![]() Rick Newman is a senior columnist for Yahoo Finance. Biden is due to meet with House Speaker Kevin McCarthy to start negotiations on May 9, with with few breakthroughs expected until markets demand them. Democrats want to raise the debt ceiling for two years or more and address spending cuts separately, which Republicans say would only delay needed action to reduce the federal debt. There's no chance Democrats who control the Senate will approve that bill, plus President Biden has said he'll veto it. Republicans have passed a bill that raises the borrowing limit for about one year, in exchange for $4.5 trillion in spending cuts during the next decade. 1, people wouldn’t start negotiating till August. “I don’t think the United States is going to default,” former Treasury Steven Mnuchin said at the Milken conference. Most analysts think Congress will raise the debt limit one way or the other, with the main question being how much damage it could cause if it happens like TARP did, beyond the last second. “Markets absolutely tanked and policymakers called everybody saying, 'What do we do?'” MacGuineas recalls. Congress got the message and four days later passed TARP after all. The S&P 500 ( ^GSPC), already down 19% for the year, fell another 7% in one day. TARP failed to pass on its first vote, which took place just after Lehman Brothers failed and the government took control of mortgage giants Fannie Mae and Freddie Mac. That was the Troubled Assets Relief Program, the huge bailout bill that helped stabilize the banking sector during the 2008 financial crash. “It shouldn't be, but I can't help but reminding people, 'Hey folks, do your job without making stock markets do it for you.'”Įvery finance pro at the Milken conference knows there’s precedent for the stock market forcing Congress to act in an emergency. “It could be markets that force lawmakers to do their jobs,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget,” told Yahoo Finance at the Milken conference. The federal government faces a historic default this summer if Congress fails to act, according to warnings from nonpartisan forecasters. One condition proposed would expand the age range of the work requirement for low-income people to participate in the Supplemental Nutrition Food Assistance Program (SNAP). Speaker McCarthy visited the NYSE to talk about the state of the economy and the conditions Republicans want Democrats to agree on, in exchange for lifting the federal debt ceiling. ![]() NEW YORK, NEW YORK - APRIL 17: Speaker of the House Kevin McCarthy (R-CA) delivers a speech about the economy at the New York Stock Exchange (NYSE) on Apin New York City. All Congress needs to do is pass a new law raising the borrowing limit, but Republicans demand spending cuts as a condition of doing that, and Democrats say no way. Treasury Secretary Janet Yellen said on May 1 that the Treasury is likely to run out of maneuvering room by early June, forcing it to prioritize payments, leaving some bills unpaid. has been shifting money among accounts to keep paying the nation’s bills. The government hit the Congressionally-authorized borrowing limit in January. government to default on its obligations. ![]() If politicians don’t listen to the CEOs and economists telling them to hurry up and resolve the debt-ceiling crisis, a more formidable master may intervene: the stock market.īusiness leaders attending this year’s Milken Institute Global Conference in Beverly Hills, Calif., are as frustrated as anybody that Democrats and Republicans in Washington, D.C., are manufacturing an artificial crisis in which Congressional failure to raise the federal borrowing limit could force the U.S.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |