Tax Deal Open Thread Theater
First blush, I would like to take McCarthy to the west side of Chicago on Madison Ave just west of where the Northwest Highway joins the Dan Ryan. Let him explain there why the people around there are expendable. I know the area well enough so as to keep out of it.
This is a sellout.
WASHINGTON, May 27 (Reuters) – U.S. President Joe Biden and top congressional Republican Kevin McCarthy reached a tentative debt deal to suspend the federal government’s $31.4 trillion debt ceiling on Saturday evening, ending a months-long stalemate.
However, the deal was announced without any celebration, in terms that reflected the bitter tenor of the negotiations and the difficult path it has to pass through Congress before the United States runs out of money to pay its debts in early June.
“I just got off the phone with the president a bit ago. After he wasted time and refused to negotiate for months, we’ve come to an agreement in principle that is worthy of the American people,” McCarthy tweeted.
Biden called the deal “an important step forward” in a statement, saying:
“The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.”
The deal would suspend the debt limit through January of 2025, while capping spending in the 2024 and 2025 budgets, claw back unused COVID funds, speed up the permitting process for some energy projects and includes some extra work requirements for food aid programs for poor Americans.
After months of back-and-forth, the tentative agreement came together in a flurry of calls. Biden and McCarthy held a 90-minute phone call earlier on Saturday evening to discuss the deal, McCarthy briefed his members later in the evening, and the White House and the House leader spoke afterward.
“We still have more work to do tonight to finish the writing of it.”
McCarthy told reporters on Capitol Hill. McCarthy said he expects to finish writing the bill on Sunday, then speak to Biden and have a vote on the deal on Wednesday.
Biden and McCarthy have to carefully thread the needle in finding a compromise that can clear the House, with a 222-213 Republican majority, and Senate, with a 51-49 Democratic majority — meaning it will need bipartisan support before the president can sign it.
Negotiators have agreed to cap non-defense discretionary spending at 2023 levels for one year and increase it by 1% in 2025, a source familiar with the deal said.
“It has historic reductions in spending, consequential reforms that will lift people out of poverty into the workforce, rein in government overreach – there are no new taxes, no new government programs,” McCarthy said.
The deal will avert an economically destabilizing default, so long as it succeeds in passing it through the narrowly divided Congress before the Treasury Department runs short of money to cover all its obligations, which it warned on Friday will occur if the debt ceiling issue was not resolved by June 5.
Republicans who control the House of Representatives have pushed for steep cuts to spending and other conditions, and were sharply critical of the deal as early details were reported.
Republican Representative Bob Good, a member of the conservative House Freedom Caucus, tweeted that he was hearing the deal would raise the debt by $4 trillion, and added “IF that is true, I don’t need to hear anything else. No one claiming to be a conservative could justify a YES vote.”
North Carolina’s Dan Bishop described the deal earlier Saturday as “utter capitulation in progress. By the side holding the cards.”
One high-ranking member of the House Freedom Caucus said they were in the process of gauging member sentiment, and unsure what the vote numbers might be.
TAXES VS. SPENDING CUTS
Republicans say they want to cut spending to slow the growth of the U.S. debt, which is now roughly equal to the annual output of the country’s economy. Biden and Democrats have pushed to increase taxes on the wealthy and companies to shrink the debt while increasing spending on programs like free community college.
The long standoff on raising the debt ceiling spooked financial markets, weighing on stocks and forcing the United States to pay record-high interest rates in some bond sales. A default would take a far heavier toll, economists say, likely pushing the nation into recession, shaking the world economy and leading to a spike in unemployment.
Biden for months refused to negotiate with McCarthy over future spending cuts, demanding that lawmakers first pass a “clean” debt-ceiling increase free of other conditions, and present a 2024 budget proposal to counter his budget issued in March.
Two-way negotiations between Biden and McCarthy began in earnest on May 16.
The work to raise the debt ceiling is far from done. McCarthy has vowed to give House members 72 hours to read the legislation before bringing it to the floor for a vote.
That will test whether enough moderate members support the compromises in the bill to overcome opposition from both hard-right Republicans and progressive Democrats to reach a simple majority vote.
Then it will need to pass the Senate, where it will need at least nine Republican votes to succeed. There are numerous opportunities in each chamber along the way to slow down the process.
My second blush holds with my first: Uncle Joe gave the repubescents a way to talk themselves out of the corner they had talked themselves into
Mighty generous of him, more than I would have done. Give ’em rope
I do like your idea. I’d like to take him out on The Rez
My vote for Kamala stands …
White House and GOP Strike Debt Limit Deal to Avert Default
NY Times – May 27
With the government on track to reach its borrowing limit within days, negotiators sealed an agreement to raise the debt ceiling for two years while cutting and capping certain federal programs.
