The cash balance in the government’s account rose on Monday. It started the day with just $87.431 billion, had revenues of $174.485 billion and expenditures of $167.288 billion, ending the day with $94.629 billion.
The debt ceiling has always been a tool for Republicans to force through measures that would otherwise never get legislative approval.
Naomi Klein’s Shock Doctrine book describes how conservatives in this country and abroad use a crisis — natural disasters and other unexpected calamities — to push through policies that would never win legislative support. What happened was, in the Obama administration, his Republican adversaries realized they could actually plan a crisis by refusing to increase the debt ceiling and then use the shock doctrine to push through their desired policy (spending cuts and, if they can get away with it, tax cuts too).
At the end of day on Thursday, May 11, the amount that the government had in its operating cash account to pay its bills was $143.314 billion. On Friday May 12th, the income was $15.982 billion and the outflow was $19.352 billion, leaving a reduced cash balance at the end of that day of $139.944 billion. As the days go by, the trend line for the closing balance is to keep dropping, though on some days the balance might rise.
The current debt ceiling limit was last raised on December 16, 2021 to $31.4 trillion. If you want to know the value of the US debt down to the last cent, as of May 12th, it was $31,458,532,169,329.81. How can it be larger than the limit by about $58 billion? It is because “under current law, [the Treasury] can take well-established “extraordinary measures” to borrow additional funds without breaching the debt ceiling.” But there is a limit to such extraordinary measures. The nominal limit of $31.4 trillion was reached back in January.
I am not sure how low the cash balance has to sink before it becomes a full-fledged crisis. Such a date is known as the ‘X-date’. This article discusses some of the known expenditures to come and who might get paid if the debt ceiling is not raised. But the Biden administration has ruled out paying some bills and not others.
The deadline is looming for the debt ceiling to be raised to avoid the US government going into some sort of default, never a good thing. The early deadlines have already passed with some accounting devices being used to avoid default so far but June 4th is said to be the final deadline for getting the ceiling raised.
Republicans in the House of Representatives, ostensibly led by speaker Kevin McCarthy but actually by the nutter caucus of the party, have demanded that Joe Biden agree to negotiations on spending cuts before they will raise the ceiling. But Biden has said that while he is willing to negotiate on the budget, he will not do so as part of the debt ceiling. Biden has released his own budget and asked the Republicans to do the same before any negotiations can begin but so far they have not been able to come up with a budget that will satisfy the disparate elements of their caucus, especially the nutters who are now so dominant.
Yesterday Joe Biden released his budget proposals for the next fiscal year. In the ritualistic role-playing that is the annual budget process in the US, a president’s proposals are taken seriously as likely to be implemented only if the president’s party controls both houses of Congress. Otherwise, the opposition party that is the majority will dismiss the proposals outright. Those are the usual opening moves in this dance and it is being followed this time with Republican speaker Kevin McCarthy and others in his party’s leadership dismissing the budget.
In a joint statement, House speaker Kevin McCarthy and other top Republicans accused Biden of “shrugging and ignoring” the national debt, which they called one of the “greatest threats to America”.
”President Biden’s budget is a reckless proposal doubling down on the same far-left spending policies that have led to record inflation and our current debt crisis,” the statement said.
McCarthy’s statement looked like it might have been written well in advance since he accuses the Biden budget of ignoring the national debt when in fact Biden argues that his budget will lower it by $2.9 trillion over the next ten years. The precise numbers are always subject to debate but it is incorrect that Biden is ‘ignoring’ it when it is the top line item.
Joe Biden sometimes surprises me. I never had a high opinion of him, seeing him as epitomizing the neoliberal centrism of the political establishment, a caretaker of the status quo and an appeaser of the right wing. My support of him during the last election was driven by my horror at the thought of the lying, grifting, narcissist Donald Trump getting to be president for another four years. But I must admit that Biden has done better than I expected. True, he is no Bernie Sanders when it comes to advancing progressive policies but he has managed to push through some important pieces of legislation in his first two years that have made real improvements in the lives of ordinary people.
A big test is the one that will occur this June or so when failure to raise the debt ceiling will reach a crisis point. Republicans were clearly planning to use that issue as a hostage to obtain cuts in spending. What cuts? They refuse to specify but their target has always been programs that benefit those who are in need. (For a list of the programs that they are likely targeting, see here.) But their main target has always been the Big Three: Social Security, Medicare, and Medicaid. These programs are expensive but extremely popular and cutting them will cause a backlash. Republicans know this and thus they seek to create a crisis so that cuts to them will be seen as inevitable and have Democrats share at least part of the blame.
