standing rules that carry over from year to year, the House adopts a new rules package for each Congress. This year, in particular, as they take over from Democratic control, Republicans want to make their mark in the rules package. The Rules Committee has posted a text and summary of the proposed rule changes.

    Some of the new elements include things that amount to framing – replacing “pay as you go” language for budget matters with “cut as you go.”

    Other elements could have more concrete consequences, like forcing specific votes to raise the debt ceiling and enacting spending cuts before the debt ceiling is raised. That debate will come to a head in the coming months as the government runs out of authority to add to the $31 trillion national debt.

    On Sunday, Republicans all said they would try to avoid cutting defense and Medicare spending, which leaves a relatively small portion of the federal budget – think the Environmental Protection Agency and other regulatory arms of the government – from which to carve out spending.

    The other way, besides spending cuts, for the government to cut down on deficit spending, is to raise taxes. The proposed rules reinstate a requirement that a House supermajority of 3/5, rather than a simple majority, sign off on any tax increases.

    If McCarthy fails to live up to these promises, the rules also allow for any member to force a vote on a “motion to vacate the chair” – ousting him from the speaker’s chair – at any time. It would only take a handful of Republicans, along with all Democrats, to oust him.

    This rules package effectively limits his ability to negotiate with the Democrats who run the rest of the federal government. McCarthy can marshal House Republicans to vote for steep spending cuts, but his greatest difficulty will be in finding legislation that can pass the House and not be immediately rejected by the Senate or vetoed by President Joe Biden.

    Just like with his quest to be speaker, McCarthy will rely only on Republicans to pass the rules package and he can only afford to lose four.

    Republican Rep. Tony Gonzales of Texas has already said he will oppose the rules package because he worries it will lead to cuts in defense spending.

    “How am I going to look at our allies in the eye and say, ‘I need you to increase your defense budget, but yet America is going to decrease ours,’” Gonzales said on CBS’ “Face the Nation” on Sunday.

    Another Republican, Rep. Nancy Mace of South Carolina, said on the same program that she likes a lot of the rules package, but she is “on the fence” about it because it was formulated behind closed doors with fringe Republicans.

    It’s an irony both that the rules package is perceived as being hashed out behind closed doors and that those who held out on supporting McCarthy argued they were achieving a path to a more open government.

    We don’t yet know all of the concessions McCarthy made to bring the ultra conservatives along. Rep. Chip Roy of Texas denied during an appearance on CNN’s “State of the Union” that he had been promised a position on the powerful Rules Committee, for instance. He said that would ultimately be up to the rest of the Republican conference.

    There was also some question about how McCarthy would enforce a pledge to cap spending for the 2024 fiscal year at 2022 spending levels.

    A main issue for Roy was that individual members should be able to offer amendments and get votes on spending bills on the House floor.

    Leaders from both parties have barred such amendments by the full House in order to pass bundled-up spending bills. They have relied on debate in the Appropriations and Authorization committees.

    Roy is among the critics who refer to Republican and Democratic leaders as the “uniparty” for this reason.

    “Too often bills are cooked up with handful of people, they’re brought through with the Rules Committee, jammed through, put on the floor and you have to vote yes or no,” Roy told CNN’s Jake Tapper on Sunday. “A little temporary conflict is necessary in this town.”

    He wants more of the openness and free form debate – the kind that Americans saw on the House floor during the speaker fight – to be present in spending discussions.

    “You say, ‘Well, are we going to have this kind of conflict going forward?’ I hope so,” Roy said.

    The idea that these debates are necessary was even being adopted by critics of the drawn-out speaker fight, like Republican Rep. Dan Crenshaw of Texas.

    “The more that you actually have everyone involved in it, the less likely it is that it gets blown up at the end,” Crenshaw told Tapper.

    But things will get increasingly difficult for McCarthy, and maybe the country, when he needs to negotiate with Senate Democrats and Biden – and also appease the fringe that does not mind a trip to the brink.

    Roy urged party leaders to work quickly and openly to find a path to raise the debt ceiling, rather than waiting until there’s a must-do-immediately moment.

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  • Chaos in Congress sends an ominous signal to Wall Street | CNN Business

    Chaos in Congress sends an ominous signal to Wall Street | CNN Business

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    New York
    CNN
     — 

    Many on Wall Street cheered last fall when the midterm elections ushered in a return of divided government in Washington.

    The old mantra is that gridlock is good because it means neither political party can mess things up.

    But the historic dysfunction playing out in Congress this week is a reminder that you should be careful what you wish for. While gridlock might be good for markets and the economy, complete paralysis is bad because, every so often, government needs to get stuff done.

    House Republicans’ inability to pick a speaker on the first ballot (or second or third) for the first time in a century raises an ominous question: If lawmakers can’t pick a speaker, how can they tackle truly thorny issues like raising the debt ceiling or responding to a potential recession?

    “We’re watching a slow-moving trainwreck collide with a dumpster fire,” Isaac Boltansky, director of policy research at BTIG, told CNN in a phone interview. “This is a clear indication we will have dysfunction for the entirety of this Congress, which heightens the risk around must-act deadlines such as the debt ceiling.”

    One New York Stock Exchange trader, a self-described conservative, told CNN on Tuesday the situation in the House is “disturbing” because it suggests lawmakers will struggle to get even more important things done.

    “This is a joke. The party can’t get its [stuff] together. It’s a disgrace,” said the trader, who requested anonymity to discuss the situation candidly.

    Even if Republicans eventually coalesce around Rep. Kevin McCarthy or a consensus candidate for speaker, the past few days have made plain to investors, economists and the public just how ungovernable the GOP majority in the House appears to be.