President Biden and Speaker Kevin McCarthy on Saturday reached an agreement in principle to lift the debt limit for two years while cutting and capping some government spending over the same period, a breakthrough after a marathon set of crisis talks that has brought the nation within days of its first default in history.
Congressional passage of the plan before June 5, when the Treasury is projected to exhaust its ability to pay its obligations, is not assured, particularly in the House, which plans to consider it on Wednesday. Republicans hold a narrow majority in the chamber, and right-wing lawmakers who had demanded significantly larger budget cuts in exchange for lifting the borrowing limit were already in revolt.
But the compromise, which would effectively freeze federal spending that had been on track to grow, had the blessing of both the Democratic president and the Republican speaker, raising hopes that it could break the fiscal stalemate that has gripped Washington and the nation for weeks, threatening an economic crisis.
Mr. Biden urged the House and Senate to pass the agreement in a late-night statement issued by the White House, saying it would prevent a catastrophic default.
“It is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone,” Mr. Biden said. “And the agreement protects my and congressional Democrats’ key priorities and legislative accomplishments. The agreement represents a compromise, which means not everyone gets what they want.”
The president and Mr. McCarthy spoke by phone on Saturday evening to resolve final sticking points. …
In a nighttime news conference outside his Capitol office that lasted just one minute, Mr. McCarthy said the deal contained “historic reductions in spending, consequential reforms that will lift people out of poverty into the work force, rein in government overreach” and would add no new taxes. He declined to answer questions or provide specifics, but said he planned to release legislative text on Sunday.
“We still have more work to do tonight to finish all the writing of it,” he said.
The plan was structured with the aim of enticing votes from both parties, though it has drawn the ire not only of conservative Republicans but also Democrats furious at being asked to vote for cuts they oppose with the threat of default looming.
Still, it gives Republicans the ability to say that they succeeded in reducing some federal spending — even as funding for the military and veterans’ programs would continue to grow — while allowing Democrats to say they spared most domestic programs from significant cuts.
The deal would suspend the borrowing limit, which is currently $31.4 trillion, for two years — enough to get past the next presidential election.
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According to a person familiar with the agreement, it also would impose new work requirements for some recipients of government aid, including food stamps and the Temporary Assistance for Needy Families program. It would place new limits on how long certain recipients of food stamps — people under the age of 54, who do not have children — could benefit from the program. But it also would expand food stamp access for veterans and the homeless, said the person, who spoke on condition of anonymity because they were not authorized to discuss details of the package.
The tentative deal also claws back some unspent money from a previous pandemic relief bill, and reduces by $10 billion — to $70 billion from $80 billion — new enforcement funding for the I.R.S. to crack down on tax cheats. It includes measures meant to speed environmental reviews of certain energy projects and a provision meant to force the president to find budget savings to offset the costs of a unilateral action, like forgiving student loans — though administration officials could circumvent that requirement. It also includes an enforcement measure that is meant to avert a government shutdown later this year.
The work requirements and the environmental review reforms were among the last details the two sides worked out on Saturday. …
… To avert a default, the House and the Senate must pass the deal and send it to Mr. Biden for his signature. That promises to be a heavy lift for both Mr. McCarthy and Representative Hakeem Jeffries of New York, the Democratic leader, who must now cobble together a coalition of House Republicans and Democrats to push it through.
Mr. McCarthy has repeatedly said he believes a majority of his conference would vote for the deal, but it is not clear yet how many Republicans will back the compromise — and how many Democrats might be needed to vote for it to make up for G.O.P. defections.
The path also is likely to be rocky in the Senate, where quick action requires bipartisan support and conservatives have signaled they are unwilling to go along.
In a sign of their displeasure, House Freedom Caucus members were huddling to identify procedural tools to delay passage of the agreement or make the bill more conservative.
Republicans have refused for months to raise the debt limit unless Mr. Biden agreed to spending cuts and reduce future debt — risking a default to wield their leverage. The final agreement accomplishes their goal, but only modestly. A New York Times analysis of the spending caps at the center of the agreement suggests they will reduce federal spending by about $650 billion over a decade, if spending grows at the expected rate of inflation after the caps lift in two years.
The cuts in the package are almost certainly both too modest to win the votes of hard-line conservatives and too stringent to win the votes of progressives in the House. Lawmakers in the House Freedom Caucus were privately pillorying the deal on Saturday night, and the Congressional Progressive Caucus had already begun to fume about it even before negotiators finalized the agreement. …
Biden, GOP reach debt-ceiling deal, now Congress must approve it to prevent calamitous default
AP via Boston Globe – May 28
President Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling, but now Congress must rush to approve the spending cuts package in a matter of days to avert a potentially disastrous US default.
