US lawmakers moved closer to a deal on Monday to fund the government through next year, potentially avoiding a shutdown that would have further damaged Congress’ tattered reputation ahead of the 2012 election, Reuters reports. The group of Republican and Democratic lawmakers tentatively agreed on how to fund a wide range of government functions from homeland security to protecting the environment, congressional aides said. The details were not immediately available and lawmakers were expected to publish the massive spending bill on Tuesday, said Reuters. “There are still a couple of open items that need to be ironed out. These aren’t deal breakers or game changers but are still important issues,” said a Democratic spokesman for the appropriations committee in the House of Representatives. Read more
Markets reflected growing concern at the impasse over the US debt ceiling limits late Tuesday and early Wednesday. In Asia, the FT reports, shares continued to struggle, with the Nikkei falling 0.6 per cent, led by banks and exporters. In the US, the S&P 500 closed 0.4 per cent lower. Treasury yields rose, the dollar hit a four-month low against the yen and gold reached a new record in response to the stand-off, reports Reuters. Congress has begun gearing up for its first critical vote on the US debt limit, but the FT says Republican leaders are grappling with a possible conservative mutiny which could threaten their hopes of avoiding a US default through a two-step increase in borrowing authority. The plan to hold a vote on Wednesday also took a hit from Congressional Budget Office analysis which showed it would save less money than anticipated. Most Democrats and the White House oppose the plan. Read more
You’re looking at an excerpt from the 2008 Housing and Economic Recovery Act. That’s the thing which created the Federal Housing Finance Agency (FHFA), which is currently charged with regulating the US’s massive Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac. Read more
Barack Obama repeatedly pressed Republican leaders to reconsider their decision to abandon a $4000bn fiscal reform package at a high-stakes White House summit on Sunday night, the FT says. According to a Democratic official, the US president’s pleas were rejected by Republican leaders, who over the weekend said negotiations would have to focus on a less ambitious package worth about $2,000bn that would allow for an increase in America’s borrowing limit, but delay a solution to the country’s long-term fiscal woes until after the 2012 presidential election. Talks on the debt ceiling will resume on Monday. In the meantime, New York Times columnist Ross Douthat explains the method behind the Republican “madness.” Both Treasury secretary Tim Geithner and new IMF chief Christine LaGardewarned over the weekend of the ramifications of a US default, reports Reuters. Read more
Republicans in the House of Representatives have splintered over plans to reform Medicare, the healthcare programme for the elderly, entering new budget talks in apparent disarray, the FT reports. A month ago, House Republicans proposed dramatic changes to Medicare as part of their 2012 budget, a politically risky blueprint designed to highlight the party’s determination to curb the mounting US debt load. But this week, just as the White House and lawmakers began fresh negotiations on a deal to raise the US debt limit – Republicans sent conflicting messages on whether they would continue to push for Medicare reform. The LA Times says Republicans are acknowledging that their plan to privatise Medicare isn’t moving forward any time soon as talks over how to shrink the federal deficit continue. Read more
The White House looks set to take a more aggressive negotiating stance against Republicans in the next fight over US fiscal policy: the vote in Congress to increase the nation’s $14,300bn debt limit, the FT says. Three days after Mr Obama helped settle a budget dispute that avoided a partial government shutdown, the White House said a decision by Republicans to “play chicken” with a vote over the debt limit would have “Armageddon”-like consequences for the US economy. Bloomberg reports that the US on Tuesday unveiled legislation identifying which programs would be cut in order to produce the $38bn in savings promised by the president and congressional leaders of both parties. The Environmental Protection Agency, high-speed rail, agriculture and law enforcement are among the programmes that would get reduced funding as part of the budget deal reached last week to avert a government shutdown. Read more
Republicans in the House of Representatives vowed to present a long-term budget proposal that would cut more than $4,000bn from US deficits over the next decade, exceeding the target set by a bipartisan fiscal commission appointed by Barack Obama, the FT says. With details expected to be released on Tuesday, Paul Ryan, chairman of the House budget committee, said his party’s plan would put the brakes on the growth of Medicare and Medicaid, the two largest government healthcare programmes, while proposing deep cuts and caps to spending. The WSJ says the plan would essentially end Medicare. Read more
The Republican plan to slash government spending by $61bn in 2011 could reduce US economic growth by 1.5 to 2 percentage points in the second and third quarters of the year, a Goldman Sachs economist has warned, the FT says. The note from Alec Phillips, a forecaster based in Washington, was seized in the ongoing US budget fight by Democrats as validating their argument that the legislation approved by the Republican-led House of Representatives last Saturday would do significant damage to the US recovery. ABC News has a copy of the report. Read more
Republican leaders in the House of Representatives are in the early stages of crafting a new short-term bill to fund the US government, congressional aides said, in a sign that they are open to a compromise that would avoid a shutdown of the federal government, according to the FT. On Saturday the House passed an aggressive budget measure for the rest of the fiscal year that includes $61bn in spending cuts, which has been criticised by Democrats and the White House as too draconian. But only a few days later it has emerged that Republican party leaders are preparing a bill that would fund the government for a much shorter period, with fewer spending cuts. Read more
Senators from both leading parties expressed hope on Sunday that a budget deal could be reached by early March, but any details were lacking and fears remained that the US could face a 1990s-style shutdown of the federal government, the FT reports. On Saturday, the Republican-controlled House of Representatives voted to approve $61bn in spending cuts from a bill to fund the government for the rest of the fiscal year, which ends on September 30. But Democrats and Barack Obama’s administration are opposing the measures, on the grounds that such fiscal retrenchment could damage the US recovery. With the government funded only through March 4, the government could run out of money if lawmakers fail to act, but both sides have been urging compromise, Reuters adds. Read more
Like its predecessor, the 112th Congress has proven it’s possible to shoot oneself in the foot while putting it in one’s mouth.
House Republicans said in their Pledge to America that: Read more
Hispanic voters’ apparent disenchantment with Republicans is likely to become a growing problem for the party after US census results showed that population gains in mostly Republican “Sun Belt” states were driven by Latino voters, the FT reports. Texas, a solid “Red” state that supported John McCain in the 2008 presidential election, is gaining four new seats in the House of Representatives. according to census results. But two of them could well be won by Democrats, analysts say, marking the beginning of a gradual shift that could favour Democrats in states such as Nevada, Arizona and Colorado. Read more
The US deficit commission’s contentious recommendations to slash $3,900bn from budget deficits by 2020 received a boost when two senators said they would introduce legislation early next year mirroring the panel’s proposals, the FT reports. The move by Saxby Chambliss, a Georgia Republican, and Mark Warner, a Virginia Democrat, is an attempt to rally Congress towards a difficult bipartisan consensus on steps to tackle the long-term debt problem in the US. It could add pressure on the Obama administration to come up with its own deficit reduction plan ahead of the state of the union address and the 2012 budget proposal, expected in February. Read more
The US Senate has given its final stamp of approval to the deal to extend Bush-era tax cuts in a 81-to-19 vote that will further bolster the agreement’s chances of being enacted by the end of the week, the FT reports. After shooting down three amendments to the proposed legislation, senators from both parties on Wednesday overwhelmingly passed the agreement negotiated by the White House and Republican leaders which would keep current income tax rates in place for all Americans, including the wealthiest, cut the payroll tax for one year, and extend unemployment benefits. The FT also examines the rift the deal is causing between Republicans, while the New York Times has an interactive graphic of the Senate vote. Read more
The bipartisan commission established to probe the causes of the 2008 financial crisis has split along party lines with its Republican members publishing a report placing the government rather than Wall Street at the heart of the crisis, the FT reports. The Financial Crisis Inquiry Commission was set up by the US Congress as a latter-day version of the Pecora commission that examined the causes of the Great Depression. But its descent into bipartisan rancour means those examining the causes of the crisis in the future will confront duelling reports rather than an authoritative single account of what led to it. The official report, which is now set to be authored only by Democratic commissioners, is due to be published early next year. The FCIC announced last month that it would miss its Wednesday deadline. Read more
Wary Democratic leaders in the House of Representatives were inching closer to accepting legislation to extend Bush-era tax cuts, even in the absence of significant changes, the FT reports. After an overwhelming show of support for the deal in the Senate, with lawmakers from both parties voting by a wide margin to advance the measures towards final passage in the upper chamber late on Tuesday, the focus of all the attention on Capitol Hill had shifted to the House. Congress’s lower chamber has been the principal hotbed of discontent with the deal negotiated between the White House and Republicans, which also extends unemployment benefits and cuts the payroll tax in 2011. The debate in the House could begin as early as Wednesday, and Nancy Pelosi, House speaker, Steny Hoyer, majority leader, and Chris Van Hollen, the main negotiator on the tax package, were meeting on Tuesday evening with party members to discuss their options. Read more
Democratic leaders in the Senate forged ahead with plans to vote on a deal championed by the White House to extend Bush-era tax cuts and unemployment insurance, after changing the proposed legislation to include a series of tax credits to promote production of renewable energy the FT reports. “This bill is not perfect, but it provides the economic boost middle class families . . . need,” said Harry Reid, majority leader, as he unveiled the proposal, which will be debated in the coming days with a vote on Monday. Apart from the addition of the energy provisions, the Senate version of the bill largely tracks the terms agreed by Barack Obama, US president, and Republican leaders early this week, and appears likely to be approved by the upper chamber. The FT also reports that the White House was facing pressure to present a detailed plan to address the dismal fiscal outlook in the US, following a meeting with members of a bipartisan panel that last week suggested $3,900bn in budget cuts by 2020. Read more
Older entries
1Time to take basic income seriously?
2We cannae give the economy no more, we're giv'n it all we've got Captain
3The case for official e-money +1
4Hacking and property prices make the BoE big league
5"Companies should know who really owns them..."
Show more6Tax needn't be taxing. It can also be a Hungarian debt wheeze
7QE down under
8The end of the end of the end of the commodities supercycle is nigh, in Asia
9When liquidity meets control in China [updated with credit crunch probability]
10The central bank (communications) bubble
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