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      President centers ‘Bidenomics’ as 2024 re-election campaign gathers pace

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      As Joe Biden launches his 2024 re-election campaign, the White House is hoping to revamp the messaging on the president’s economic performance with a series of speeches, memos and the term “Bidenomics”.On Wednesday, Biden delivered what was billed as a major speech focused on the economy as he told an audience in Chicago that the Republican policy of “trickle-down economics” had “failed America”. In its place, Biden vowed to create policies that would prioritize growing the middle class, touted post-pandemic economic recovery and announced “Bidenomics is working” – one of 15 times he used the word over the course of his speech.Earlier in the week, a White House memo from two of Biden’s top advisers was sent to reporters and laid out a range of talking points. It touted the president’s various accomplishments on post-Covid economic recovery and job creation, while reiterating the theme that “Bidenomics is working.”“In the weeks and months ahead, the president, members of his cabinet, and senior administration officials will continue fanning out across the country to take the case for Bidenomics and the President’s Investing in America agenda directly to the American people,” the memo announced.The administration’s campaign appears to take aim at one of the president’s key vulnerabilities for the election, with polling showing voters have a dim assessment of how he has handled the economy. A Pew Research Center survey from this month found that inflation is the top concern among Republicans and Republican-leaning voters, while support for Democratic economic policies lags 12 points behind support for GOP policies. An AP/NORC poll from last month showed that only 33% of Americans supported Biden’s handling of the economy.The perceptions of Biden’s handling of the economy are at odds with a range of positive economic indicators that the White House is eager to highlight. Inflation has gone down to the lowest levels since 2021, while the administration has repeatedly touted months of consistent job growth and low unemployment. The US economy has generally outperformed economic experts’ forecasts, and for now has staved off a recession that seemed inevitable.But these gains have not appeared to resonate with voters, who have repeatedly given Biden poor marks on the economy as workers have struggled with rising prices that often outpaced growth in wages. Republicans have meanwhile been eager to capitalize on issues of inflation, labeling the spike “Bidenflation” and making it a frequent point of attack.Biden’s team attempted to defend the president’s economic achievements in the past, including dedicating a significant portion of his State of the Union address in February to highlight his record on job growth and unemployment. The White House even passed out small “palm cards” to Democratic lawmakers with a list of talking points about the economy. But as the presidential election begins to take shape it appears these efforts are intensifying, attempting to go on the offensive with a positive message about the administration’s economic agenda.Some Democratic politicians have embraced the talking points, earning them favorable positions as surrogates for the president. The California governor, Gavin Newsom, reportedly won praise from administration officials this month after an appearance on the Fox News host Sean Hannity’s show, in which Newsom forcefully challenged assertions that Biden’s economic plans were struggling and touted the president’s job creation.The “Bidenomics” memo sent to reporters earlier this week was the work of two longtime Biden advisers, Anita Dunn and Mike Donilon. Dunn is Biden’s most senior communications adviser and played a key role in turning around his 2020 presidential election bid. Donilon has worked with Biden for decades, and as his chief strategist during the 2020 election was key in shaping the campaign’s messaging.Biden initially joked about the “Bidenomics” term at a rally on 17 June hosted by union members in Philadelphia, where he said it was “time to end the trickle-down economics theory” that was commonly associated with former President Ronald Reagan’s plan of ‘Reaganomics’.“We decided to replace this theory with what the press has now called ‘Bidenomics’,” the president said. “I don’t know what the hell that is. But it’s working.” More

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      The US debt-ceiling ‘deal’ was a giant exercise in bipartisan class warfare | Clara Mattei

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      The headlines around the debt-ceiling legislation focused on the ability of the US to meet its financial obligations on time and in full through 2024. This was no small accomplishment, especially as it arrived within a forever-fractured political environment and only 18 months from a presidential election.But the actual terms of the debt-ceiling legislation reveal a political consensus that is at once troubling and longstanding. While topline US spending will increase this year and next, its increase is reserved almost exclusively for defense and for veterans’ medical care. Other programs, including social welfare and enforcement of the tax code by the IRS, will have their budgets cut. Americans seeking food-stamp benefits will also face increased work requirements – a curiously unrelated throw-in policy that reflects a longstanding wish of Republicans and some Democrats.Here, the bipartisan consensus is clear: federal overspending is fine when it supports military ventures; it is a problem when it supports social welfare. In navigating the debt-ceiling legislation and the price inflation that has persisted over the last year, US policymakers have consistently drawn on the failed economic doctrine of austerity – popularized in the 20th century and still prominent today – to intervene in a dysfunctional economy. In using these economic instruments, which are known to fail, they reveal their political ends.At its core, austerity is a suite of economic policies that aims to reduce aggregate demand among the largest population in any society – the working class. Rising interest rates and reduced social benefits, especially in an inflationary economy, require working classes to do more with less. This means working more hours for less money. And who benefits from that environment? A society’s upper crust – the capital class.The recent debt-ceiling agreement, like the Federal Reserve’s continued increases in interest rates, has been presented under the false pretense that curbing expenditures is a necessary intervention for an economy living beyond its means. This narrative is plainly false. In a capitalist economy like ours, it’s never the size of the debt that matters. What matters is how that debt can be wielded to convince Americans to accept economic decisions as somehow unavoidable – painful concessions that are the result of rational deliberations from economic experts.The same excusing of economic pain is used to justify military spending at the cost of social spending. Many have argued, convincingly, that the military-industrial complex is to blame for this double standard, with defense spending doubling as a means of economic upward redistribution toward those with influence and power. But even for those who would be critical of that narrative, the question remains: where is the federal debate around unlimited defense spending? Where are the economic hawks lamenting the undisciplined excess of military adventure?This lack of economic self-reflection illustrates the power of another false principle guiding the American economy, including its tendency toward austerity: it’s not whether the state spends but rather where the state spends. Under austerity capitalism, it is acceptable to use public resources to enrich the very few who profit from real wealth (in the form of dividends and interests), while widespread structural dispossession explicitly serves to “discipline” working people. In other words: economic policy is used as the most important economic lever to perpetuate class warfare.This principle is readily and concretely evident in the recent debt-ceiling legislation. Of the $15tn in excess US debt, more than half ($8tn) is due to war expenditure.Against any imperative of cutting expenditures, the latest debt agreement conspicuously exonerates military spending from any cuts. Meanwhile, US spending on the war in Ukraine is predicted to go up in the coming years, reaching $895bn in 2025. These are unprecedented numbers, a shocking 40% of global military expenditure.And while state spending boosts the profits of big shareholders in the military-industrial complex, and props up stakeholders in the Mountain Valley pipeline despite protests from climate activists in Appalachia, the same policy defunds the Internal Revenue Service, the agency charged with investigating tax evasion. As even the lightest examination makes clear, the US impulse to spend on its military serves the same interests as its refusal to enforce its tax code.Defenders of the Biden administration’s debt-ceiling bill argue, plausibly, that the legislation could have been worse for working people if the priorities of the most conservative Republicans were met. But the specifics of this worst-case scenario offer little cover for what we got instead: a concretization of austerity policies and a whole new set of levers for one-sided class warfare.
      Clara E Mattei is an assistant professor of economics at the New School for Social Research in New York City and the author of The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism More

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      Biden signs debt ceiling bill after months-long standoff, avoiding default

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      Joe Biden signed a bill on Saturday to suspend the US debt ceiling, ending a months-long standoff with the Republican House speaker, Kevin McCarthy, and averting a federal default that could have upended the world economy.Economists warned that a default could have caused the US unemployment rate to double while significantly damaging gross domestic product.In a televised address from the Oval Office on Friday evening, Biden said: “Passing this budget agreement was critical. The stakes could not have been higher.“If we had failed to reach an agreement on the budget, there were extreme voices threatening to take America, for the first time in our 247-year history, into default on our national debt. Nothing, nothing would have been more irresponsible.”The signing of the bill came one day after the Democratic-held Senate passed it in a bipartisan vote, 63-36, sending the proposal to Biden’s desk a few days before the 5 June deadline. A day earlier, the bill passed the Republican-controlled House by 314-117.“It was critical to reach an agreement, and it’s very good news for the American people,” Biden said on Friday. “No one got everything they wanted. But the American people got what they needed.”In a statement on Saturday, the White House thanked Democratic and Republican leaders in Congress “for their partnership”.The White House also tweeted video of Biden signing the bill in the Oval Office.Heralding the “safeguarding [of] Social Security, Medicare and Medicaid, and fulfilling our scared obligation to our veterans”, Biden said: “Now, we continue the work of building the strongest economy in the world.”The bill signing followed the release on Friday of strong monthly jobs figures.The new law will suspend the borrowing limit until January 2025, ensuring the issue will not resurface before the next presidential election.In negotiations with Biden, McCarthy secured concessions aimed at cutting government spending. The legislation includes a modest reduction in non-defense discretionary spending as well as changes to work requirements for the Supplemental Nutrition Assistance and the Temporary Assistance for Needy Families programs.The concessions were a partial defeat for Biden, who spent months insisting he would not negotiate and repeatedly called on Congress to pass a bill with no strings attached. The president was forced to the negotiating table after House Republicans passed a debt ceiling bill in late April.But as he discussed the compromise bill, Biden expressed pride that he and his advisers were able to rebuff many Republican demands. The bill passed by House Republicans would have enacted much steeper cuts and broader work requirements for benefits while raising the borrowing limit until 2024.“We averted an economic crisis, an economic collapse,” Biden said on Friday. “We’re cutting spending and bringing the deficits down at the same time. We’re protecting important priorities – from Social Security to Medicare to veterans to our transformational investments in infrastructure and clean energy.”Biden’s cause for celebration was a source of outrage among hard-right Republicans. The debt ceiling bill was opposed by 71 Republicans in the House and 17 in the Senate, who argued it did too little to address the federal debt of more than $31tn. Members of the House Freedom caucus repeatedly attempted to block the compromise bill.skip past newsletter promotionafter newsletter promotion“President Biden is happily sending Americans over yet another fiscal cliff, with far too many swampy Republicans behind the wheel of a ‘deal’ that fails miserably to address the real reason for our debt crisis: SPENDING,” Scott Perry of Pennsylvania, chair of the House Freedom caucus, said on Wednesday.Progressives harbored their own concerns, saying the cuts and work requirements amounted to a betrayal of voters. Five progressives in the Senate, including Bernie Sanders of Vermont, and 46 in the House decided to vote against the bill.“I could not in good conscience vote for a bill that cuts programs for the most vulnerable while refusing to ask billionaires to pay a penny more in taxes,” Sanders wrote in a Guardian op-ed on Friday. “Deficit reduction cannot just be about cutting programs that working families, the children, the sick, the elderly and the poor depend upon.”A particular source of anguish for progressives was the bill’s handling of defense spending. While non-defense priorities like education and healthcare will have to endure cuts, the Pentagon budget is set to grow. The inflated spending outlined in the bill did not go far enough for defense hawks already weighing options to spend more. Progressives saw the uneven distribution of cuts as an insult.“At a time when we spend more on the military than the next 10 nations combined I could not, in good conscience, vote for a bill that increases funding for the bloated Pentagon and large defense contractors that continue to make huge profits by fleecing American taxpayers with impunity,” Sanders wrote.In the end, the vast majority of Democrats voted to prevent a default.Biden’s signing of the bill prevents that outcome for now, but lawmakers will need to take up the matter again before January 2025, when the new suspension expires.Many Democrats and some economists have called for the elimination of the debt ceiling to remove any threat of default in future, progressives suggesting Biden can unilaterally do away with the borrowing limit by invoking the 14th amendment of the constitution. The amendment states that the validity of the public debt of America “shall not be questioned”.If Biden were to follow that path, the recent battle over the debt ceiling could prove to be the last.“The fact of the matter is that this bill was totally unnecessary,” Sanders wrote. “I look forward to the day when [Biden] exercises this authority and puts an end, once and for all, to the outrageous actions of the extreme right wing to hold our entire economy hostage in order to protect their corporate sponsors.” More

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      Joe Biden to address nation but delays debt ceiling bill signing; White House press secretary addresses president’s fall – live

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      From 3h agoWhite House press secretary Karine Jean-Pierre said Joe Biden won’t be signing the debt ceiling bill that passed Congress until tomorrow at the earliest.“It won’t be today. The House and the Senate have to do their business, so we’re going to work very quickly to get this done to make sure we can sign it hopefully as soon as tomorrow,” Jean-Pierre said. Treasury secretary Janet Yellen said that the debt ceiling must be raised by 5 June, which means that Biden must sign the bill by the weekend to avoid default. Jean-Pierre said the White House is confident they can get the bill signed before June 5.Jean-Pierre did not specify what Congress needs to do before getting it on Biden’s desk. Biden is planning to address the deal in a speech tonight at 7pm. Jean-Pierre said that he will focus on the bipartisan nature of the deal and how it benefits Americans.“When you think about what could have happened here, to our seniors, to our veterans, to American families,” Jean-Pierre said. “That is something the president believes he has an opportunity to talk directly to the American people [about]. This could’ve been, as we’ve said over and over again, devastating.”“He believes this is a good moment to lay that out and how we were able to come together to avert this crisis.”An appeals court ruling has revived an anti-discrimination lawsuit accusing an Albuquerque teacher of cutting off one Native American girl’s hair and asking another if she was dressed as a “bloody Indian” during class on Halloween.Associated Press reports:Outrage over the girls’ treatment propelled legislation in New Mexico and beyond that prohibits discrimination based upon hairstyle and religious head garments.The American Civil Liberties Union’s lawsuit accused Albuquerque Public Schools and a teacher of discrimination and fostering a hostile learning environment. ACLU of New Mexico Deputy Director Leon Howard said the ruling affirms that public schools are subject to antidiscrimination protections in the New Mexico Human Rights Act.The appellate ruling validates that all “students must feel safe at school and confident that their culture, history, and personal dignity are valued and respected by the public schools they attend,” Howard said in a statement.A lower court had determined that a public high school does not qualify as a “public accommodation” under the state’s civil rights law. The appellate ruling returns the lawsuit to state district court for a hearing on its merits.“If a public secondary school official in their official capacity were to refuse services to an individual based on the individual’s race, religion, or sexual orientation, then the New Mexico Human Right Act would surely apply,” Appeals Court Judge J. Miles Hanissee wrote.Lawmakers in Connecticut voted on Friday to prohibit anyone under 18-years old from being issued a marriage license.The legislation got passed in the Senate unanimously after a 98-45 bipartisan vote in the House of Representatives in May.Currently, in the state, a 16 or 17-year old can obtain a marriage license of their local probate court judge approves a petition that gets filed on the minor’s behalf by a parent or guardian, the Associated Press reports.According to a spokesperson from Democratic governor Ned Lamont office, the governor is planning sign the legislation into law.During the vote, senator Herron Gaston told his colleagues that his sister was married to a 50-year old man while she was 17-years old.
      “I’ve seen the devastating impact it has had on her physically, how it deprived her of her innocence and of her childhood,” he said.
      “She bore five children from this marriage and eventually had to flee from the island of Saint Lucia and down to Florida in order to get away from her abuser,” the Associated Press reports.
      A US air force colonel “misspoke” when he said at a Royal Aeronautical Society conference last month that a drone killed its operator in a simulated test because the pilot was attempting to override its mission, according to the society.Guardian staff and agencies report:The confusion had started with the circulation of a blogpost from the society, in which it described a presentation by Col Tucker “Cinco” Hamilton, the chief of AI test and operations with the US air force and an experimental fighter test pilot, at the Future Combat Air and Space Capabilities Summit in London in May.According to the blogpost, Hamilton had told the crowd that in a simulation to test a drone powered by artificial intelligence and trained and incentivized to kill its targets, an operator instructed the drone in some cases not to kill its targets and the drone had responded by killing the operator.The comments sparked deep concern over the use of AI in weaponry and extensive conversations online. But the US air force on Thursday evening denied the test was conducted. The Royal Aeronautical Society responded in a statement on Friday that Hamilton had retracted his comments and had clarified that the “rogue AI drone simulation” was a hypothetical “thought experiment”.“We’ve never run that experiment, nor would we need to in order to realise that this is a plausible outcome,” Hamilton said.For more details, click here:A federal judge who was presiding over Disney’s lawsuit against Florida governor Ron DeSantis has disqualified himself, citing a third-degree relative who has stock in the company “which could be substantially affected by the outcome of this case”, according to CNN.Walker had denied a motion from DeSantis’ lawyers to disqualify him from the case, saying that questions in previous cases raised “substantial doubts” about his impartiality.The judge criticized DeSantis’ lawyers, who “cherry-pick language from these cases to support their position without acknowledging the wholly distinguishable context underlying each decision”.Disney filed a lawsuit against DeSantis in April saying that the governor violated the company’s right to free speech after it spoke out against the state’s “Don’t Say Gay” law that banned instruction on sexual orientation and gender identity in schools. DeSantis took over the special district that Disney ran at its massive theme park in Florida near Orlando.Here’s quick summary of what’s happened today:
      Though the debt ceiling bill has passed Congress, the bill won’t be signed by the White House by Saturday at the earliest. The White House said that it is waiting for lawmakers to wrap up the bill and send it to Joe Biden’s desk for signing.
      Meanwhile, credit agency Fitch said that it could still downgrade the US government’s credit rating even though a deal has been passed. The agency said that the standoff over the limit “lowers confidence” in the ability of the government to pay its bill.