The agreement risks angering both Democratic and Republican sides as lawmakers Sunday begin to unpack the the concessions made to compromise. Negotiators agreed to some Republican demands for increased work requirements for recipients of food stamps that had sparked an uproar from House Democrats as a nonstarter. But they stopped short of greater spending cuts overall that Republicans wanted.
Support from both parties will be needed to win congressional approval before a projected June 5 government default on US debts.
The Democratic president and Republican speaker reached the agreement after the two spoke Saturday evening by phone. The country and the world have been watching and waiting for a resolution to a political standoff that threatened the US and global economies.
“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.
Biden called the agreement “good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
McCarthy in brief remarks at the Capitol said that “we still have a lot of work to do.”
But the Republican speaker said: “I believe this is an agreement in principle that’s worthy of the American people.”
With the outlines of a deal in place, the legislative package could be drafted and shared with lawmakers in time for House votes as soon as Wednesday, and later next week in the Senate.
Central to the package is a two-year budget deal that would hold spending flat for 2024 and increase it by 1% for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.
Driving hard for a deal to impose tougher work requirements on government aid recipients, Republicans achieved some but not all of what they wanted. The agreement would raise the age for existing work requirements on able-bodied adults without children from 49 to 54, but Biden was able to secure waivers for veterans and the homeless.
The two sides had also reached for an ambitious overhaul of federal permitting to ease development of energy projects. Instead, the agreement would put in place changes in the landmark 1970s’ National Environmental Policy Act that will designate “a single lead agency” to develop environmental reviews, in hopes of streamlining the process. …
The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time. Lifting he nation’s debt limit, now at $31 trillion, allows more borrowing to pay the nation’s already incurred bills.
Biden also spoke earlier in the day with Democratic leaders in Congress to discuss the status of the talks. White House officials will brief House Democrats on a Sunday video call.
McCarthy commands only a slim Republican majority in the House, powered by hard-right conservatives who may resist any deal as insufficient as they try to slash spending. But compromising with Democrats for votes, he risks losing support from his own rank-and-file, setting up a career-challenging moment for the new speaker. …
I expect Speaker McCarthy mostly stays away from urban areas.
Unfortunately, if McCarthy obtains cross-over votes from Dems (especially Progressive ones), that is only going to enrage the ‘Freedom Caucus’.
That could lead to dire consequences, which would create an opportunity for the Progressive Dems to come to McCarthy’s aid by re-electing him Speaker.
Desperate times call for desperate measures.
The House Progressive bloc is three times the size of the GOP ‘Freedom Caucus’, but the GOP group has a lot of ‘influence’ with the remaining GOP members, and also with GOP senators. This is not the case, apparently, with the Dem progressives in the House. It would seem that among Dems, those who are Progressive are not as ‘persuasive’ as their GOP counterparts.
House Progressive Dems would not stand for Dems crossing over to keep Kevin McCarthy in office. That would just be ‘too desperate’.
They wouldn’t be doing it to help Kevin McCarthy; it would be to help Biden. He is the most at risk for being blamed should there be an economic meltdown. It’s not fair; it’s just true.
IMO, if any (centrist) House Dems were to vote for McCarthy, Dem Progressives would be most distraught.
They might be distraught but they’d still have nowhere to go.
Run, I’m not sure why you think observing the people hurt by the deal would impress Kevin McCarthy in the least.
“the House Freedom Caucus said they were in the process of gauging member sentiment,”
gauging? …that must be spellcheck for gagging.
as in “gag me with a spoon.”
With Debt Limit Deal in Hand, McCarthy (and Biden) Turn to Task of Selling It
NY Times – just in
A day after striking a deal in principle with President Biden to raise the debt limit, Speaker Kevin McCarthy and his leadership team began an all-out sales pitch on Sunday to rally Republicans behind a compromise that was drawing intense resistance from the hard right.
To get the legislation through a fractious and closely divided Congress, Mr. McCarthy and top Democratic leaders must cobble together a coalition of Republicans and Democrats in the House and the Senate willing to back it. Members of the ultraconservative House Freedom Caucus have already declared war on the plan, which they say fails to impose meaningful spending cuts, and warned that they would seek to block it.
So after spending late nights and early mornings in recent days in feverish negotiations to strike the deal, proponents have turned their energies to ensuring it can pass in time to avert a default now projected on June 5.