    “This is not gridlock so much as a rudderless ship without a captain,” Chris Krueger of Cowen Washington Research Group wrote in a note titled, “Burning down the House: Speaker vote opening act for 2 years of tail risk.”

    Krueger said the 4,000-page spending bill passed by Congress last month removed “a lot of the sharp objects” that could harm the economy.

    But lawmakers did not agree to tackle the debt ceiling, the borrowing limit that must be raised to avoid a calamitous US debt default.

    It’s not hard to imagine the ungovernable GOP majority clashing with Democrats and the White House this summer and fall over the debt ceiling — with the entire world economy hanging in the balance.

    Even before the House speaker stalemate, Goldman Sachs warned late last year that 2023 could bring the scariest debt ceiling fight since that infamous 2011 episode that cost America its perfect AAA credit score.

    In the past, brinksmanship over the debt ceiling eventually gave way to a compromise, though often not until significant pressure was applied by business leaders, financial markets — or both.

    It’s not clear how a debate over the debt ceiling will play out this time though, given the narrowly divided Congress and skepticism from Republicans about corporate America.

    “Our concern is that an increasingly populist GOP is less tied to big business influence, while a narrow majority amplifies their influence,” Benjamin Salisbury, director of research at Height Capital Markets, wrote in a note to clients on Wednesday.

    Of course, the “House of Cards”-style drama playing out in Congress is not the most pressing issue facing the economy and investors right now.

    The biggest questions concern whether the US economy is about to stumble into a recession (or a “slowcession,” if you ask Moody’s) and how long the Federal Reserve will keep up its fight against inflation.

    Later this week, on Friday, investors will be laser-focused not on McCarthy’s fate but on the monthly jobs report and what it says about efforts to cool down the labor market.

    Andrew Frankel, co-president of Stuart Frankel, dismissed the House speaker race as a “big, fat nothing-burger” for the market and said it was “just noise.”

    “It’s all about the Fed,” Frankel said.

    And yet the stalemate in the House underscores how hard it will be for lawmakers to aggressively respond to a potential recession or another crisis in the next two years.

    Although there are reasons to be cautiously optimistic about a soft landing, former Fed Chair Alan Greenspan warns a recession is still the most likely outcome.

    Greenspan, senior economic adviser at Advisors Capital Management, said in a discussion posted online that inflation will not cool enough to avoid “at least a mild recession” induced by the Fed.

    “We may have a brief period of calm on the inflation front, but I think it will be too little too late,” Greenspan said.

    If there is a recession, the chaos in Washington suggests the economy may not be able to count on a timely rescue from Congress this time around.

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  • Five political trends that could make 2023 a momentous year | CNN Politics

    Five political trends that could make 2023 a momentous year | CNN Politics

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    CNN
     — 

    Republicans’ take over of the House this week will usher in a two-year political era that threatens to bring governing showdowns and shutdowns as a GOP speaker and Democratic president try to wield power from opposite ends of Pennsylvania Avenue.

    The unprecedented possibility that former President Donald Trump, who’s already launched another bid for the White House, could face indictment could tear the nation further apart at a moment when American democracy remains under grave strain. The already stirring 2024 presidential campaign, meanwhile, will stir more political toxins as both parties sense the White House and control of Congress are up for grabs after the closely fought midterms.

    Abroad, the war in Ukraine brings the constant, alarming possibility of spillover into a NATO-Russia conflict and will test the willingness of American taxpayers to keep sending billions of dollars to sustain foreigners’ dreams of freedom. As he leads the West in this crisis, President Joe Biden faces ever more overt challenges from rising superpower China and alarming advances in the nuclear programs of Iran and North Korea.

    If 2022 was a tumultuous and dangerous year, 2023 could be just as fraught.

    Washington is bracing for a sharp shock. Since November, the big story has been about the red wave that didn’t arrive. But the reality of divided government will finally dawn this week. A House Republican majority, in which radical conservatives now have disproportionate influence, will take over one half of Capitol Hill. Republicans will fling investigations, obstruction and possible impeachments at the White House, designed to throttle Biden’s presidency and ruin his reelection hopes.

    Ironically, voters who disdained Trump-style circus politics and election denialism will get more of it since the smaller-than-expected GOP majority means acolytes of the ex-president, like expected House Judiciary Chairman Jim Jordan of Ohio and Rep. Marjorie Taylor Greene of Georgia, will have significant sway. The new Republican-run House represents, in effect, a return to power of Trumpism in a powerful corner of Washington. If House GOP leader Kevin McCarthy wins his desperate struggle against his party’s hardliners to secure the speakership, he’ll be at constant risk of walking the plank after making multiple concessions to extreme right-wingers.

    A weak speaker and a nihilistic pro-Trump faction in the wider GOP threaten to produce a series of spending showdowns with the White House – most dangerously over the need to raise the government’s borrowing authority by the middle of the year, which could throw the US into default if it’s not done.

    As Democrats head into the minority under a new generation of leaders, government shutdowns are more likely than bipartisanship. The GOP is vowing to investigate the business ties of the president’s son, Hunter Biden, and the crisis at the southern border. The GOP could suffer, however, if voters think they overreached – a factor Biden will use as he eyes a second term.

    In the Senate, Democrats are still celebrating the expansion of their tiny majority in the midterms. (After two years split at 50-50, the chamber is now 51-49 in their favor). Wasting no time in seeking to carve out a reputation among voters as a force for bipartisanship and effective governance, the president will travel to Kentucky this week. He’ll take part in an event also featuring Republicans, including Senate Minority Leader Mitch McConnell, to highlight the infrastructure package that passed with bipartisan support in 2021.

