US economy; If agreement is not reached by the end of May, between Republicans and Democrats on debt ceiling, US economy could collapse.

fierce standoff is underway between the Democrats and Republicans, who want the White House to agree to sweeping public spending cuts as well as other reforms.

Top Republican leaders are due to meet US President Joe Biden on Tuesday at the White House to try to resolve the dispute.

Read more at: https: //www.dw.com

The debt ceiling: action needed to increase the debt ceiling before a total US economic meltdown occurs

Just over a week ago, Treasury Secretary Janet Yellen announced that the U.S. government had hit the limit on total federal borrowing allowed by law, also known as the debt ceiling. Unless Congress raises or does away with the debt limit soon, the federal government will go into default, triggering a global financial crisis that economists estimate will destroy 6 million jobs and $12 trillion in household wealth.¹

Congress can defuse this time bomb by simply raising the debt limit, as it has dozens of times over the years, under presidents of both parties.

But Kevin McCarthy, Marjorie Taylor Greene, and the other MAGA radicals now in control of the House of Representatives are refusing to raise the debt ceiling unless President Biden agrees to deep cuts to Social Security and Medicare.

Read more at: https//www.eu-digest.blogspot.com

USA: Debt Ceiling Drama Standoff

A standoff over the U.S. debt ceiling has begun. It could become the country's most consequential political showdown this year, with global economic repercussions.

Treasury Secretary Janet Yellen announced Thursday that the country has hit its borrowing limit and must take extraordinary measures to delay a catastrophic and once-unfathomable U.S. debt default.

We may witness months of escalating drama.

Read more at: https://www.cbc.com

USA - US economy:: Democrats dare GOP to vote against government funding bill

The federal government faces a looming shutdown at the end of the fiscal year on Sept. 30, leaving lawmakers with little time to finagle a compromise over a suspension of the debt limit, which Democrats have attached to the must-pass spending bill.

Senate Republicans say they oppose suspending the debt limit because of additional spending measures Democrats are crafting -- even though doing so would pay for previous expenditures. But Senate Democrats worked with Republicans under the Trump administration to raise the debt limit on multiple occasions and say it's a bipartisan responsibility.

Read more at: Democrats dare GOP to vote against government funding bill

USA Government Shutdown: Republicans "BLINK" and make temporary debt-ceiling offer

US Republicans have offered President Barack Obama a short-term debt limit increase to stave off default.

House of Representatives Speaker John Boehner said they would do so in exchange for negotiations with the White House to end a government shutdown that took effect on 1 October.

Republicans will meet Mr Obama, who is a Democrat, later on Thursday.

Officials have warned the US risks default on 17 October if the nation's borrowing limit is not increased.

Mr Boehner told reporters on Thursday: "What we want to do is to offer the president today the ability to move a temporary increase in the debt ceiling in agreement to go to conference on the budget for his willingness to sit down and discuss with us a way forward to reopen the government."

 Read more: BBC News - US Republicans make temporary debt-ceiling offer

USA: Government Shutdown - Obama Press Conference On Debt Ceiling, Government Shutdown - by Brett LoGiurato

President Barack Obama seemed to open the door Tuesday to a short-term fix to the couple of budget battles running their way through Congress.

During a press conference with reporters, Obama signaled that he would be open to a deal that would reopen the government and raise the debt ceiling while allowing for negotiations between the two parties.

"If they want to do that, reopen the government, extend the debt ceiling," Obama said. "If they can't do it for a long time, do it for the period of time in which these negotiations are taking place. 

"Why is it that we've got hundreds and thousands of people who aren't working right now in order for what you just described to occur? It doesn't make any sense."

But while he said that he was prepared to sit down and negotiate with Republicans on anything — as long as they agree to reopen the government and lift the debt ceiling first, he insisted, "We can't make extortion routine as part of our democracy.

"Democracy doesn't function this way. And this is not just for me; it's also for my successors in office. Whatever party they're from, they shouldn't have to pay a ransom either for Congress doing its basic job. We've got to put a stop to it."

