Debt Ceiling

Is Boehner's Debt Limit Threat All Hot Air?

Brian Beutler | May 15, 2012, 4:00PM

Office of Management and Budget Director Jacob J. Lew, and Treasury Secretary Timothy Geithner

House Speaker John Boehner (R-OH) wants to add a plot twist to the post-election lame-duck session of Congress that will be deliberating how to avoid automatic spending cuts and tax increases set to take effect in January 2013. The twist? He wants to use the debt limit as leverage to make sure tax increases aren't part of the equation. His message today to the White House: If you want my cooperation on raising the debt limit, don't even think about raising taxes.

But for Boehner's threat to be feasible, the government would have to run out of borrowing authority in November or December. That seems unlikely.

Treasury officials note -- and Secretary Timothy Geithner made clear Tuesday -- that the administration expects to be able to manage its accounts in such a way that the true deadline for raising the debt limit won't actually come until early next year -- after the fiscal cliff on January 1, and possibly after the new Congress is sworn in. Which means it's unclear if Boehner's threat has any teeth to it.

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Taxes

What's Behind Obama's New Push For Corporate Tax Reform

Brian Beutler | February 22, 2012, 12:45PM

President Barack Obama during his 2012 "State of the Union" address

A new Obama administration framework for reforming the business income tax code is touching off a brand new election-year policy debate in Washington. But this time around there's a great deal of consensus between the parties over the ideal nature of reform. And that means there will be two main obstacles to success. The first issue will be political concerns -- should Republicans hand President Obama a substantive victory with control of the White House on the line? The second will be the parochial concerns of powerful interest who stand to lose tremendous subsidies as a result of the reforms.

In a briefing with reporters Wednesday, Treasury Secretary Timothy Geithner laid out the five principles underlying the proposed reforms. Any corporate tax reform should eliminate scores of loopholes and subsidies and use the savings to lower rates -- specifically from a current top rate of 35 percent down to 25 percent.

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Debt Ceiling

Uh-Oh... Looks Like We'll Hit The Debt Limit Again This Year

Brian Beutler | January 31, 2012, 1:09PM

President Barack Obama

President Obama sacrificed an awful lot last year to take the debt limit off the legislative table until his second term, or some lucky Republican's first term. More importantly, he wanted it off the table until after the 2012 elections, to prevent a replay of last year's debt limit fight from playing out in the middle of election season, when the political consequences would be farther-reaching. And by "farther-reaching" we mean the doomsday scenario of legislators succumbing to a collective action problem and allowing the country to default on its debt.

Well, it looks like Obama will probably get his wish, but it will be an awfully close call.

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Debt Ceiling

White House Avoids Fight With GOP Over Debt Limit Hike

Brian Beutler | December 30, 2011, 1:28PM

President Barack Obama

Remember how the Obama administration planned to alert Congress of its intent to raise the debt limit by today? Well, that's getting kicked back a few days.

An aide to House Majority Leader Eric Cantor (R-VA) says the White House has assured Republicans they will not issue the debt limit request this week, heading off a confrontation between the administration and the GOP over Congress' power under the debt limit law to block the increased borrowing authority.

Under the terms of the August debt limit agreement, the administration was given the right to raise the debt limit by $2.1 trillion in three tranches, nearly unilaterally. The catch was that Republicans reserved the right for the House and Senate, within a narrow time frame, to block the increase. This caveat was largely symbolic. Democrats control the Senate and wouldn't undermine President Obama by triggering another debt limit crisis -- and even if they did, Obama would reserve the right to veto the so-called "resolution of disapproval." But it's a ready-made talking point for the GOP.

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Barack Obama

Just The Facts: Republicans Falsely Claim Obama Seeks Biggest Tax Hike In History

Brian Beutler | September 29, 2011, 11:19AM

President Barack Obama

After President Obama unveiled his jobs and deficit reduction plans, he took to the road to draw a contrast between himself and the Republican politicians who want to end his political career. Obama's proposes to spend money now on hiring people and cutting taxes temporarily to spur further job growth, and pay for it in just over a year, in large part by raising taxes on wealthy Americans.

The Republican vision -- phasing out safety net programs like Medicare in order to maintain low tax rates on the same group of affluent people -- is far less popular. So in their own tried and true way, Republicans recast Obama's plan for "shared sacrifice" as "the largest tax increase in history."

What a difference! But also untrue.

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Timothy Geithner

Geithner: Suskind Book Has No Basis In Reality

Susan Crabtree | September 19, 2011, 12:56PM

Office of Management and Budget Director Jacob J. Lew, and Treasury Secretary Timothy Geithner

Treasury Secretary Tim Geithner strongly rejected the way he is depicted in "Confidence Men," Ron Suskind's new book on the Obama administration's economic policies and efforts to shore up the financial sector in the wake of the collapse.

"I haven't read this book, but -- to borrow a phrase -- I've lived the reality," Geithner told reporters at a White House press briefing Monday. "Reports about this book bear no resemblance to the reality we lived."

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Jobs

How Obama's Jobs Plan Could Trigger Another Debt Limit Fight Before Election Day

Brian Beutler | September 19, 2011, 6:15AM

President Barack Obama and Treasury Secretary Timothy Geithner

If President Obama manages to get his entire jobs plan passed -- a big if, of course -- it will quicken the pace at which the federal government is burning through its new borrowing authority and could set up another debt limit battle with Republicans before Election Day 2012.