    Attorney General Merrick Garland could shortly face one of the most fateful decisions in modern politics: whether to indict Trump over his attempt to steal the 2020 election and over his hoarding of classified documents.

    A criminal prosecution of an ex-president and current presidential candidate by the administration that succeeded him would subject the country’s political and judicial institutions to more extreme strain than even Trump has yet managed. The ex-president has already claimed persecution over investigations he faces – and an early declaration of his 2024 campaign has given him the chance to frame them as politicized.

    If Trump were indicted, the uproar could be so corrosive that it’s fair to ask whether such an action would be truly in the national interest – assuming special counsel Jack Smith assembles a case that would have a reasonable chance of success in court.

    Yet if Trump did indeed break the law – and given the strength of the evidence of insurrection against him presented in the House January 6 committee’s criminal referrals – his case also creates an even more profound dilemma. A failure to prosecute him would set a precedent that puts ex-presidents above the law.

    “If a president can incite an insurrection and not be held accountable, then really there’s no limit to what a president can do or can’t do,” outgoing Illinois GOP Rep. Adam Kinzinger, a member of the select committee, said on CNN’s “State of the Union” Sunday.

    “If he’s not guilty of a crime, then I, frankly, fear for the future of his country because now every future president can say, ‘Hey, here’s the bar.’ And the bar is, do everything you can to stay in power.”

    Like it or not, with his November announcement, Trump has pitched America into the next presidential campaign. But unusual doubts cloud his future after seven years dominating the Republican Party. His limp campaign launch, bleating over his 2020 election loss and the poor track record of his hand-picked election-denying candidates in the midterms have dented Trump’s aura.

    Potential alternative figureheads for his populist, nationalist culture war politics, like Florida Gov. Ron DeSantis, are emerging who could test the ex-president’s bond with his adoring conservative base. Even as he fends off multiple investigations, Trump must urgently show he’s still the GOP top dog as more and more Republicans consider him a national liability.

    Biden is edging closer to giving Americans a new piece of history – a reelection campaign from a president who is over 80. His success in staving off a Republican landslide in the midterms has quelled some anxiety among Democrats about a possible reelection run. And Biden’s strongest card is that he’s already beaten Trump once. Still, he wouldn’t be able to play that card if Trump fades and another potential GOP nominee emerges. DeSantis, for example, is roughly half the current president’s age.

    As 2023 opens, a repeat White House duel between Trump and Biden – which polls show voters do not want – is the best bet. But shifting politics, the momentous events in the months to come and the vagaries of fate means there’s no guarantee this will be the case come the end of the year.

    Russia’s invasion of Ukraine last year showed how outside, global events can redefine a presidency. Biden’s leadership of the West against Moscow’s unprovoked aggression will be an impressive centerpiece of his legacy. But Russian President Vladimir Putin shows every sign of fighting on for years. Ukraine says it won’t stop until all his forces are driven out. So Biden’s capacity to stop the war from spilling over into a disastrous Russia-NATO clash will be constantly tested.

    And who knows how long US and European voters will stomach high energy prices and sending billions of taxpayer cash to arm Ukraine if Western economies dip into recession this year.

    Biden has his hands full elsewhere. An alarming airborne near miss between a Chinese jet and US military jet over the South China Sea over the holiday hints at how tensions in the region, especially over Taiwan, could trigger another superpower standoff. Biden also faces burgeoning nuclear crises with Iran and North Korea, which, along with Russia’s nuclear saber rattling, suggests the beginning of a dangerous new era of global conflict and risk.

    Rarely has an economy been so hard to judge. In 2022, 40-year-high inflation and tumbling stock markets coincided with historically low unemployment rates, which created an odd simultaneous sensation of economic anxiety and wellbeing. The key question for 2023 will be whether the Federal Reserve’s harsh interest rate medicine – designed to bring down the cost of living – can bring about a soft landing without triggering a recession that many analysts believe is on the way.

    Washington spending showdowns and potential government shutdowns could also pose new threats to growth. The economy will be outside any political leader’s capacity to control, but its state at the end of the year will play a vital role in an election that will define America, domestically and globally after 2024.

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  • Biden signs $1.7 trillion bill funding government operations

    Biden signs $1.7 trillion bill funding government operations

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    KINGSHILL, U.S. Virgin Islands (AP) — President Joe Biden on Thursday signed a $1.7 trillion spending bill that will keep the federal government operating through the end of the federal budget year in September 2023, and provide tens of billions of dollars in new aid to Ukraine for its fight against the Russian military.

    Biden had until late Friday to sign the bill to avoid a partial government shutdown.

    The Democratic-controlled House passed the bill 225-201, mostly along party lines, just before Christmas. The House vote came a day after the Senate, also led by Democrats, voted 68-29 to pass the bill with significantly more Republican support.

    Biden had said passage was proof that Republicans and Democrats can work together.

    Rep. Kevin McCarthy, the House Republican leader who hopes to become speaker when a new session Congress opens on Jan. 3, argued during floor debate that the bill spends too much and does too little to curb illegal immigration and the flow of fentanyl into the U.S. from Mexico.

    “This is a monstrosity that is one of the most shameful acts I’ve ever seen in this body,” McCarthy said of the legislation.

    McCarthy is appealing for support from staunch conservatives in the GOP caucus, who have largely blasted the bill for its size and scope. Republicans will have a narrow House majority come Jan. 3 and several conservative members have vowed not to vote for McCarthy to become speaker.

    The funding bill includes a roughly 6% increase in spending for domestic initiatives, to $772.5 billion. Spending on defense programs will increase by about 10%, to $858 billion.

    Passage was achieved hours before financing for federal agencies was set to expire. Lawmakers had approved two short-term spending measures to keep the government operating, and a third, funding the government through Dec. 30, passed last Friday. Biden signed it to ensure services would continue until Congress sent him the full-year measure, called an omnibus bill.

    The massive bill, which topped out at more than 4,000 pages, wraps together 12 appropriations bills, aid to Ukraine and disaster relief for communities recovering from natural disasters. It also contains scores of policy changes that lawmakers worked to include in the final major bill considered by that session of Congress.

    Lawmakers provided roughly $45 billion for Ukraine and NATO allies, more than even Biden had requested, an acknowledgment that future rounds of funding are not guaranteed when Republicans take control of the House next week following the party’s gains in the midterm elections.

    Though support for Ukraine aid has largely been bipartisan, some House Republicans have opposed the spending and argued that the money would be better spent on priorities in the United States.

    McCarthy has warned that Republicans will not write a “blank check” for Ukraine in the future.

    The bill also includes about $40 billion in emergency spending, mostly to help communities across the U.S. as they recover from drought, hurricanes and other natural disasters.

    The White House said it received the bill from Congress late Wednesday afternoon. It was delivered to Biden for his signature by White House staff on a regularly scheduled commercial flight.

    Biden signed the bill Thursday in the U.S. Virgin Islands, where he is spending time with his wife, Jill, and other family members on the island of St. Croix. The Bidens are staying at the home of friends Bill and Connie Neville, the White House said. Bill Neville owns US Viking, maker of ENPS, a news production software system that is sold by The Associated Press.

    Also in the bill are scores of policy changes that are largely unrelated to spending, but lawmakers worked furiously behind the scenes to get the added to the bill, which was the final piece of legislation that came out of that session of Congress. Otherwise, lawmakers sponsoring these changes would have had to start from scratch next year in a politically divided Congress in which Republicans will return to the majority in the House and Democrats will continue to control the Senate.

    One of the most notable examples was a historic revision to federal election law to prevent a future president or presidential candidate from trying to overturn an election.

    The bipartisan overhaul of the Electoral Count Act is a direct response to-then President Donald Trump’s efforts to persuade Republican lawmakers and then-Vice President Mike Pence to object to the certification of Biden’s victory on Jan. 6, 2021, the day of the Trump-inspired insurrection at the Capitol.

    Among the spending increases Democrats emphasized: a $500 increase in the maximum size of Pell grants for low-income college students, a $100 million increase in block grants to states for substance abuse prevention and treatment programs, a 22% increase in spending on veterans’ medical care and $3.7 billion in emergency relief to farmers and ranchers hit by natural disasters.

    The bill also provides roughly $15.3 billion for more than 7,200 projects that lawmakers sought for their home states and districts. Under revamped rules for community project funding, also referred to as earmarks, lawmakers must post their requests online and attest they have no financial interest in the projects. Still, many fiscal conservatives criticize the earmarking as leading to unnecessary spending.

    ___

    Associated Press writer Kevin Freking in Washington contributed to this report.

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  • Biden signs $1.7 trillion government spending bill into law | CNN Politics

    Biden signs $1.7 trillion government spending bill into law | CNN Politics

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    CNN
     — 

    President Joe Biden on Thursday signed a $1.7 trillion federal spending bill that includes a number of administration priorities and officially avoids a government shutdown, ending what he called a “year of historic progress.”

    “It’ll invest in medical research, safety, veteran health care, disaster recovery, (Violence Against Women Act) funding – and gets crucial assistance to Ukraine,” Biden wrote in a tweet.

    He added: “Looking forward to more in 2023.”

    Biden signed the bill while vacationing on St. Croix in the US Virgin Islands. The bill was flown to him for signing, the White House said.

    “The White House received the bill from Congress late afternoon on Wednesday. The bill was delivered to the President for his signature by White House staff on a regularly scheduled commercial flight,” a White House official told pool reporters.

    It’s at least the second time this year that an important bill has been flown to Biden for his signature. While on a trip to Asia in May, a bill authorizing about $40 billion in aid to Ukraine was carried by a staffer who was already scheduled to travel to the region. Biden signed the bill while overseas.

    The spending bill represents the final opportunity for Biden and Democrats to put their imprint on government spending before Republicans assume the majority in the House next week. It caps a remarkably productive two years legislatively for Biden, including a Covid-19 relief package, infrastructure bill and a China competitiveness measure.

    The legislation includes $772.5 billion for nondefense discretionary programs and $858 billion in defense funding, according to a bill summary from Democratic Sen. Patrick Leahy, chair of the Senate Committee on Appropriations. That represents an increase in spending in both areas for fiscal year 2023.

    The sweeping package includes roughly $45 billion in emergency assistance to Ukraine and NATO allies, an overhaul of the electoral vote-counting law, protections for pregnant workers, an enhancement to retirement savings rules and a ban on TikTok on federal devices.

    It also will provide a boost in spending for disaster aid, college access, child care, mental health and food assistance, more support for the military and veterans and additional funds for the US Capitol Police, according to Leahy’s summary and one from Sen. Richard Shelby of Alabama, the top Republican on the Senate Appropriations Committee. And the legislation contains several major Medicaid provisions, notably one that could disenroll up to 19 million people from the nation’s health insurance program for low-income Americans.

