US economy on the brink as time runs low to avert debt default
CNN
23-05-22 04:03
The US is facing a potentially catastrophic economic crisis as a result of a dispute between the Biden administration and House lawmakers. Republicans in the House have said they will not raise the country’s borrowing limits without Biden agreeing to spending cuts, a move that could lead to the US defaulting on its debts, putting retirement benefits and social programmes on hold. The Treasury Sec. has warned that the government will no longer be able to fulfil its obligations by June 1 without this. The economy would crash, millions would lose their jobs, and the US would lose its reputation as a safe haven for investors, causing further damage to the economy.
Talks have stalled between the two sides, prompting President Biden to meet with House Speaker Kevin McCarthy for urgently needed discussions. The pressure on the outcome of the meeting is particularly high given that options for compromise are running out due to congressional deadlines. However, even if an agreement can be reached, there is doubt that any deal acceptable to Biden will be approved by the Senate, due to its plan to curtail spending. Republicans want potentially damaging provisions added to address their concerns. There are also concerns from the GOP that the proposed spending is not sustainable or equitable.
The US has faced other political, social and humanitarian crises in recent years, such as Covid-19, tensions with North Korea, and the Capitol Hill attacks of January 6. But the current impasse is the latest in a series of routine debt-ceiling crises that have become increasingly common over the past decade, with creditworthiness being threatened every time the debt ceiling is reached. While such crises used to be resolved through compromise and inflection, there is now a greater cultural divide up to and including a willingness from extremist elements of the House GOP to risk the ruin of the country’s economy in the hopes of reversing the presidency of Joe Biden.
The president of the Democratic Republic of Congo, Felix Tshisekedi, is set to visit China later this month for talks with Chinese officials, including President Xi Jinping, to discuss trade deals and the formalisation of a $6bn infrastructure-for-minerals deal between the two nations. During the visit, the heads of state are expected to attend a signing ceremony for several key trade and cooperation documents. The African nation is the world's leading producer of cobalt, which is found in batteries for electric vehicles.
Democrat Tom Carper has announced that he will not seek re-election to a fifth term in the US Senate, a move that ensures his unblemished record of never having lost an election remains intact. Carper has held the Senate seat since 2001 and served five terms in the US House, as well as two terms as governor of Delaware. He began his political career as state treasurer in Delaware and built a reputation as a moderate Democrat with a strong interest in environmental issues. He has also helped lead efforts to shore up the financially struggling US Postal Service.
Pennsylvania's state House of Representatives is debating gun control measures for the first time since 2018, after Democrats advanced four bills from a House committee last month. The legislation would require long-barrelled guns to be sold with trigger locks; impose financial penalties on gun owners who fail to report stolen or lost firearms; end the so-called gun show loophole, requiring background checks on would-be gun buyers across all sales; and allow a judge to order the temporary seizure of guns if requested by police or family members. Despite the Democrats' one-vote majority in the house, the legislation is expected to face significant opposition from Republican lawmakers.
New York Mayor Eric Adams is facing criticism for rehousing migrants in school gyms. Commentators have said the mayor is culpable for ignoring an array of excellent volunteer groups working on the crisis, which has led to some mosques, churches and synagogues in all New York boroughs being denied access to migrants. In a final insult, the mayor was also criticized for his spokesman blaming volunteer groups for encouraging more people to arrive, an untrue comment. However, a social justice consultant and former member of the NY City Council argued that the mayor was right to ask for help and his requests for financial and strategic input were entirely reasonable. Commentators also called for ownership of mistakes made in the past, highlighting that US imperialism is a "fool’s errand" and the crisis is a national one, so it requires governmental rather than mayoral action.
Senator Ted Cruz of Texas has caused criticism from Bernice King, daughter of famous civil rights leader Martin Luther King Jr, after he invoked her father's legacy to attack the NAACP, an American anti-racist institution. Cruz had taken issue with the body's decision to issue a "travel advisory" warning people against racist attitudes in Florida, following Governor Ron DeSantis's recent efforts to ban so-called "woke" lessons in schools." Dr King's daughter accused him of being guilty of the "harmful, discriminatory legislation in Florida".
JPMorgan Chase is to spend $15.7bn on new initiatives, including investments in technology, marketing and hiring, according to co-head of the bank’s consumer and community division, Marianne Lake. Her unit is set to spend $7.9bn on new investments, which represents an $800m increase from 2022. The announcement comes on the back of a year in which smaller lenders have faced pressure and represents the latest example of the widening gap between small and large US banks. The wider spending will be $2bn more than the bank spent last year.
