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White House and Republican Party Close to Deal to Raise Debt Ceiling



Senior White House officials and Republican lawmakers on Thursday moved closer to an agreement that would raise the debt limit by two years and cap federal spending on everything but the military and veterans for the same period. Officials were keen to seal the agreement in time to avert a federal default that is forecast to be just a week away.

A deal in the form of a deal would allow Republicans to say they are cutting some federal spending—even as spending on military and veterans programs will continue to rise—and would allow Democrats to say they have spared most domestic programs significant cuts.

Negotiators from both sides talked until the evening and began work on the text of the law, although some details remained in the process of discussion.

“We’ve been talking to the White House all day, we’ve been going back and forth, and it’s not easy,” McCarthy told reporters as he left the Capitol on Thursday evening, refusing to divulge what was discussed. “It takes time for this to happen, and we are working hard to make it happen.”

The compromise, if it can be negotiated and put into action, would raise the government’s borrowing limit for two years after the 2024 election, according to three people familiar with him, who insisted on anonymity when discussing the plan, which was still in the pipeline.

The United States hit the legal limit, currently $31.4 trillion, in January and has been relying on accounting measures to avoid a default ever since. The Treasury Department predicts that its ability to pay bills on time will dry up as early as June 1st.

In exchange for lifting the debt cap, the deal would satisfy a Republican demand to cut some federal spending, albeit through accounting maneuvers that would give both sides political cover for an agreement that is likely to be unpopular with a large portion of their core constituencies.

It will impose caps on discretionary spending for two years, although those caps will apply to military spending differently from other non-defense discretionary spending. Military spending will rise next year, as will the cost of caring for some veterans who fall under discretionary non-defense spending. The rest of non-defense discretionary spending will fall slightly – or barely – from this year’s levels.

The deal will also reduce $10 billion of the $80 billion approved by Congress last year to crack down on high net worth and tax avoiding corporations by the Internal Revenue Service. due, although this provision is still under discussion. Democrats supported the initiative, but Republicans denounced it, falsely claiming that the money would be used to fund an army of auditors who would persecute workers.

“The president and his negotiating team are hard at work on his agenda, including funding for the IRS so it can improve customer service for taxpayers and crack down on rich tax fraud,” White House spokesman Michael Kikukawa said in an email Thursday. in response to a question about the situation.

Since the deal was struck on Thursday, the IRS money will essentially go to non-defense discretionary spending, allowing Democrats to avoid further cuts to programs like education and the environment, according to people familiar with the upcoming deal.

The plan was not yet finalized and the bidders continued to haggle over important details that could decide any deal.

“Nothing will be done until you actually get a complete deal,” said North Carolina Representative Patrick T. McHenry, one of the GOP’s top negotiators, who also declined to discuss the details of the talks. “Nothing has been decided.”

The cuts contained in the package were almost certainly too modest to win the votes of tough fiscal conservatives in the House of Representatives. Liberal groups were already complaining Thursday about the deal to cut the IRS funding increase.

But people familiar with the developing deal said the negotiators agreed to fund programs for the military and veterans at the level that President Biden calls for in his budget for next year. They will cut discretionary non-defense spending below this year’s level, but most of that cut will be covered by changes in IRS funding and other budgetary maneuvers. White House officials argue that these changes will functionally make non-defense discretionary spending next year the same as this year.

All discretionary spending will increase by 1 percent in 2025, after which the restrictions will be lifted.

Mr. McCarthy on Thursday agreed with the idea that a compromise aimed at preventing a default as early as June 1 is likely to generate ill will on both sides.

“I don’t think everyone will be happy at the end of the day,” he said. “That’s not how this system works.”

Another provision of the deal aims to prevent a government shutdown later this year, and will attempt to make it impossible for Republicans to seek deeper cuts to government programs and agencies through an appropriation process later this year.

The exact details of how such a measure would work remained unclear Thursday evening. But it was based on a sort of penalty that would adjust spending limits in case Congress fails to pass all 12 separate spending bills that fund the government by the end of the calendar year.

Negotiators continued to argue over operational requirements for social safety net programs and permitting reforms for domestic energy and gas projects.

“We have legislative and political work to do,” McHenry said. “The details of all these things are really important to us so that we can get through it.”

As the negotiators moved closer to an agreement, far-right Republicans on Thursday grew increasingly worried that Mr. McCarthy would sign a compromise they see as not being conservative enough. Several right-wing Republicans have already vowed to oppose any compromise that backs off the cuts that were part of their debt-limit bill.

“Republicans shouldn’t be doing a bad deal,” Chip Roy of Texas, a powerful conservative, tweeted on Thursday morning, shortly after telling a local radio station that he “will have to go and have some candid conversations with my colleagues. and the leadership team” because he didn’t like “the direction they were going.”

South Carolina Representative Ralph Norman said he refrained from deciding how he would vote on the compromise until he saw the bill, but added, “What I’ve seen now is not good.”

Former President Donald J. Trump, who said Republicans should default if they don’t get what they want from the talks, also spoke out. McCarthy told reporters that he spoke briefly with Trump about the talks: it only happened for a second,” the speaker said. “He talked about making sure you get a good deal.”

After teeing off at his golf course outside of Washington, Trump approached a New York Times reporter with an iPhone in hand and showed a phone conversation with Speaker Kevin McCarthy.

“It’s going to be interesting – it’s not going to be that easy,” Trump said, describing his call to the speaker as a “short talk.”

“They spent three years wasting money on nonsense,” he added. “Republicans don’t want to see this, so I understand where they left off.”

Luke Broadwater another Stephanie Lai provided a report from Washington. Alan Blinder report provided by Sterling, Virginia.


A US Treasury Department team is monitoring early warning signs of the economic situation as default looms.




Nearly five months before the US debt ceiling was forecast to hit, a small team at the Treasury Department began to warn senior officials of the early impact that is already being felt in the US financial system.

The cost of insuring US debt, as measured by the price of credit default swaps, has risen, a sign that investors have begun to view US bonds and other securities as increasingly risky.

This early warning – and follow-up warnings for the past month when swap prices have soared – comes from the Treasury Department’s Markets Division and its eponymous team of nine financial analysts who are responsible for monitoring and analyzing global financial markets to inform policy makers. faces of the Treasury Department and the White House.

As the US rapidly approaches a potential default date in early June, senior US officials are increasingly relying on the Markets Room to monitor for signs of disruption in financial markets.

“Just like a doctor wants to understand a patient’s vital signs when they think about how to treat them, the Treasury Department is always aware of the different ways the economy is healthy or unhealthy. Part of that is understanding the market,” Deputy Treasury Secretary Wally Adeyemo said in an interview with CNN.

“So we’re spending a lot of time with them to better understand what the costs are today, to make sure we’re able to share this information with Congress to prevent us from getting caught. where, for the first time in our history, we cannot pay off all of our obligations on time.”

This work begins each day before dawn, when employees take turns waking up around 3:30 AM ET to collect data on overnight market events and start calling contacts in the European and Asian markets.

At about 7 a.m. ET, these data and ideas hit the inboxes of top politicians in the White House and the Treasury Department.

At 9 a.m. ET, ahead of the opening of US markets, Treasury Secretary Janet Yellen and her senior leadership team met virtually with the Markets Department and other key Treasury Department aides for a briefing on the state of financial markets and issues to watch out for in this day.

“Nearly every American is affected by what is happening in the world and in global markets, either through your 401(k) form or through your attempt to borrow money for your small business or for your home. So, this group of people gives us a briefing every morning and an update on what’s going on around the world,” Adeyemo said.

In recent weeks, this daily briefing has been heavily focused on echoes of the debt-limit standoff, from updates to T-bills auctions to market reactions and commentary from market analysts and economists.

Most of the rest of the day is devoted to monitoring developments in the financial markets and sending in requests from top politicians in the Treasury and the White House to analyze these developments.

Finally, the Markets Room also helps policy makers analyze the most important developments in the financial markets with another widely read one-page note published after the US markets close and before the Asian markets open.

In addition to the Treasury Department, a White House spokesman said the division’s daily memos are a “valuable asset” to officials at the National Economic Council and the Council of Economic Advisers.

“These offices also rely on real-time Markets Room updates — either in memos or meetings — when more regular monitoring is needed,” the spokesperson said.

Officials say the Markets Room is focused on monitoring the global economic recovery from the pandemic-driven recession, lingering inflation and the trajectory of the global economy.

Albert Lee, director of the Markets Room, described the division as an early warning system for the global financial system for top US policymakers.

In the early days of the coronavirus pandemic, the team was one of the first to sound the alarm within the federal government about early turmoil in the pockets of the financial system and forecasting rate cuts by the Federal Reserve.

The team also played a pivotal role during the banking crisis earlier this year, tracking a stock sell-off and deposit run-off at Silicon Valley Bank that ultimately triggered the bank’s collapse.