There are several variables at play, and another debt limit fight before the election wouldn't be a sure thing. But it's not out of the question, especially if economic growth between now and then is weaker than predicted.

A slower-than-expected economy -- or a double dip recession -- combined with the jobs bill's $447 billion price tag, means the federal government could run out of borrowing authority right about October 2012, according to one worst-case-scenario estimate. The deal to raise the debt limit last month was designed to give the government enough cushion to make it past the election before the parties would have to square off again. But that was before Obama introduced his new jobs plan, and before revised economic forecasts revealed the economy's in worse shape than economists believed earlier this year.

Here are the variables to watch that could come together to create an exquisitely timed political crisis:

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Treasury

CHART OF THE DAY: S&P's $2 Trillion Error Explained

Brian Beutler | August 8, 2011, 12:20PM

President Barack Obama and Treasury Secretary Timothy Geithner

In the weeks leading up to last week's debt limit deal, the ratings agency Standard & Poors warned that they would downgrade the country's AAA bond rating if the White House and Congressional leaders couldn't reach a fiscal consolidation plan of at least $4 trillion over 10 years.

The Congressional Budget Office scored the deal they ultimately reached at just over $2 trillion and S&P, perhaps feeling locked into its threat, made good on it.

The implication, to borrow from the Vice President, is that $2 trillion worth of deficit spending over ten years is a BFD.

But as Treasury Department officials, including Secretary Tim Geithner, have been angrily pointing out since Friday night, S&P's original analytical justification for the downgrade included a $2 trillion error, exaggerating U.S. deficits over the same 10 year window.

Geithner himself said, "[t]hey've shown a stunning lack of knowledge about basic U.S. fiscal budget math. And I think they drew exactly the wrong conclusion from this budget agreement."

Most reports have simply alluded to the error without explaining it. But here, according to Treasury officials, is what actually happened.

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Debt Ceiling

Chart Of The Day: Treasury's Quickly Draining Coffers

Kyle Leighton | July 27, 2011, 11:03AM

The chart below shows the operating balance for the U.S. Treasury, i.e. the "cash and debt operations" the federal government has, based on data from the Financial Management Service up until July 25th, and estimates from the Bipartisan Policy Center (BPC) to August 15th.

As you can see, there is a severe drop-off directly before and after August 2nd, when our national bank account goes into the red, seeming to confirm what Treasury Secretary Timothy Geithner has been saying for weeks. There has been some back-and-forth on what exactly the August 2nd deadline means, but according to the projections, the government will only have $12 billion in incoming revenue on August 3rd, and $32 billion in commitments.

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Debt Ceiling

Geithner On Debt Limit: 'No Way To Give Congress More Time To Solve This Problem'

Brian Beutler | July 14, 2011, 2:45PM

Treasury Secretary Timothy Geithner

Treasury Secretary Timothy Geithner says the time is all but up, and Congress must raise the debt limit by August 2, or unleash financial hell.

"There is no way to give Congress more time to solve this problem," Geithner told reporters in brief remarks outside the Senate chamber after meeting with the Democratic caucus.

"We're a country that meets its obligations, we're a country that pays our bills, and that we will act and do what's necessary to make sure that we can maintain that commitment," he added.

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14th Amendment

Pelosi On Obama Ignoring The Debt Limit: Ain't Gonna Happen

Brian Beutler | July 8, 2011, 2:27PM

House Minority Leader Nancy Pelosi (D-CA)

House Minority Leader Nancy Pelosi dumped the last shovel-full of dirt on the idea that President Obama can ignore the national borrowing limit if Congress refuses to raise it.

At her weekly press conference on Capitol Hill, she gave reporters a glimpse into a Thursday meeting at the White House with Democratic and Republican leaders, which, she said, became dominated by the question of the Constitutionality of the debt ceiling.

"At our meeting they spent a whole lot of time talking about the 14th Amendment. I said, 'you know what? Why are we talking about something that's not going to happen.'"

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Debt

Pick Up The Pace! White House Says Congress Needs Debt Deal By July 22

Brian Beutler | July 1, 2011, 9:46AM

President Barack Obama and Treasury Secretary Timothy Geithner

For all the talk about August 2 being the hard-and-fast deadline for Congress to raise the debt limit, that's never really been the case. The Treasury department considers August 2 the day they're likely to run out of headroom and either take drastic action to avoid a credit default, or begin missing interest payments and unleashing hell. It's like the outer bound. But practically, White House officials now say, that means Congress needs to have a debt limit deal in hand about two weeks before then -- a legislative lifetime -- if they're going to have enough time to crank out a bill and raise the debt limit in time to prevent calamity.

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Debt Ceiling

How Republicans Are Convincing Themselves That A Debt Default Wouldn't Be So Bad -- And Why They're Wrong

Brian Beutler | May 20, 2011, 1:53PM

House Speaker John Boehner (R-OH) with Senate Minority Leader Mitch McConnell (R-KY)

Congressional Republicans are falling under the spell of an unorthodox group of financial experts who dispute the views of their peers and say that the U.S. could default briefly on debt payments without major, lasting consequences to the U.S. economy and international markets.

The most influential of these dissidents is Stanley Druckenmiller, a billionaire former-hedge fund manager who helped George Soros build his fortune. His recent comments to the Wall Street Journal have carried the day with senior Republicans like House Budget Committee Chairman Paul Ryan (WI), House Majority Leader Eric Cantor (VA), and Sen. