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The outlines of a deal to raise the $31.4 trillion debt ceiling and avert a US government default for the first time in the country’s history are emerging after a weekend of talks between the White House and its political opponents.
People familiar with the matter said the gap between senior officials in Joe Biden’s administration and aides to Republican House Speaker Kevin McCarthy is closing.
An agreement to limit domestic spending will be at the heart of any deal. Republicans are calling for deep cuts to many government programs over 10 years, while the White House wants to see more modest restrictions over two years.
Biden has indicated he is open to applying the savings from unspent Covid-19 relief money to any agreement to help reduce the differences between the two sides. He also indicated his willingness to expedite permit procedures for large investment projects.
But the main differences remain. The White House has rejected Republican calls to repeal the clean energy tax credits that were part of the Inflation Reduction Act and to demand that the president’s student debt relief be rescinded.
Democrats also oppose the Republicans’ request for labor requirements that would be applied to anti-poverty programs and social safety nets in areas such as health care and nutrition.
The danger of running out of money in the United States and its inability to meet its financial obligations is increasing day by day.
The Congressional Budget Office warned Friday that there is a “significant risk” that the US government may not be able to pay its bills in the first two weeks of June if the debt ceiling is not raised. The CBO warning followed similar comments from Treasury Secretary Janet Yellen.
A person close to talks between the White House and McCarthy said any agreement is unlikely before Biden attends the G7 summit in Hiroshima this weekend.
Glenn Hubbard: Talks about raising the debt ceiling may get ugly, writes an economics and finance professor at Columbia University, but they don’t have to.
Here are the other things I’m watching today:
Argentina: The government in Buenos Aires will raise interest rates to 97 percent in a bid to stave off the country’s worst economic crisis in two decades.
The war in Ukraine: Rishi Sunak will promise to send more military equipment to Ukraine when he meets Volodymyr Zelensky near London. The Ukrainian president visited other European capitals over the weekend as he prepared to launch a counteroffensive against Russia.
monetary policy: Raphael Bostick, President of the Federal Reserve Bank of Atlanta, and Austan Goolsby, President of the Federal Reserve Bank of Chicago, both appeared on CNBC Business TV this morning.
Five other important stories
1. Turkish leader Recep Tayyip Erdogan and his rival Kemal Kilicdaroglu appear to be heading into an unprecedented second round of voting in the country’s presidential elections. With 99 percent of the votes counted, Erdogan secured 49.4 percent, just shy of the required majority, according to state media. Read more about the tight race to lead Türkiye.
2. The largest US cryptocurrency enforcement czar promises to crack down on illegal behavior on digital platforms, saying that the amount of crypto crime has grown “exponentially” in the past four years. Read more from the interview with Ms. Eun Young Choi of the Ministry of Justice.
3. Envision Healthcare filed for bankruptcy yesterday just five years after it took KKR private In a massive leveraged buyout, the doctors’ company was valued at $10 billion. Read more about the Tennessee-based company.
4. A deal was announced yesterday to create one of the largest oil and gas infrastructure companies in North America. Pipeline giant Oneok buys Magellan Midstream Partners for $18.8 billion, creating a $60 billion company and a 25,000-mile pipeline network stretching from North Dakota to Texas. Read more.
5. The European Union is under increasing pressure from Europe’s largest derivatives houses to radically rethink its plans to wrest the euro-denominated clearing from the City of London. Finance chiefs have warned of the serious risk to financial stability if the Brussels Scheme is adopted.
After more than a decade of bailouts and austerity measures that brought Greece back from the brink of bankruptcy and exit from the eurozone, the country has rebounded and is on the verge of restoring its investment grade rating. Read more about “Greece’s Greatest Transformation”.
We’re reading too. . .
planner of the day
According to the NASA Ozone Agency, the hole in Earth’s ozone layer has stopped growing and started closing in recent years. A United Nations panel says the ozone layer should return to pre-1980 levels by the middle of this century if current policies continue in place.
Take a break from the news
Before covid, clothes were meant for the office, home, or outings. Then the lockdowns happened and we were all plunged into The Great Slobification, writes Emma Jacobs. The world has reopened, but the division between work and weekend wardrobes is no longer for many, she writes.
Additional contributions from Gary Jones and Annie Jonas
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