    However, the bill, which runs more than 4,000 pages, left out several measures that some lawmakers had fought to include. An expansion of the child tax credit, as well as multiple other corporate and individual tax breaks, did not make it into the final bill. Neither did legislation to allow cannabis companies to bank their cash reserves – known as the Safe Banking Act – or a bill to help Afghan evacuees in the US gain lawful permanent residency. And the spending package did not include a White House request for roughly $10 billion in additional funding for Covid-19 response.

    The spending bill, which will keep the government operating through September – the end of the fiscal year, is the product of lengthy negotiations between top congressional Democrats and Republicans.

    Congress originally passed a continuing resolution on September 30 to temporarily fund the government in fiscal year 2023, which began October 1.

    This story has been updated with additional details.

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  • House passes $1.7 trillion government spending bill as funding deadline looms | CNN Politics

    House passes $1.7 trillion government spending bill as funding deadline looms | CNN Politics

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    CNN
     — 

    The House voted Friday to pass a massive $1.7 trillion spending bill that would fund critical government operations across federal agencies and provide emergency aid for Ukraine and natural disaster relief. The bill will next go to President Joe Biden to be signed into law.

    Government funding is currently set to expire late Friday evening – and lawmakers raced the clock to clear the measure before the deadline. The Senate passed the legislation on Thursday along with a bill to extend the deadline by one week, to December 30, to provide enough time for the yearlong bill to be formally processed and sent to Biden. The House also approved the one-week extension and Biden signed it into law on Friday, ensuring there will not be a shutdown.

    The massive spending bill for fiscal year 2023, known on Capitol Hill as an omnibus, provides $772.5 billion for non-defense, domestic programs and $858 billion in defense funding. It includes roughly $45 billion in emergency assistance to Ukraine and NATO allies and roughly $40 billion to respond to natural disasters like hurricanes, wildfires and flooding.

    Other key provisions in the bill include an overhaul of the 1887 Electoral Count Act aimed at making it harder to overturn a certified presidential election – the first legislative response to the US Capitol insurrection and then-President Donald Trump’s relentless pressure campaign to stay in power despite his 2020 loss.

    Among other provisions, the spending bill also includes the Secure Act 2.0, a package aimed at making it easier to save for retirement, and a measure to ban TikTok from government devices.

    The legislative text of the package, which runs more than 4,000 pages, was released in the middle of the night – at around 1:30 a.m. ET on Tuesday – leaving little time for rank-and-file lawmakers, and the public, to review its contents before it came up for a vote in both chambers.

    House GOP leader Kevin McCarthy criticized $1.7 trillion dollar spending bill in a floor speech ahead of the House vote.

    “This is a monstrosity. It is one of the most shameful acts I have ever seen in this body,” the California Republican said. “The appropriations process has failed the American public, and there is no greater example of the nail in the coffin of the greatest failure of a one-party rule of the House, the Senate, and the presidency of this bill here.”

    House Speaker Nancy Pelosi later spoke in favor of the spending bill while noting that the moment would “probably be my last speech as speaker of the House on this floor, and I’m hoping to make it my shortest.”

    The California Democrat took issue with McCarthy’s floor comments, saying she was “sad to hear the minority leader earlier say this legislation is the most shameful thing to be seen on the House floor in this Congress.”

    “I can’t help but wonder, had he forgotten January 6?” she asked, a reference to the January 6, 2021, attack on the US Capitol.

    The giant government funding bill initially stalled in the Senate in the days following its release over a GOP amendment regarding the Trump-era immigration policy, Title 42, that could have sunk the entire $1.7 trillion legislation in the Democratic-controlled House.

    GOP Sen. Mike Lee of Utah insisted on getting a vote on his amendment to keep in place the immigration policy that allows migrants to be turned back at the border, which Republicans strongly support. Because Lee’s measure was expected to be set at a simple majority threshold, there was concern it would pass and be added to the government funding bill as several centrist Democrats back extending the policy – only for it to later be rejected in the House.

    But senators had a breakthrough in negotiations Thursday morning.

    Sens. Kyrsten Sinema of Arizona and Jon Tester of Montana wrote an amendment in an attempt to give moderates an alternative way to vote in support of extending Title 42, which the administration and most Democrats want to get rid of.

    As expected, both amendments did not pass. Lee’s amendment to extend the Trump-era immigration policy failed 47-50. The Democratic alternate version from Sinema-Tester went down 10-87.

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  • This is how your government works now | CNN Politics

    This is how your government works now | CNN Politics

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    CNN
     — 

    The annual dash to fund the government is starting to sound like a bad Christmas carol: 12 spending bills, $1.7 trillion, 4,000-plus pages, a single massive end-of-year vote and a lifeline for the lobster industry.

    This is the bizarre way your government works. Rather than pass spending bills in regular order or throughout the year, the leaders on Capitol Hill punt on the process until the last possible moment when it’s vote “yes” or shut down the government.

    Democrats are the ringleaders this year, but next year it will be Republicans in charge of the House and they’ll have to either make good on pledges never to do it this way again or we’ll find members of Congress and senators right back here again, aching to be home for the holidays rather than voting on things they should have done earlier in the year.

    The Senate passed the massive year-long funding bill Thursday and is waiting for the House to do the same before it can go to President Joe Biden’s desk. But, having been down this road before, senators also tried to buy a little extra time by also clearing on Thursday afternoon a bill to extend the government funding deadline by one week, to December 30. The House is expected to do the same on Friday before voting on the broader funding bill.

    House Republican leader Kevin McCarthy, however, could draw out the last-minute work with a lament on the House floor, known as a “magic minute,” which allows party leaders to speak as long as they want. The California Republican, who’s hoping to become speaker in the new year, has promised not to let government funding work this way.

    Recent memory is littered with such threats. President Donald Trump promised to veto any “omnibus” bill, endured a government shutdown and then ended up signing versions throughout the rest of his presidency.

    The Senate leaders are proud of the bill.

    “A lot of Sturm und Drang, a lot of ups and downs, but the end, a great result that really helped the American people,” said Senate Majority Leader Chuck Schumer.

    Senate Minority Leader Mitch McConnell, facing criticism from fellow Republicans about the process, argued he wouldn’t have done it this way.

    “But given the reality of where we stand today, senators have two options this week, just two,” the Kentucky Republican said on the Senate floor. “Give our armed forces the resources and certainty that they need or we will deny it to them.”

    McConnell focused on the defense spending, but there was so much more, including billions earmarked by lawmakers for projects in their home states and districts.

    The return of the earmarking progress, now called Community Project Funding, allows even those lawmakers who will vote against the omnibus to direct spending back home. Rep. Elise Stefanik of New York, for example, lists her requests for appropriations on her website. They include taxpayer money for a wastewater plant in Greenwich, a police station in Moriah, a childcare facility in Ogdensburg, among others. But she’s expected to join other House Republicans and oppose the final bill.

    The difficulty for lawmakers like Stefanik and McCarthy will come next year when they face calls among hardline Republicans to refuse raising the debt ceiling without steep federal spending cuts.

    Schumer said he will wait to negotiate with McCarthy on that topic until next year, but had this warning that the House GOP leader must listen to more moderate Republicans.

    “There is a large chunk of Republicans, perhaps a majority in the House and the Senate who are not MAGA,” Schumer, a New York Democrat, said. “And this election showed them – I’ve talked to them – that following MAGA is like Thelma and Louise, going over a cliff.”

    The omnibus was not just about spending and keeping the government’s lights on. Lawmakers also threw in some extra packages, mostly bipartisan efforts they didn’t have time to turn to during the year.

    This year those included:

    • Electoral Count Act – a bipartisan effort to avert Insurrection 2.0 and clarify that no, the vice president cannot simply reject election results
    • 401(k)s – much-needed updates to federal rules about retirement accounts
    • Tech – a ban on TikTok from federal government devices
    • Education – higher maximum Pell grant awards
    • Ukraine aid – an additional $45 billion, which will allow the Pentagon to back Ukraine for some time
    • Military and veterans – funding for a 4.6% pay raise for troops and a 22.4% increase in support for VA medical care
    • And that lifeline for the lobster industry.

    There’s a lot more. No human has read the entire thing, which GOP Sen. Rick Scott of Florida pointed out, is “three times the size of the Bible.”

    That doesn’t mean many of its parts, which were cobbled together from committees’ work throughout the year, haven’t been scrutinized.

    But for many reasons – lawmakers are frequently distracted by other matters like judicial nominations, for instance – these things get delayed until the last minute.

    But mostly, it seems like leaders have found it’s easier to ram something through when the vote is framed as must-pass and it’s the only thing standing between them and the holidays.

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  • Here’s what’s in the $1.7 trillion federal spending bill | CNN Politics

    Here’s what’s in the $1.7 trillion federal spending bill | CNN Politics

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    CNN
     — 

    Senate leaders unveiled a $1.7 trillion year-long federal government funding bill early Tuesday morning.

    The legislation includes $772.5 billion for non-defense discretionary programs and $858 billion in defense funding, according to a bill summary from Democratic Sen. Patrick Leahy, chair of the Senate Committee on Appropriations.

    The sweeping package includes roughly $45 billion in emergency assistance to Ukraine and NATO allies, boosts in spending for disaster aid, college access, child care, mental health and food assistance, more support for the military and veterans and additional funds for the US Capitol Police, according to Leahy’s summary and one from Sen. Richard Shelby of Alabama, the top Republican on the Senate Appropriations Committee.

    However, the bill, which runs more than 4,000 pages, left out several measures that some lawmakers had fought to include. An expansion of the child tax credit, as well as multiple other corporate and individual tax breaks, did not make it into the final bill. Neither did legislation to allow cannabis companies to bank their cash reserves – known as the Safe Banking Act. Also, there was also no final resolution on where the new FBI headquarters will be located.

    The spending bill is the product of lengthy negotiations between top congressional Democrats and Republicans. Lawmakers reached a “bipartisan, bicameral framework” last week following a dispute between the two parties over how much money should be spent on non-defense domestic priorities. They worked through the weekend to craft the legislation.

    The Senate is expected to vote first to approve the deal this week and then send it to the House for approval before government funding runs out on December 23. The bill would keep the government operating through September, the end of the fiscal year.

    Congress originally passed a continuing resolution on September 30 to temporarily fund the government in fiscal year 2023, which began October 1.

    More aid for Ukraine: The spending bill would provide roughly $45 billion to help support Ukraine’s efforts to defend itself against Russia’s attack.

    About $9 billion of the funding would go to Ukraine’s military to pay for a variety of things including training, weapons, logistics support and salaries. Nearly $12 billion would be used to replenish US stocks of equipment sent to Ukraine through presidential drawdown authority.

    Also, it would provide $13 billion for economic support to the Ukrainian government.

    Other funds would address humanitarian and infrastructure needs, as well as support European Command operations.

