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      Fears of US government shutdown as debt ceiling game of chicken begins

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      US politicsFears of US government shutdown as debt ceiling game of chicken beginsIf neither side budges, US risks default on debt and lowered credit rating, which would cost billions Hugo Lowellin WashingtonSun 19 Sep 2021 04.00 EDTTop Democrats are expected to dare Republicans to block a stopgap funding measure, which would trigger the double-barreled fiscal crisis of the US defaulting on its mammoth debt and a shutdown of the federal government, according to two sources familiar with the proposal.The plan being considered by the House speaker, Nancy Pelosi, and the Senate majority leader, Chuck Schumer, involves suspending the debt ceiling past the 2022 midterm elections in a stopgap bill that would keep the government funded through early December, the sources said.Democrats want to then dare Republicans to block the stopgap funding measure with a filibuster and prevent it from receiving 60 votes needed to pass the Senate – which could cause a government shutdown on 1 October and leave the US unable to pay its bills.The US has almost always avoided defaults and the sources said they expected some resolution on this occasion, too, even if negotiations, like in years past, continued until the 11th hour.But economists say a failure to raise or suspend the debt limit when tied to the stopgap funding measure would be particularly catastrophic as the US would be unable to service its debt obligations in the midst of a potentially non-functional federal government.Resolving the impasse – which typically becomes a political football under a Democratic president as Republicans criticize their spending – now requires one party to blink.The strategy to tie the potentially catastrophic prospect of the US defaulting on its $28tn of debt with a government shutdown could put Republicans in a difficult position after their repeated refusal to raise the debt limit in a bipartisan fashion.It also underscores the extent of the dysfunction of Congress, as Republicans decline to back measures from voting rights legislation to police reform to a 9/11-style commission to investigate the deadly 6 January attack on the Capitol.The high-stakes showdown over the debt ceiling is accelerating after the treasury secretary, Janet Yellen, said recently the US could default in mid-October and cause “irreparable harm” to the economy if Congress failed to take action.In a letter to Pelosi, Yellen said the extraordinary measures the treasury department had been employing to finance the government on a temporary basis after the nation’s debt hit its statutory limit on 1 August would be exhausted next month.“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Yellen wrote.That meltdown could affect the US credit rating, which raises the specter of increased treasury interest rates, which could cost the government billions and lead to higher borrowing costs for American businesses, since their rates are benchmarked to treasury rates.Democrats have insisted for months that Republicans join them in taking action on the debt ceiling, arguing that it was mainly because of Republicans that the national debt increased by roughly $8tn over the course of the Trump administration.Pelosi added in a recent news conference that the need to suspend the debt ceiling stemmed in part from Republican tax cuts to the wealthy. “We’re paying the credit card, the Trump credit card,” Pelosi said.But the Senate Republican leader, Mitch McConnell, has remained adamant that Republicans will not support Democrats in raising the debt ceiling as part of a standalone bill, and that it should instead be included in a sprawling infrastructure package that can be passed on a party-line vote.“Let’s be clear,” McConnell said in a tweet on Wednesday. “With a Democratic president, a Democratic House and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It is their sole responsibility.”Both Pelosi and Schumer have also noted that Democrats joined Republicans to handle the debt limit when Trump was president and believe the Republicans should now return the favor – rather than leave vulnerable Democrats open to attack ads if the ceiling is raised on a party-line vote.In pressing the point, Pelosi said that Democrats would not include a provision to raise the debt ceiling in the $3.5tn budget resolution for Biden’s infrastructure agenda that they intend to pass with the reconciliation process, to avoid a filibuster.Instead, top Democrats are moving forward with a plan to add such language in the stopgap funding measure that would keep the government funded through either 3 December or 10 December, the sources said, and hope to persuade 10 Senate Republicans to support the bill.The inclusion of the debt limit in the stopgap measure is not final, the sources cautioned, and discussions will continue as the House returns from a summer recess. It could still be added to a disaster relief bill, for instance, or be tackled in a standalone bill.Part of the worry for top Democrats is that the path to 60 votes in the Senate was significantly narrowed last month after the majority of the Senate Republican conference signed on to a letter vowing to block any bill that attempted to raise the debt ceiling.Only four Senate Republicans – the Senate appropriations committee chairman, Richard Shelby, Lisa Murkowski, Susan Collins and John Kennedy – declined to sign the letter, a number far short of the threshold required to defeat an expected filibuster.TopicsUS politicsDemocratsNancy PelosinewsReuse this content More

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      Wildland review: Evan Osnos on the America Trump exploited

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      BooksWildland review: Evan Osnos on the America Trump exploited The New Yorker writer delivers a sweeping and brilliant portrait of a people subjected to 50 years of rightwing aggression