      The Republican National Committee set its requirements for qualifying for its first presidential debate in August. Candidates will need at least 40,000 individual campaign donors and poll at 1% across multiple national polls.
      The Department of Justice closed its investigation into Mike Pence for his having classified documents in his Indiana home. Pence faces no charges. The closing of the investigation comes as Pence is gearing up to announce a run in the 2024 election.
      Joe Biden is set to sign the debt ceiling bill that passed the Senate last night. He will deliver remarks tonight on the bill at 7 pm.
      Stay tuned for more live updates.Youtube announced today that it will no longer remove videos that make false claims about the 2020 election, saying in a blog post that continuing to remove these videos could “have the unintended effect of curtailing political speech without meaningfully reducing the risk of violence or other real-world harm”.The video platform said that it has removed “tens of thousands” of videos since it implemented its policy against election misinformation in December 2020.“The ability to openly debate political ideas, even those that are controversial or based on disproven assumptions, is core to a functioning democratic society – especially in the midst of election season,” the company said.The company said it will continue to remove content that discourages people from voting or contains misinformation about how to vote.Credit rating agency Fitch said on Friday that a downgrading of the US government credit rating is still possible, despite Congress passing a bipartisan bil to raise the debt ceiling . Fitch has put the US on a negative credit watch and said that while the passing of the bill is a “positive consideration”, “repeated political standoffs” over the debt limit “lowers confidence in governance on fiscal and debt matters”.The country’s credit rating has only been downgraded once in history. Credit rating agency S&P downgraded the country’s credit for the first time in 2011 after an impasse between Republicans in Congress and then-president Barack Obama. The downgrade occurred after the deal was made, as it was settled too close to the default date.A downgrading of the country’s credit rating will be costly for the country as it will make it more expensive for the country to borrow money, along with lowering confidence in the American dollar.White House press secretary Karine Jean-Pierre said Joe Biden won’t be signing the debt ceiling bill that passed Congress until tomorrow at the earliest.“It won’t be today. The House and the Senate have to do their business, so we’re going to work very quickly to get this done to make sure we can sign it hopefully as soon as tomorrow,” Jean-Pierre said. Treasury secretary Janet Yellen said that the debt ceiling must be raised by 5 June, which means that Biden must sign the bill by the weekend to avoid default. Jean-Pierre said the White House is confident they can get the bill signed before June 5.Jean-Pierre did not specify what Congress needs to do before getting it on Biden’s desk. Biden is planning to address the deal in a speech tonight at 7pm. Jean-Pierre said that he will focus on the bipartisan nature of the deal and how it benefits Americans.“When you think about what could have happened here, to our seniors, to our veterans, to American families,” Jean-Pierre said. “That is something the president believes he has an opportunity to talk directly to the American people [about]. This could’ve been, as we’ve said over and over again, devastating.”“He believes this is a good moment to lay that out and how we were able to come together to avert this crisis.”White House press secretary Karine Jean-Pierre is holding the daily press briefing right now and addressed a question on Joe Biden’s fall last night. Biden was in Colorado Springs at the graduation ceremony of the US Air Force Academy. Biden tripped on a sandbag onstage, caught himself with his hands and was helped up by three people.“He tripped over a sandbag on the stage, briefly he tripped and got up, and continued what he was there to do,” Jean-Pierre said. “There was no need for the doctor to see him.”Biden addressed reporters upon returning to Washington Thursday night, joking that “I got sandbagged”.The Republican National Committee is tightening the requirements candidates will have to meet in order to get on the debate stage in August. There are nine Republican 2024 presidential candidates so far, and a handful more are expected to announce their runs in the coming weeks.Candidates will have to get at least 40,000 individual campaign donors and receive at least 1% of voters in multiple national polls, according to the Washington Post. The first debate will be held in Milwaukee and hosted by Fox News.Donald Trump and Ron DeSantis are currently the clear frontrunners, according to polls, with Trump ahead of the Florida governor by at least 30 points. Other candidates, like Nikki Haley and Tim Scott, have been polling well under 10%.Donald Trump’s attorneys have been unable to find a classified document the former president said he had in a recording that was ultimately given to prosecutors, according to CNN.The recording, taken in July 2021 at a Trump golf course in Bedminster, New Jersey, has the former president saying that he retained a document on a potential attack on Iran.Prosecutors have subpoenaed Trump for all classified materials and have recovered classified documents throughout 2022. Trump attorneys turned over more documents in March, but it did not include the document on Iran.A Florida man who stormed the US Capitol on January 6 was sentenced on Friday to three years in prison, the latest in a string of prison sentences for those who participated in the January 6 insurrection.45-year-old David Moerschel, a neurophysiologist from Punta Gorda, Florida, was convicted in January with three other members of the Oath Keepers, reported the Associated Press.Several members of the antigovernment extremist group have been charged for their roles in a plot led by several far-right groups to stop Joe Biden from becoming president after the 2020 election results.In total, nine people associated with the Oath Keepers have been tried with seditious conspiracy, AP reported, including Moerschel.Six have been convicted on the charge.House Speaker Kevin McCarthy has invited Indian prime minister Narendra Modi to speak to Congress during his visit to Washington DC on June 22. Modi will also meet with Joe Biden for a state dinner that night.In a letter to Modi, McCarthy said that Modi in his address “will have the opportunity to share your vision for India’s future and speak to the global challenges our countries both face”. More