    Emergency disaster assistance: The bill would appropriate more than $38 billion in emergency funding to help Americans in the west and southeast affected by recent natural disasters, including tornadoes, hurricanes, flooding and wildfires. It would aid farmers, provide economic development assistance for communities, repair and reconstruct federal facilities and direct money to the Federal Emergency Management Agency’s Disaster Relief Fund, among other initiatives.

    Overhaul of the electoral vote counting law: A provision in the legislation aims at making it harder to overturn a certified presidential election, in a direct response to the January 6 attack on the US Capitol.

    The changes would overhaul the 1887 Electoral Count Act, which then-President Donald Trump tried to use to overturn the 2020 election.

    The legislation would clarify the vice president’s role while overseeing the certification of the electoral result to be completely ceremonial. It also would create a set of stipulations designed to make it harder for there to be any confusion over the accurate slate of electors from each state.

    Higher maximum Pell grant awards: The bill would increase the maximum Pell grant award by $500 to $7,395 for the coming school year. This would be the largest boost since the 2009-2010 school year. About 7 million students, many from lower-income families, receive Pell grants every year to help them afford college.

    Increased support for the military and veterans: The package would fund a 4.6% pay raise for troops and a 22.4% increase in support for Veteran Administration medical care, which provides health services for 7.3 million veterans.

    It would include nearly $53 billion to address higher inflation and $2.7 billion – a 25% increase – to support critical services and housing assistance for veterans and their families.

    The bill also would allocate $5 billion for the Cost of War Toxic Exposures Fund, which provides additional funding to implement the landmark PACT Act that expands eligibility for health care services and benefits to veterans with conditions related to toxic exposure during their service.

    Beefing up nutrition assistance: The legislation would establish a permanent nationwide Summer EBT program, starting in the summer of 2024, according to Share Our Strength, an anti-hunger advocacy group. It would provide families whose children are eligible for free or reduced-price school meal with a $40 grocery benefit per child per month, indexed to inflation.

    It would also change the rules governing summer meals programs in rural areas. Children would be able to take home or receive delivery of up to 10 days worth of meals, rather than have to consume the food at a specific site and time.

    The bill would also help families who have had their food stamp benefits stolen since October 1 through what’s known as “SNAP skimming.” It would provide them with retroactive federal reimbursement of the funds, which criminals steal by attaching devices to point-of-sale machines or PIN pads to get card numbers and other information from electronic benefits transfer cards.

    More money for child care: The legislation would provide $8 billion for the Child Care and Development Block Grant, a 30% increase in funding. The grant gives financial assistance to low-income families to afford child care.

    Also, Head Start would receive nearly $12 billion, an 8.6% boost. The program helps young children from low-income families prepare for school.

    Help to pay utility bills: The bill would provide $5 billion for the Low Income Home Energy Assistance Program. Combined with the $1 billion contained in the earlier continuing resolution, this would be the largest regular appropriation for the program, according to the National Energy Assistance Directors Association. Home heating and cooling costs – and the applications for federal aid in paying the bills – have soared this year.

    Enhance retirement savings: The bill contains new retirement rules that could make it easier for Americans to accumulate retirement savings – and less costly to withdraw them. Among other things, the provisions would allow penalty-free withdrawals for some emergency expenses, let employers offer matching retirement contributions for a worker’s student loan payments and increase how much older workers may save in employer retirement plans.

    More support for the environment: The package would provide an additional $576 million for the Environmental Protection Agency, bringing its funding up to $10.1 billion. It would increase support for enforcement and compliance, as well as clean air, water and toxic chemical programs, after years of flat funding.

    It also would boost funding for the National Park Service by 6.4%, restoring 500 of the 3,000 staff positions lost over the past decade. This would be intended to help the agency handle substantial increases in visitation.

    Plus, the legislation would provide an additional 14% in funding for wildland firefighting.

    Additional funding for the US Capitol Police: The bill would provide an additional $132 million for the Capitol Police for a total of nearly $735 million. It would allow the department to hire up to 137 sworn officers and 123 support and civilian personnel, bringing the force to a projected level of 2,126 sworn officers and 567 civilians.

    It would also give $2 million to provide off-campus security for lawmakers in response to evolving and growing threats.

    Investments in homelessness prevention and affordable housing: The legislation would provide $3.6 billion for homeless assistance grants, a 13% increase. It would serve more than 1 million people experiencing homelessness.

    The package also would funnel nearly $6.4 billion to the Community Development Block Grant formula program and related local economic and community development projects that benefit low- and moderate income areas and people, an increase of almost $1.6 billion.

    Plus, it would provide $1.5 billion for the HOME Investment Partnerships Program, which would lead to the construction of nearly 10,000 new rental and homebuyer units and maintain the record investment from the last fiscal year.

    Increased health care funding: The package would provide more money for National Institutes of Health, the Centers for Disease Control and Prevention and the Assistant Secretary for Preparedness and Response. The funds are intended to speed the development of new therapies, diagnostics and preventive measures, beef up public health activities and strengthen the nation’s biosecurity by accelerating development of medical countermeasures for pandemic threats and fortifying stockpiles and supply chains for drugs, masks and other supplies.

    More resources for children’s mental health and for substance abuse: The bill would provide more funds to increase access to mental health services for children and schools. It also would invest more money to address the opioid epidemic and substance use disorder.

    Tiktok ban from federal devices: The legislation would ban TikTok, the Chinese-owned short-form video app, from federal government devices.

    Some lawmakers have raised bipartisan concerns that China’s national security laws could force TikTok – or its parent, ByteDance – to hand over the personal data of its US users. Recently, a wave of states led by Republican governors have introduced state-level restrictions on the use of TikTok on government-owned devices.