Obama breathlessly tried to explain why there were no tricks, no workarounds, and no getting around Congress raising the debt ceiling. He said that there are no "silver bullets." There's no "magic wand." And options frequently discussed as alternatives — such as the 14th Amendment and minting a high-value platinum coin — also wouldn't work.

"I say, imagine, in your private life, if you decided that I'm not going to pay my mortgage for a month or two. First of all, you're not saving money by not paying your mortgage. You're just a deadbeat. And you can anticipate that will hurt your credit, which means that in addition to the debt collectors calling, you're going to have trouble borrowing in the future," Obama said.

"And if you are able to borrow in the future, you're going to have to borrow at a higher rate. Well, what's true for individuals is also true for nations."

Read more: Obama Press Conference On Debt Ceiling, Government Shutdown - Business Insider

USA: Obama on the offensive against uncooperative Republicans

President Obama today warned Republicans against refusing to raise the nation’s debt ceiling, calling such talk “irresponsible” and “absurd” and saying it would set off an economic crisis and financial hardship. 

“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama said during his final news conference of his first term in office. “The full faith and credit of the United States of America is not a bargaining chip.” 

The president repeated his vow to seek what he called a “balanced” approach to reduce the nation’s deficit during the months ahead. But he said he would not negotiate on the debt ceiling, and he said Republicans in Congress would be responsible for the effects of a refusal to raise it. 

“It would be a self-inflicted wound on the economy,” Mr. Obama said. “It would slow down our growth and tip us into recession. To even entertain the idea of this happening is irresponsible. It’s absurd.” He added: “America cannot afford another debate with this Congress about whether or not they should pay the bills they’ve already racked up.”

In today's speech which was originally around the coming fight around the debt ceiling, President Obama also said that lawful and responsible gun owners have little to fear. No specifics were given about what sort of legislation would be proposed but the tone was less strict and less pointed than in prior speeches.

Again, some form of gun control is coming. Likely it is around longer universal registrations, closing of gun-show loopholes, and limiting high-capacity magazine sales. That being said, what will be proposed remains to be seen and most of the public likely expects that whatever is proposed is something that has better than a decent chance of being passed in Congress.

Unfortunately the potential victim in this game of chicken over the debt ceiling would be The American Public. And it would be done ostensibly by the hands of Republicans. That will be the perception at least.

EU-Digest

USA Debt Ceiling: 14th Amendment - Senate Dems Tell Obama to Bypass GOP On Debt Ceiling If Needed - by Kathleen Hunter

Senate Democratic leaders urged President Barack Obama to take any steps he can to pay U.S. financial obligations if congressional Republicans don’t support a debt-limit increase that Democrats deem acceptable.

In a letter to Obama yesterday, Senate Majority Leader Harry Reid and three other top Democrats said Obama “must be willing to take any lawful steps to ensure that America does not break its promises and trigger a global economic crisis -- without congressional approval, if necessary.”

The Democrats’ letter sharpens the dispute with Republicans over the borrowing limit, which the U.S. hit at year’s end. Amid Republican opposition to raising the debt ceiling without spending cuts, some Democrats have proposed invoking the Constitution’s 14th amendment and minting a platinum coin with a face value of $1 trillion to pay government bills.

House Speaker John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky, both Republicans, have said they will seek substantial spending cuts in exchange for any debt-ceiling increase. Boehner has said cuts must match or exceed the amount the ceiling is raised.

Read more: Senate Dems Tell Obama to Bypass GOP On Debt Ceiling If Needed - Businessweek

Spain changes constitution to cap budget deficit - by Giles Tremlett

Spanish politicians took a dramatic step to try to win back market confidence by agreeing on a reform of the country's constitution to introduce a cap on future deficits.

The socialist party (PSOE) of outgoing prime minister José Luis Zapatero and the conservative opposition People's party (PP) said the cap would come into effect in 2020. The limit will be set at 0.4% and will effect all levels of Spain's highly devolved administration, including the regional governments that run health and education.