“This is the most conservative spending package in my service in Congress, and this is my 10th term,” Representative Patrick T. McHenry, Republican of North Carolina and a lead member of Mr. McCarthy’s negotiating team, said at a news conference on Capitol Hill on Sunday morning.
House Republicans circulated a one-page memo with 10 talking points about the conservative benefits of the deal, which was still being finalized and written into legislative text on Sunday, hours before it was expected to be released. The G.O.P. memo asserted that the plan would cap government spending at 1 percent annually for six years — though the measure is only binding for two years — and noted that it would impose stricter work requirements for Americans receiving government benefits, cut $400 million from the Centers for Disease Control and Prevention for global health funding and eliminate funding for hiring new I.R.S. agents in 2023.
“It doesn’t get everything everybody wanted,” Mr. McCarthy told reporters on Capitol Hill. “But, in divided government, that’s where we end up. I think it’s a very positive bill.”
Mr. Biden told reporters that he was confident the deal would reach his desk and that he spoke with Mr. McCarthy on Sunday afternoon “to make sure all the T’s are crossed and the I’s are dotted.” …
… Mr. McCarthy argued that Republican critics were a small faction.
“More than 95 percent of all those in the conference were very excited,” Mr. McCarthy, who briefed Republicans about the deal on Saturday night, said on Fox. “Think about this: We finally were able to cut spending. We’re the first Congress to vote for cutting spending year over year.”
The deal would essentially freeze federal spending that had been on track to grow, excluding military and veterans programs.
Representative Dusty Johnson, Republican of South Dakota and an ally of Mr. McCarthy’s, said that House Republicans would overwhelmingly support the debt deal. He played down the right-wing revolt, claiming that leaders never expected certain House Freedom Caucus members to vote for it. …
Thinking along the lines that Democrats in the House who support this are supporting McCarthy is understandable, but they’ll be supporting Biden and Jeffries just as much and seems more reasonable to examine these votes in the context of each Rep’s own party. If you believe the past month of commentary that default would be a catastrophe (which I do believe), avoiding it at this pretty modest cost is a smart move, even for folks west of the Dan Ryan. Maybe especially for individuals with higher claims on federal discretionary spending.
Of course, I fully agree.
I am disposed to agree but don’t want to buy in to whatever “therefore” you might have in mind.
A little less growth is a good thing. And so might be “the loss of a few jobs” if those who lose jobs are made “almost whole” by, perhaps, shorter work weeks to give them a chance to discover the pleasures of time over money.
I think it’s funny that there is a hysterical meme among the political-economist complex about the shortage of workers in the future maing social security unsustainable, while we can’t find jobs for the workers we have. I imagine fewer workers will still be able to produce enough for as much wealth as anybody…everybody…needs and reduce the unemployment rate at the same time while discovering the joys of more time over more money.
the other costs of the corrupt bargain can easily be absorbed by intelligent administration of the crazy-right’s austerity demands.
ah, intelligent administration…there’s the rub.
The tas deal comment above appeared in
29 may 23
Biden Hands Manchin Huge Win on Environmentally Disastrous Pipeline
Josh Siegel/POLITICO
copied from reader supported news (RSN) May 29.
sorry abut the empty spaces. copy and paste does not work well from some sources.
apparently the copied material on the tax deal cited above @ 1:15 pm actually appears below in my comment @ 1:11 pm.
Why Spending Cuts Likely Won’t Shake the Economy
NY Times – May 29
… The debt deal that President Biden and Speaker Kevin McCarthy have agreed to in principle is less restrictive than the one President Barack Obama and Speaker John Boehner cut in 2011, centered on just two years of cuts and caps in spending. The economy that will absorb those cuts is in much better shape. As a result, economists say the agreement is unlikely to inflict the sort of lasting damage to the recovery that was caused by the 2011 debt ceiling deal — and, paradoxically, the newfound spending restraint might even help it.
“For months, I had worried about a major economic fallout from the negotiations, but the macro impact appears to be negligible at best,” said Ben Harris, a former deputy Treasury secretary for economic policy who left his post earlier this year.
“The most important impact is the stability that comes with having a deal,” Mr. Harris said. “Markets can function knowing that we don’t have a cataclysmic debt ceiling crisis looming.”
Mr. Biden expressed confidence earlier this month that any deal would not spark an economic downturn. That was in part because growth persisted over the past two years even as pandemic aid spending expired and total federal spending fell from elevated Covid levels, helping to reduce the annual deficit by $1.7 trillion last year.
Asked at a news conference at the Group of 7 summit in Japan this month if spending cuts in a budget deal would cause a recession, Mr. Biden replied: “I know they won’t. I know they won’t. Matter of fact, the fact that we were able to cut government spending by $1.7 trillion, that didn’t cause a recession. That caused growth.”