      Interview: Evan Osnos on the US 20 years after 9/11
      Charles KaiserSun 19 Sep 2021 02.00 EDTLast modified on Sun 19 Sep 2021 02.01 EDTEver since Donald Trump was inaugurated as president, bookstores have been flooded with volumes attempting to explain America’s unraveling.George Packer’s Last Best Hope, published earlier this year, provided one of the best diagnoses. But this new volume by New Yorker staff writer Evan Osnos offers the most personal and the most powerful description yet of a country “so far out of balance that it [has] lost its center of gravity”.Peril review: Bob Woodward Trump trilogy ends on note of dire warningRead moreTo tell a story bookended by the attacks of 9/11 and the assault on the US Capitol on 6 January this year, Osnos travels to three places in which he has lived: Greenwich, Connecticut; Chicago; Clarksburg, West Virginia. His subjects range from the decline of local newspapers and the opioid crisis to the tremendous hidden costs of idiotic wars in Iraq and Afghanistan.But the leitmotif of the book is best captured by a phrase he cites from the great liberal economist John Kenneth Galbraith, who described “one of man’s oldest, best financed, most applauded, and, on the whole, least successful” quests: “The search for a truly superior moral justification for selfishness.”Osnos’ book is replete with ghastly statistics. The three men – Bill Gates, Warren Buffett and Jeff Bezos – who have “more wealth than the entire bottom half of the US population combined”. The CEO salaries which spiraled from 20 times as much as a frontline worker in 1965 to 278 times in 2019. The fewer than 200 companies with Washington lobbyists in 1971 to the 2,500 that had them just 11 years later.But what makes the book come alive are the personal stories. Billionaires, coal miners and soldiers who suffer from post-traumatic stress, and all the evidence Osnos offers of failure to control excess at the top or provide meaningful help at the bottom.Above all this is a story of how mega-rich Americans have invested hundreds of millions of dollars to give themselves the power to pillage the earth, destroy the air and corrupt democracy in a thousand ways without ever being held to account.Lee Hanley is a perfect example. A Yale graduate and Greenwich resident, in 1980 he dumped George HW Bush for Ronald Reagan. Osnos’ keen eye provides a crucial detail about how Hanley’s wife, Allie, pinpointed Regan’s greatest flaw before presenting him to the Connecticut gentry: “He had on a brown tie and it was ghastly. When you go to a different part of the country, the most important thing you need to do is dress like they do. So I ran to Bloomingdale’s and bought four ties.”Reagan “wore them in all the posters after that”.Hanley spent millions more than his wife. In alliance with Richard Scaife, Robert Mercer and the Koch brothers, he trained “a generation of Republicans to adhere to ideological orthodoxy” with “a string of historic political investments”.“He saved the conservative publisher Regnery with an infusion of cash, he founded a Connecticut affiliate of a network of think tanks to advocate for low taxes and small government, and he became the principal backer of a political consulting firm formed by Roger Stone, Charlie Black and Paul Manafort, whose early clients included Rupert Murdoch and Donald Trump.”Rarely has a handful of clever investments done more damage to more people.In West Virginia, where Osnos once worked for the Exponent Telegram of Clarksburg, he offers a nuanced history of a state’s transformation from hardcore Democratic to reliably Republican. A West Virginia think tank funded partly by the Kochs made a moving argument against mine-safety regulations – “Improved safety conditions result in lower money wages for workers” – then asked, “Are workers really better off being safer but making less income?”Then-governor Joe Manchin asked the author of the study to brief his cabinet and a joint session of the state legislature finance committees.Juxtaposed with the lobbyists’ many successes are heartbreaking tales of ecological catastrophe spawned by coal companies removing mountain tops. Osnos also reminds us of Manchin’s first big contribution to the national political discussion, when he ran for Senate in 2010: an ad in which he fired bullets through climate-change legislation.“For decades candidates had been photographed with guns,” Osnos writes, “but this was the first time anyone had assassinated a piece of proposed legislation on film.”Four years later, an Arizona Republican “upped the stakes” by shooting the Affordable Care Act with “a handgun, a rifle and a semiautomatic”.There is so much more in this book, including the horrific fact that America has now accumulated 310m private firearms, the highest rate of civilian gun ownership in the world.“The second highest,” Osnos writes, “was Yemen, which had barely half the rate.”Joe Biden by Evan Osnos review – a story of survivalRead moreThe story of the electoral backlashes, when Democrats took the House in 2018 and the White House and Senate in 2020, is one of Osnos’ only hopeful sections. The right has spent so much money to end government regulation and purchase elections, especially since the disastrous supreme court decision of Citizens United, it is astonishing American democracy has survived at all.America’s richest “launched a set of financial philanthropic and political projects that changed American ideas about government, taxes and the legitimacy of the liberal state,” Osnos writes.“In every element of his commercial and political persona, Trump was a consummation of that project … Most of all, of course, he stood for a belief in unbridled self-enrichment, and on that basis some of his most genteel supporters were willing to overlook” every other disgusting thing about him.Osnos says the assault on the Capitol reminded him of an observation by Lincoln’s secretary of state, William Seward: “There was always just enough virtue in this republic to save it; sometimes none to spare.”My hope is that everyone who reads this great book will be enraged enough to redouble their efforts to undo the damage the greedy have wrought, and to take back America for its decent citizens, once and for all.
      Wildland is published by Farrar, Straus and Giroux
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      House Democrats are scared to tax billionaires – that’s a costly mistake | Robert Reich