The move came at the end of a month that has seen Spain's sovereign debt under severe pressure in the markets, amid fears that it might need a bailout similar to those of fellow eurozone nations Portugal, Greece or Ireland.

It also came a week after Germany's Angela Merkel and France's Nicolas Sarkozy called for eurozone countries to establish legal limits on their deficits to integrate their economies. So far only Germany has such a cap.

For more: Spain changes constitution to cap budget deficit | Business | The Guardian

US Debt downgrade: financial world reviews of crises

The United States' loss of its top-notch AAA credit rating from Standard & Poor's on Friday drew mixed reactions from the world of finance.

For the complete review of these reviews click on: Debt downgrade: Views from finance world - Business - Stocks & economy - msnbc.com

US Economy: Debt deal offers no cure for U.S.' deepening economic ills - by Don Lee and Tom Petruno

The last-minute deal on the debt ceiling may prevent a government default, but it does little to avert a perfect storm of economic problems pushing the nation toward a new downturn and more financial pain for millions of Americans.

Instead of increasing confidence in the future, the emerging agreement seems to have underscored the near paralysis in Washington — and the fact that no substantial new efforts are likely for dealing with unemployment, lagging consumer spending or other problems that have been dragging the economy down.

"By itself, it doesn't do anything to solve the problems down the road," said Roberton Williams, an economi
st at the nonpartisan Tax Policy Center, referring to the budget deal that is estimated to cut the federal deficit by some $2.1 trillion over the next decade.

For more: Nation & World | Debt deal offers no cure for U.S.' deepening economic ills | Seattle Times Newspaper

US Economy - Debt talks: Democrats erupt over Obama surrender to Republicans - by Lisa Mascaro and Christi Parsons

As President Obama pushed hard for a grand deal to reduce the federal deficit, he ignited a furor among congressional Democrats on Thursday by appearing to retreat from his insistence that spending cuts and revenue increases be included in the same package.

The White House briefed Democratic leaders on a possible $3-trillion deficit-reduction deal, the latest in a rapid-fire series of proposals aimed at winning congressional approval for an increase in the nation's $14.3-trillion borrowing limit before Aug. 2. That's when the government is expected to run short of funds and risk defaulting on its debt.

An early version of the plan would lock in cuts in spending and social programs, as Republicans want, but appeared to defer decisions on increasing tax revenues until 2012. Under the proposal, Congress would take up comprehensive tax reform next year. But Democrats want enforceable measures to ensure that Republicans follow through on increasing revenue.

For more: Debt talks: Democrats erupt over latest plan on debt ceiling - latimes.com

US Economy: US Treasury's 'Extraordinary Measures' Are Not So Extraordinary - by Joshua Green

Right now, the media is consumed with Osama bin Laden, but once the news begins to recede the debt ceiling will quickly become a front-burner issue. Yesterday, the problem took another big step toward crisis when Treasury Secretary Timothy Geithner sent a letter to Congress outlining the "extraordinary measures" he'll begin taking this week to prevent the U.S. from defaulting when the debt limit is reached on May 16th. A default, Geithner has warned, "would have a catastrophic economic impact that would be felt by every American." This Slate article by Annie Lowrey offers a gripping take on what might happen. I'll bet one of the financial networks even breaks out a countdown clock.

The first of these emergency steps will come on Friday, when the Treasury suspends new issuance of State and Local Government Series securities, or "slugs," which are generally used to finance infrastructure projects. If the problem isn't resolved by May 16th, which it won't be, Treasury will take additional emergency measures, such as halting reinvestments in the G-Fund (a federal-employee pension fund) and suspending new investments in the Civil Service Retirement and Disability Fund, in order to buy themselves time. This will probably generate lots of anguish and hand-wringing, and the prospect of an actual default certainly warrants that.

But one thing to bear in mind about these "extraordinary measures" is that they're really not all that extraordinary.

For more: US Treasury's 'Extraordinary Measures' Are Not So Extraordinary - Joshua Green - Politics - The Atlantic