The agreement in principle still must pass the House and Senate, where it is facing opposition from the most liberal and conservative members of Congress. It goes well beyond spending limits, also including new work requirements for food stamps and other government aid and an effort to speed permitting for some energy projects. …
But its centerpiece is limits on spending. Negotiators agreed to slight cuts to discretionary spending — outside of defense and veterans’ care — from this year to next, after factoring in some accounting adjustments. Military and veterans’ spending would increase this year to the amount requested in Mr. Biden’s budget for the 2024 fiscal year. All those programs would grow by 1 percent in the 2025 fiscal year — which is less than they were projected to.
A New York Times analysis of the proposal suggests it would reduce federal spending by about $55 billion next year, compared with Congressional Budget Office forecasts, and by another $81 billion in 2025.
The first back-of-the-envelope analysis of the deal’s economic impacts came from Mark Zandi, a Moody’s Analytics economist. He had previously estimated that a prolonged default could kill seven million jobs in the U.S. economy — and that a deep round of proposed Republican spending cuts would kill 2.6 million jobs.
His analysis of the emerging deal was far more modest: The economy would have 120,000 fewer jobs by the end of 2024 than it would without a deal, he estimates, and the unemployment rate would be about 0.1 percent higher. …
… Other economists say the economy could actually use a mild dose of fiscal austerity right now. That is because the biggest economic problem is persistent inflation, which is being driven in part by strong consumer spending. Removing some federal spending from the economy could aid the Federal Reserve, which has been trying to get price growth under control by raising interest rates.
“From a macroeconomic perspective, this deal is a small help,” said Jason Furman, a Harvard economist who was a deputy director of Mr. Obama’s National Economic Council in 2011. “The economy still needs cooling off, and this takes pressure off interest rates in accomplishing that cooling off.”
“I think the Fed will welcome the help,” he said.
Economists generally consider increased government spending — if it is not offset by increased tax revenues — to be a short-term boost for the economy. That’s because the government is borrowing money to pay salaries, buy equipment, cover health care and provide other services that ultimately support consumer spending and economic growth. That can particularly help lift the economy at times when consumer demand is low, such as the immediate aftermath of a recession. …
on the other hand:
the text of the debt ceiling bill released on Sunday would approve all the remaining permits to complete the stalled Mountain Valley Pipeline, delivering a big win for West Virginia Sens. Joe Manchin and Shelley Moore Capito.
But the backing of the pipeline that would deliver gas from West Virginia into the Southeast is sure to set off bitter complaints from the environmental groups that have fought its construction for years and turned the project into a symbol of their struggle against fossil fuels.
Manchin hailed the bill’s language, saying finishing the pipeline would lower energy costs for the United States and West Virginia.
“I am proud to have fought for this critical project and to have secured the bipartisan support necessary to get it across the finish line,” he said in a statement.
The bill agreed by the White House and House Republicans must still be approved by both chambers of Congress, which is expected to happen in the coming week.
“After working with Speaker McCarthy and reiterating what completing the Mountain Valley Pipeline would mean for American jobs and domestic energy production, I am thrilled it is included in the debt ceiling package that avoids default,” Capito, a Republican, said in a statement. “Despite delay after delay, we continued to fight to get this critical natural gas pipeline up and running, and its inclusion in this deal is a significant victory for the future of West Virginia.”
The project has won support from the White House, which argues the controversial project is needed for U.S. energy security. Its approval comes after the approval of the Willow oil project in Alaska, which activists have said undercuts the Biden administration’s climate promises.
Including the project in the debt bill came as a surprise that wasn’t revealed by either negotiat…”
apparently what you don’t lnow can kill you.
I wonder if this wasn’t what it was all about in the first place.
this is from RSN today, who got it from Politico. my citations seem to have gotten scattered all over this thread, if you can’t find the article I will try to find a proper link.
originally the pipe line deal was referred to as “speeding up” or “streamlining” the permitting process. that could have been dealt with [your streamlined permit request is denied]. i did not expect that it would be speeded up to “immediate approval.”
shows the dangers of thinking you can outsmart the professional liars.
The clawback will eat into the tax collection agency’s efforts to crack down on rich tax cheats. It is also a political win for Republicans, who have been outraged by the prospect of a beefed up I.R.S. and approved legislation in the House to rescind the entire $80 billion.
where are the proofreaders when you really need them???
It is also a political win for Republicans, who have been outraged by the prospect of the tax collection agency’s efforts to crack down on rich tax cheats.