As the Treasury Department took action to address the second-biggest banking failure in US history and prevent any spillovers in the banking sector, senior Treasury Department officials reached out to the Markets Room team to monitor feedback on their policy actions.

“It was critical for us to understand how the markets would interpret the actions we took that made it clear to the American people that your deposits are safe,” Adeyemo said. “We have been monitoring for signs of distress in the banking sector.”

With a week before the government is potentially no longer able to pay its bills, the US stock market is just beginning to show signs of concern over a potential default, and Treasury officials say the team is focused on monitoring further reaction from the stock market, as well as the Treasury securities market.

The stock market has been relatively subdued so far, especially compared to the 17% drop in the S&P 500 during the 2011 debt ceiling crisis. But Treasury officials say the volatility in the stock market is already affecting the federal government, driving up borrowing costs.

Yields on short-term Treasury securities have risen sharply, with recent securities auctions leaving a higher price tag for the federal government, which Adeyemo said recently incurred an additional $80 million in spending on a recent Treasury bill auction.

“So, the cost of borrowing has already become more expensive when it comes to short-term loans to the US government,” Adeyemo said. “So as the debt cap crisis continues and government spending rises, it also means that spending will rise for the American people as well.”

Adeyemo declined to disclose what contingencies are being prepared for a US default. But when the US faced a similar debt standoff in 2011, Federal Reserve and Treasury officials quietly prepared a plan to prioritize US debt payments and defer other government bills and obligations, such as Social Security and veterans’ payments. Transcripts of a central bank meeting published in 2017.

“The most important thing for the American people, for our country, for our trust, not only in our creditors, but in the American people, is to pay all our bills on time. This is what our system is designed for,” Adeyemo said. “I have spent a good part of a decade working here at the Treasury Department. What I can tell you is that there is no plan that will allow us to meet all of our obligations, except for Congress by raising the debt limit.”

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Texas Attorney General Ken Paxton Recommended by House Committee for Impeachment



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A committee of the Texas House of Representatives voted unanimously in favor of a recommendation to impeach state attorney general Ken Paxton and remove him from office. This is reported by Lily Zheng from KXAS.

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Failed Launch: The DeSantis Fiasco



In the early days of the Internet, to be exact, in 1993, New Yorker ran cartoon it will become one of the most popular. In it, a dog in front of a computer screen says to his canine companion, “On the Internet, nobody knows you’re a dog.” This is a spoof of a growing number of nobodies who have been trolling and laughing and sometimes acting nasty, even threatening, without using their real names or any identifying information. Dogs, in fact, would generally behave better.

No one on Twitter knows that you’re only five foot nine or that you’re wearing heels. They don’t understand why mean people can call you “Meatball Ron” or “Little Dee”. Nobody knows that you don’t seem to like people and have a hard time with the usual hospitality of politics. You don’t have to answer questions from the hateful media. That’s why the highly uncharismatic Florida Gov. Ron DeSantis decided to officially launch his 2024 presidential campaign in a conversation with Elon Musk on Twitter Spaces. It seemed like a safe space.

This is wrong. For nearly half an hour, “cosmos” announced “Preparing for launch…” which could have been another slogan for an already troubled DeSantis campaign. This gave Twitter users enough time to post GIFs of Musk’s latest SpaceX rocket going up in flames. President Joe Biden had a good laugh at this tweet:

Wags predicted that DeSantis’ conversation with Musk could come across as abrupt and unpredictable. Well, it was. But perhaps the fiasco should have been predictable, because Musk wiped out the workforce at the company he bought last year, and now no one knows how to work the damn thing.

For almost half an hour, we heard moderator David Sacks, Musk and DeSantis’ sharpie, insist that “there are a huge number of people online, so the servers are somewhat loaded.” Why wasn’t Musk prepared for “massive crowds” to gather to hear the candidate he backed on the platform he’s so proud of? At some point, the event abruptly ended. Luckily, I guess enough of the audience gave up, so the event started again – sort of.

When DeSantis was finally able to speak, he rushed to make a formal “announcement”, criticized Joe Biden for his “wake up” policies, and claimed that black leaders under other Florida administrations were there because of “identity politics.” He also touted his lame response to the Covid pandemic, which is expected to be one of his main avenues of attack on Trump (since the former president briefly backed the shutdown and urged Americans to get a vaccine). When Musk asked him about confirmed reports of book bans in Florida, the defensive governor sang the song. “There wasn’t a single banned book in Florida.” As Judd Legham quickly retorted on Twitter, “Hundreds of books are banned from Florida schools and hundreds of thousands are unavailable to students pending review.”

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