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      Joe Biden hails ‘big win’ as bipartisan debt ceiling bill reaches his desk

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      The bipartisan bill to solve the US debt ceiling crisis just days before a catastrophic and unprecedented default was on its way to Joe Biden’s desk on Friday as the US president prepared to address the nation and hailed “a big win for our economy and the American people”.The compromise package negotiated between Biden and the House speaker, Kevin McCarthy, passed the US Senate late on Thursday.Biden acknowledged that it leaves neither Republicans nor Democrats fully pleased with the outcome. But the result, after weeks of torturous negotiations, shelves the volatile debt ceiling issue until 2025, after the next presidential election.“No one gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a big win for our economy and the American people,” Biden tweeted after the Senate voted 63 to 36 to pass the deal agreed between Biden and McCarthy last weekend, which passed the House on Wednesday.The final Senate vote capped off a long day that ground into night, as lawmakers spent hours considering amendments to the legislation. All 11 of the proposed amendments failed to gain enough support to be added to the underlying bill.Several of the amendments were introduced by Senate Republicans who expressed concern that the debt ceiling bill passed by the House did too little to rein in government spending.“Tonight’s vote is a good outcome because Democrats did a very good job taking the worst parts of the Republican plan off the table,” the Senate majority leader, Democrat Chuck Schumer, said after the vote.As part of the negotiations over the bill, McCarthy successfully pushed for modest government spending cuts and changes to the work requirements for the Supplemental Nutrition Assistance and the Temporary Assistance for Needy Families Programs. Those changes were deemed insufficient by 31 Republican senators, who echoed the criticism voiced by the 71 House Republicans who opposed the bill a day earlier.The Senate minority leader, Republican Mitch McConnell, supported the bill, even as he acknowledged that lawmakers must take further action to tackle the federal government’s debt of more than $31tn.Senate Democrats lobbied against certain provisions in the bill, namely the expedited approval of the controversial Mountain Valley natural gas pipeline. Senator Tim Kaine, a Democrat of Virginia, introduced an amendment to remove the pipeline provision from the underlying debt ceiling bill, but that measure failed alongside the 10 other proposed amendments.Refusing a once-routine vote to allow a the nation’s debt limit to be lifted without concessions, McCarthy brought Biden’s White House to the negotiating table to strike an agreement that forces spending cuts aimed at curbing the nation’s deficits.“The fact remains that the House majority never should have put us at risk of a disastrous, self-inflicted default in the first place,” said Senator Chris Coons, a Democrat. “We should prevent the debt ceiling from being used as a political hostage and stop allowing our country to be taken up to the edge of default.” More

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      ‘It left me with nothing’: the debt trap of payday loans

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      Meka Armstrong of Detroit, Michigan, has struggled in a cycle of debt from payday loans for years. She first took out a payday loan in 2010 to cover the costs of medication she needs as she is disabled and lives with lupus.“Worst decision I ever made,” said Armstrong. “The interest rate was 49% and I thought I would get my medications and pay the money back, but when I paid the money back, it left me with nothing. That’s how they get you. I, unfortunately, started the payday nightmare, and you can’t get out of the loop.”Armstrong is just one of the 12 million Americans who take out payday loans annually in the states where payday lending is not prohibited, shelling out up to $9.8bn in fees to payday lenders every year. The industry targets Black borrowers such as Armstrong, and Latinos, who are more likely to have lower credit scores and be unbanked compared with their white counterparts.A payday loan is a short-term, high-cost loan typically due on an individual’s next payday. But the payday industry thrives and depends on borrowers who take out numerous loans and face exorbitant fees and interest rates when they can’t keep up. Payday lenders collect 75% of their fees from borrowers who take out 10 or more loans a year, according to the Consumer Financial Protection Bureau.The average payday loan customer has an annual income of about $30,000 and four in five payday loans are rolled over or renewed. The average payday borrower stays in debt for five months, paying $520 in fees to borrow $375 on average. The majority of borrowers, seven out of 10, take out payday loans to pay rent, utilities or other basic expenses.It took Armstrong years to get out of the debt cycle, which she said was difficult because the payday lenders have borrowers’ bank account information, can sue them and even threaten them with jail time for nonpayment.During the Covid pandemic, Armstrong had to take out another payday loan, even though she had previously experienced the debt trap and the consequences of doing so, because she caught Covid in 2020 and was sick.“It’s embarrassing because I know how predatory they are, but I had Covid-19 for 98 days, almost died, my whole house was sick and we were behind on bills,” she added. “I’m still in the payday nightmare because of that desperation unfortunately.”The US has a poor record when it comes to regulating payday lenders. Currently 20 states and Washington DC have enacted rate caps of 36% annually or less to rein in the cycle of debt that traps consumers who take on payday loans, aligning these states with the federal Military Lending Act passed during the George W Bush administration that capped annual interest rates on consumer loans for active duty military at 36%.In states without caps, the average annual interest rate for payday loans is about 400% and as high as 664%.“The debt trap is very much by design and it’s how payday lenders’ business model works,” said Yasmin Farahi, deputy director of state policy and senior policy counsel at the Center for Responsible Lending. “They succeed by making sure their customers fail. They target low-income communities and communities of color, and it’s a model that’s based on their customers failing, essentially, for them to stay in business and generate fees.”In Minnesota, the state legislature recently passed a law to cap interest rates on payday loans to 36% annually, from average annual interest rates in the state of 220% in 2022.Opponents to the legislation claimed the cap would deter lenders from doing business in Minnesota, though advocates have countered that this has not been the case in states where similar legislation has already been enacted.“It’s meant to be a continuous cycle,” said a payday loan recipient in Minnesota who requested anonymity. “You end up having an emergency, and then you think that, OK, I can pay this off, it’ll be a one-time thing and that’ll be that, but then your next paycheck comes, and it comes out of your bank account automatically and then you’re essentially just back where you started. So then you have to take the same loan out, basically the same day that you pay it off. And it just keeps going and going and going every payday.”Anne Leland Clark, the executive director of Exodus Lending in Minnesota, supported the cap. The legislation was split across partisan lines with Democrats introducing and supporting the bill though polling across political lines showed 79% of Minnesotans supporting a 36% or lower interest rate cap.Prior to Democrats in Minnesota winning a trifecta majority in the state government in November 2022, efforts were made at the local level to enact interest rate caps.“No longer will people be turning and getting into debt traps, or balloon payments, where their ability to repay is not accounted for,” said Clark.She noted a provision was added to the legislation that would permit lenders to charge 50% annual interest rates as long as they report doing so, but Clark noted her organization will be monitoring to see how lenders utilize the provision.“When you crowd out the predators, people are going to turn to and find the more responsible lenders and the more responsible lenders are going to license in your state,” Clark added.Jason Ward, a bankruptcy lawyer in South Carolina, where payday lending is permitted and unregulated, said over half of his clients filing for bankruptcy have at least one payday loan.The average annual interest rate for a payday loan in South Carolina is 385 %.“The interest numbers are so high that I honestly don’t believe the payday loan companies even intend to get paid back,” said Ward.He said many of his clients take out the loans out of desperation to cover basic expenses and that desperation is taken advantage of by payday lenders who know many clients will accept loans with exorbitant terms because they are just focusing on trying to survive at the present.“When you weigh how desperate somebody can be with what’s being offered, you get the sense that it can be predatory,” Ward said. “I don’t think people understand the desperation of a lot of people’s situations.” More