    Enhanced child tax credit: A coalition of Democratic lawmakers and consumer advocates pushed hard to extend at least one provision of the enhanced child tax credit, which was in effect last year thanks to the Democrats’ $1.9 trillion American Rescue Plan. Their priority was to make the credit more refundable so more of the lowest-income families can qualify. Nearly 19 million kids won’t receive the full $2,000 benefit this year because their parents earn too little, according to a Tax Policy Center estimate.

    New cannabis banking rules: Lawmakers considered including a provision in the spending bill that would make it easier for licensed cannabis businesses to accept credit cards – but it was left out of the legislation. Known as the Safe Banking Act, which previously passed the House, the provision would prohibit federal regulators from taking punitive measures against banks for providing services to legitimate cannabis businesses.

    Even though 47 states have legalized some form of marijuana, cannabis remains illegal on the federal level. That means financial institutions providing banking services to cannabis businesses are subject to criminal prosecution – leaving many legal growers and sellers locked out of the banking system.

    FBI headquarters: There was also no final resolution on where the new FBI headquarters will be located, a major point of contention as lawmakers from Maryland – namely House Majority Leader Steny Hoyer – pushed to bring the law enforcement agency into their state. In a deal worked through by Senate Majority Leader Chuck Schumer, the General Services Administration would be required to conduct “separate and detailed consultations” with Maryland and Virginia representatives about potential sites in each of the states, according to a Senate Democratic aide.

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  • Congress moves to ban TikTok from US government devices

    Congress moves to ban TikTok from US government devices

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    WASHINGTON — TikTok would be banned from most U.S. government devices under a government spending bill Congress unveiled early Tuesday, the latest push by American lawmakers against the Chinese-owned social media app.

    The $1.7 trillion package includes requirements for the Biden administration to prohibit most uses of TikTok or any other app created by its owner, ByteDance Ltd. The requirements would apply to the executive branch — with exemptions for national security, law enforcement and research purposes — and don’t appear to cover Congress, where a handful of lawmakers maintain TikTok accounts.

    TikTok is consumed by two-thirds of American teens and has become the second-most popular domain in the world. But there’s long been bipartisan concern in Washington that Beijing would use legal and regulatory power to seize American user data or try to push pro-China narratives or misinformation.

    ByteDance did not immediately respond to a request for comment. It has previously noted that TikTok is incorporated in the U.S. and is bound by American laws.

    Speaking Friday, CIA Director William Burns said Beijing can “insist upon extracting the private data of a lot of TikTok users in this country and also to shape the content of what goes on to TikTok as well to suit the interests of the Chinese leadership.”

    “I think those are real challenges and a source of real concern,” Burns told PBS. He declined to take a position on congressional efforts to limit TikTok.

    House Speaker Nancy Pelosi, D-Calif., was pushing to include the TikTok provision in the big year-end bill, her office said. Sen. Josh Hawley, a Missouri Republican who authored a version of the TikTok bill that passed the Senate last week, called the government device ban “the first major strike against Big Tech enacted into law.”

    Rep. Raja Krishnamoorthi, D-Ill., has co-sponsored legislation to prohibit TikTok from operating in the U.S. altogether. He called the government device ban an appropriate initial step and said there was a “groundswell of support” for wider action.

    “We’re not just talking about Republicans and Democrats and independents,” said Krishnamoorthi, a member of the House Intelligence Committee. “We’re talking about parents who are concerned broadly about social media and TikTok in particular.”

    ———

    Associated Press writer Lisa Mascaro contributed to this report.

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  • Lawmakers announce ‘framework’ on bill to keep gov’t open

    Lawmakers announce ‘framework’ on bill to keep gov’t open

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    WASHINGTON — Lawmakers leading the negotiations on a bill to fund the federal government for the current fiscal year announced late Tuesday they’ve reached agreement on a “framework” that should allow them to complete work on the bill over the next week and avoid a government shutdown.

    Congress faces a midnight Friday deadline to pass a spending bill to prevent a partial government shutdown. The two chambers are expected to pass another short-term measure before then to keep the government running through Dec. 23, which will allow negotiators time to complete work on the full-year bill.

    “Now, the House and Senate Appropriations Committees will work around the clock to negotiate the details of final 2023 spending bills that can be supported by the House and Senate and receive President Biden’s signature,” said Rep. Rosa DeLauro of Connecticut, the Democratic chair of the House Appropriations Committee.

    Earlier in the day, Senate leaders said lawmakers from the two parties were nearing an agreement, but Republicans warned Democrats that lawmakers would need to complete their work by Dec. 22 or they would only support a short-term extension into early next year. That would give House Republicans more leverage over what’s in the legislation, since they will be in the majority then.

    “We intend to be on the road going home on the 23rd. We intend not to be back here between Christmas and New Year’s, and if we can’t meet that deadline, we would be happy to pass a short-term (resolution) into early next year,” said Sen. Mitch McConnell of Kentucky, the Republican leader in the Senate.

    McConnell voiced confidence Republicans would be able to meet their priorities of increasing spending on defense without “having to pay a bonus above what President Biden asked for” on non-defense priorities. He said Democrats were willing to accept that because they had previously passed two bills on a party-line basis that allow for more government spending on various domestic priorities.

    Sen. Richard Shelby, R-Ala., said last week that the two parties were about $25 billion apart in what is expected to be about a $1.65 trillion package, not including mandatory spending on programs such as Social Security and Medicare. However, Democrats in their statements did not indicate what topline spending number had been reached in the framework announced Tuesday.

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