The invaluable investigate journalism organization ProPublica has started releasing analyses of tax data of wealthy people that it received from a source that reveal in great detail what we have always suspected, that the rich find all manner of ways to avoid paying taxes. Their receipt of this confidential information was likely made possible because of the ways that media organizations created in the wake of the Edward Snowden revelations that enabled sources and whistleblowers to anonymously transmit confidential information to trusted media sources with the media source not knowing where it came from and thus unable to reveal them either accidentally or under coercion.
ProPublica is not disclosing how it obtained the data, which was given to us in raw form, with no conditions or conclusions. ProPublica reporters spent months processing and analyzing the material to transform it into a usable database.
We then verified the information by comparing elements of it with dozens of already public tax details (in court documents, politicians’ financial disclosures and news stories) as well as by vetting it with individuals whose tax information is contained in the trove. Every person whose tax information is described in this story was asked to comment. Those who responded, including Buffett, Bloomberg and Icahn, all said they had paid the taxes they owed.
This first report is eye-opening.
France is experiencing unrest over President Macron’s proposal to raise the retiring age, when workers can start collecting their pensions, from 62 to 64 by 2030. Nationwide strikes have been called over this issue. As Kevin Drum points out, the unfairness of fixing by age when people can retire is true for the US too, because people whose work involves manual labor typically start work at an earlier age than those who go to college and get advanced degrees. Not only do the latter they put in fewer years of work, the work they do takes much less of a toll on their bodies and, crucially, they live longer.
Republican speaker Kevin McCarthy is due to meet with president Joe Biden on Wednesday. What about? It depends. According to the White House, the talks will be about raising the debt ceiling and avoiding a default. According to McCarthy, it is about what kind of budget cuts Biden will agree to in exchange for raising the debt ceiling.
House Speaker Kevin McCarthy said Sunday he is looking forward to discussing with President Joe Biden a “reasonable and responsible way that we can lift the debt ceiling ” when the two meet Wednesday for their first sit-down at the White House since McCarthy was elected to the post.
McCarthy, R-Calif., said he wants to address spending cuts along with raising the debt limit, even though the White House has ruled out linking those two issues together as the government tries to avoid a potentially devastating financial default.
Asked whether he would make a guarantee, McCarthy said, “There will not be a default,” though he suggested that declaration depended on the willingness of Biden and Democrats to negotiate.
The White House on Sunday confirmed Wednesday’s meeting on “a range of issues.” It said Biden looked forward to “strengthening his working relationship” with McCarthy and to asking about the speaker’s plan on spending, noting that the first House bill passed by Republicans this year to slash IRS funding would ultimately increase the deficit.
Evan Osnos exposes the many ways in which the ultra-wealthy shield their income from taxes even when they die, using loopholes that are not available to ordinary people. They do this while claiming to be philanthropists by putting their names on things, which are also forms of tax avoidance. But one the main ways they avoid taxes is by means of creating elaborate trusts that ensure that their children and their children pay little or no taxes on their inheritances when they die. These trust fund babies continue their tax avoidance schemes. The consequences are apparent.
And yet, in recent times, the fortunes of many prominent American clans have soared…. In 1978, the top 0.1 per cent of Americans owned about seven per cent of the nation’s wealth; today, according to the World Inequality Database, it owns eighteen per cent.
A century ago, American law handled the rare pleasure of a giant inheritance with suspicion. Instead of allowing money to cascade through generations, like a champagne tower, we siphoned off some of the flow through taxes on estates, gifts, and capital gains. As the Supreme Court Justice Oliver Wendell Holmes wrote in 1927, “Taxes are what we pay for civilized society.” But, since the late seventies, American politics has taken a more accommodating approach to dynastic fortunes—slashing rates, widening exemptions, and permitting a vast range of esoteric loopholes for wealthy taxpayers. According to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley, the average tax rate on the top 0.01 per cent has fallen by more than half, to about thirty per cent, while rates for the bottom ninety per cent have climbed slightly, to an average of twenty-five per cent.
That lucrative maneuvering is the realm of specialized attorneys, accountants, and money managers, many of whom work for family offices: in-house financial teams that typically include a dozen or so full-time attendants… They tend to have no public presence—Gordon Getty’s family office is known, inconspicuously, as Vallejo Investments—but by some estimates they control about six trillion dollars in assets, a larger sum than is managed by all the world’s hedge funds.