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      OpinionUS taxationHouse Democrats are scared to tax billionaires – that’s a costly mistakeRobert ReichPolitical cowardice means those funding Joe Biden’s ambitious social policy plan want to leave the mega-rich unscathed Sun 19 Sep 2021 01.00 EDTLast modified on Sun 19 Sep 2021 05.30 EDTThis week, House Democrats released their proposed tax increases to fund Joe Biden’s $3.5tn social policy plan.‘Medium is the message’: AOC defends ‘tax the rich’ dress worn to Met GalaRead moreThe biggest surprise: they didn’t go after the huge accumulations of wealth at the top – representing the largest share of the economy in more than a century.You might have thought Democrats would be eager to tax America’s 660 billionaires whose fortunes have increased by $1.8bn since the start of the pandemic, an amount that could fund half of Biden’s plan and still leave the billionaires as rich as they were before the pandemic began.Elon Musk’s $138bn in pandemic gains, for example, could cover the cost of tuition for 5.5 million community college students and feed 29 million low-income public-school kids, while still leaving Musk $4bn richer than he was before Covid.But senior House Democrats decided to raise revenue the traditional way, taxing annual income rather than giant wealth. They aim to raise the highest income tax rate and apply a 3% surtax to incomes over $5m.The dirty little secret is the ultrarich don’t live off their paychecks.Jeff Bezos’s salary from Amazon was $81,840 last year, yet he rakes in some $149,353 every minute from the soaring value of his Amazon stocks, which is how he affords five mansions, including one in Washington DC which has 25 bathrooms.House Democrats won’t even close the gaping “stepped-up basis at death” loophole, which allows the heirs of the ultrarich to value their stocks, bonds, mansions and other assets at current market prices – avoiding capital gains taxes on the entire increase in value from when they were purchased.This loophole allows family dynasties to transfer ever larger amounts of wealth to future generations without it ever being taxed. Talk about an American aristocracy.Biden wanted to close this loophole but House Democrats balked.You might also have assumed Democrats would target America’s biggest corporations, awash in cash but paying a pittance in taxes. Thirty-nine of the S&P 500 or Fortune 500 paid no federal income tax at all from 2018 to 2020 while reporting a combined $122bn in profits to their shareholders.But remarkably, House Democrats have decided to set corporate tax rates below the level they were at when Barack Obama was in the White House. Democrats even kept scaled-back versions of infamous corporate loopholes such as private equity’s “carried interest”. And they retained special tax breaks for oil and gas companies.What’s going on? It’s not that Democrats lack the power. They’re in one of those rare trifectas when they hold the presidency and majorities, albeit small, in the House and Senate.It’s not the economics. Americans have been subject to decades of Republican “trickle-down” nonsense and know full well nothing trickles down. Billionaires hardly need to have their fortunes grow $100,000 a minute to be innovative. And as I’ve stressed, there’s more money at the top, relative to anywhere else, than at any time in the last century.Besides, Democrats need the revenue to finance their ambitious plan to invest in childcare, education, paid family leave, healthcare and the climate.So what’s holding them back?Put simply, Democrats are reluctant to tax the record-breaking wealth of the rich and big corporations because of … the wealth of the rich and big corporations.Many Democrats rely on that wealth to bankroll their campaigns. They also dread becoming targets of well-financed ad campaigns accusing them of voting for “job-killing” taxes.Republicans sold their souls to the moneyed interests long ago, but the timidity of House Democrats shows just how loudly big money speaks these days even in the party of Franklin D Roosevelt.US’s wealthiest 1% are failing to pay $160bn a year in taxes, report findsRead moreThat’s because there’s far less of it on the other side. Through the first half of 2021, business groups and corporations spent nearly $1.5bn on lobbying, compared to roughly $22m spent by labor unions and $81m by public interest groups, according to OpenSecrets.org.Progressive House Democrats will still have a say. Senate Democrats haven’t weighed in. But there’s reason for concern.The looming debate over taxes is really a debate over the allocation of wealth and power. As that allocation becomes ever more grotesquely imbalanced, this debate will loom ever larger over American politics.Behind it will be this simple but important question: Which party represents average working people and which shills for the rich? Democrats, take note.
      Robert Reich, a former US secretary of labor, is professor of public policy at the University of California at Berkeley and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His new book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com
      TopicsUS taxationOpinionUS domestic policyUS politicsBiden administrationDemocratsUS CongressHouse of RepresentativescommentReuse this content More