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      US debt ceiling deal narrowly passes senate averting catastrophic federal default

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      The Senate narrowly passed a bill to suspend the debt ceiling on Thursday night, sending the legislation to Joe Biden’s desk and averting a federal default that could have wreaked havoc on the US economy and global markets.The final vote was 63 to 36, with 46 Democrats and 17 Republicans supporting the bill while five Democrats and 31 Republicans opposed the legislation. Sixty votes were needed to pass the bill.“Tonight’s vote is a good outcome because Democrats did a very good job taking the worst parts of the Republican plan off the table,” the Senate majority leader, Democrat Chuck Schumer, said after the vote. “And that’s why Dems voted overwhelmingly for this bill, while Republicans certainly in the Senate did not.”Biden applauded the Senate’s accomplishment and promised to sign the bill as soon as it reaches his desk, with just days to go before the 5 June default deadline.“Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States,” Biden said in a statement. “Our work is far from finished, but this agreement is a critical step forward, and a reminder of what’s possible when we act in the best interests of our country.”The Senate vote came one day after the House passed the debt ceiling bill in a resounding, bipartisan vote of 314 to 117. The bill – which was negotiated between Biden and the House Republican speaker, Kevin McCarthy of California – will suspend the government’s borrowing limit until January 2025, ensuring the issue will not resurface before the next presidential election.The final Senate vote on the bill capped off a long day in the upper chamber, where lawmakers spent hours considering amendments to the legislation. All 11 of the proposed amendments failed to gain enough support to be added to the underlying bill.Several of the amendments were introduced by Senate Republicans who expressed concern that the debt ceiling bill passed by the House did too little to rein in government spending.As part of the negotiations over the bill, McCarthy successfully pushed for modest government spending cuts and changes to the work requirements for the Supplemental Nutrition Assistance and the Temporary Assistance for Needy Families Programs. Those changes were deemed insufficient by 31 Republican senators, who echoed the criticism voiced by the 71 House Republicans who opposed the bill a day earlier.“It doesn’t go far enough. It doesn’t do the basic things that it purports to do,” Senator Mike Lee, a Republican of Utah, told Fox News on Thursday morning. “In case after case, the cuts that it proposes won’t materialize.”The Senate minority leader, Republican Mitch McConnell, supported the bill, even as he acknowledged that lawmakers must take further action to tackle the federal government’s debt of more than $31tn.“The Fiscal Responsibility Act avoids the catastrophic consequences of a default on our nation’s debt,” McConnell said on the floor on Thursday morning. “The deal the House passed last night is a promising step toward fiscal sanity. But make no mistake: there is much more work to be done. The fight to reel in wasteful government spending is far from over.”As some of their colleagues lamented the state of America’s debt, defense hawks in the Senate Republican conference warned that the legislation does not sufficiently fund the Pentagon, leaving the US military vulnerable in the face of foreign threats.skip past newsletter promotionafter newsletter promotionSchumer and McConnell attempted to allay those concerns by entering a statement into the record reaffirming that America stands ready to “respond to ongoing and growing national security threats”.“This debt ceiling deal does nothing to limit the Senate’s ability to appropriate emergency supplemental funds to ensure our military capabilities are sufficient to deter China, Russia and our other adversaries,” the joint statement read. “The Senate is not about to ignore our national needs, nor abandon our friends and allies who face urgent threats from America’s most dangerous adversaries.”The Senate leaders released a second statement aimed at reassuring colleagues who expressed alarm over a provision stipulating that an across-the-board spending cut will be enacted if Congress does not pass all 12 appropriations bills for fiscal year 2024. The measure was designed to incentivize Congress members to pass a full budget, which has proven to be a difficult task in recent years, but lawmakers fear the policy will lead to more spending cuts.“We share the concern of many of our colleagues about the potential impact of sequestration and we will work in a bipartisan, collaborative way to avoid this outcome,” Schumer and McConnell said. “The leaders look forward to bills being reported out of committee with strong bipartisan support.”Senate Democrats also lobbied against certain provisions in the bill, namely the expedited approval of the controversial Mountain Valley natural gas pipeline. Senator Tim Kaine, a Democrat of Virginia, introduced an amendment to remove the pipeline provision from the underlying debt ceiling bill, but that measure failed alongside the 10 other proposed amendments.Despite their personal concerns about the details of the bill, most Senate Democrats, including Kaine, supported the legislation to get it to Biden’s desk and avoid a devastating default that economists warned could result in millions of lost jobs. With the immediate crisis averted, Democrats reiterated their demands to eliminate the debt ceiling and remove any future threat of default.“The fact remains that the House majority never should have put us at risk of a disastrous, self-inflicted default in the first place,” said Senator Chris Coons, a Democrat. “We should prevent the debt ceiling from being used as a political hostage and stop allowing our country to be taken up to the edge of default.” More

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      Apostle of bipartisanship: why US debt ceiling deal was a victory for Joe Biden

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      Sometimes presidencies are about things that don’t happen. Joe Biden will be breathing a mighty sigh of relief that the economic asteroid hurtling towards planet Earth turned into a near miss: America is apparently not going to default on his watch.As a bipartisan deal to suspend the $31.4tn debt ceiling passed the House of Representatives on Thursday, Biden could also claim vindication for the underlying theory of his presidency: that in the age of polarisation it takes an apostle of bipartisanship and a 36-year veteran of the Senate to reach across the aisle and make deals with his opponents.Only Biden, the argument goes, can bridge divides that seem unbridgeable in the age of Donald Trump.Such deals come at a price, of course. Not even the White House claimed that the hard-won budget agreement is a cornucopia of delights for the Democratic base. But it was notable that more Democrats than Republicans voted for the 99-page bill, an unofficial scorecard of who got more of what they wanted, and even progressives who opposed it reserved their contempt for its contents rather than their president.For sure, there will be plenty of time to debate how Biden and Democrats could have played this episode better. They could have raised or abolished the debt limit when they had control of the White House and both chambers of Congress. Senator Tim Kaine of Virginia told the Politico website that if he could “do one thing different, it would have been raising the debt limit late last year”.The president may have also been lulled into a false sense of security by the shenanigans around Kevin McCarthy’s election as House speaker in January. It took 15 ballots and implied a Republican majority mired in division and dysfunction. But Democrats underestimate Republicans’ ability to fall into line at their peril.McCarthy managed to steer his unwieldy coalition into passing a debt limit bill stuffed with conservative priorities and spending cuts. If Biden hoped that moderate Republicans would bow to logic – the debt limit is about spending that Congress has already authorised, not future appropriations – and break ranks, rather than embrace the apocalyptic prospect of default, he had to think again.The president duly cancelled a trip to Australia and Papua New Guinea to hold talks with McCarthy. He deployed a negotiating team that included Shalanda Young, director of the Office of Management and Budget, working such long hours that she admitted to reporters she had run out of clean clothes.What emerged was a deal that protected Biden’s legislative accomplishments including the Bipartisan Infrastructure Law and Inflation Reduction Act, fending off Republicans attempts to repeal the latter’s green energy incentives. The White House also swept aside Republican proposals to slash funding for education, healthcare, law enforcement and social security.The argument that “it could have been worse” is hardly an inspiring re-election slogan but the White House would contend that it is realistic in divided government. If anyone channels Biden’s bipartisan spirit it is Young, a former staff director of the House appropriations committee who speaks his language of compromise, flexibility and give and take.She insisted: “Look, the House is not very different from when I was there. You have to have some faith in the governing majority, which I do, because I have a lot of respect for members on both sides of the aisle to do what’s best for the American people. And that is not some pollyannish thing. I know them. And I’ve always thought we could get here if we let the extreme go away.”Letting the extreme go away, as Young puts it, has typically been a doomed enterprise since Trump’s descent on an escalator at Trump Tower in 2015 signalled the descent of the Republican party into a personality cult. The far-right Freedom caucus unleashed sound and fury against the deal, inadvertently complimenting Biden on having outfoxed McCarthy (quite an achievement for a man they also insist is senile).skip past newsletter promotionafter newsletter promotionOn the left, there was opposition from Pramila Jayapal, Alexandria Ocasio-Cortez and other progressives. They condemned work requirements for food aid programmes for some poor Americans, reduced funding for the Internal Revenue Service that could make life easier for wealthy tax cheats, and the speeding up of the permitting process for a natural gas pipeline in West Virginia (home of the conservative Democratic senator Joe Manchin).This could chip away at Biden’s long-term support, fuelling a perception that he is pivoting to the centre as 2024 approaches. But again, it could have been worse.There was no mass revolt against him. Progressives understood that “Maga Republicans” had taken the economy hostage and left Biden with no choice but to negotiate the ransom. Congressman Jamie Raskin said: “We need to make sure this kind of legislative extortion never happens again.” The president constantly benefits from the “Don’t judge me against the Almighty, judge me against the alternative,” dynamic.The bill now heads to the Senate after a House vote that, as a purple blend of Democrats and Republicans, could hardly have been more Bidenesque in hitting the sweet spot between left and right. It was his predecessor who wrote a book entitled The Art of the Deal. But it is Biden who continues to exceed low expectations by finding common ground in the disappearing middle. More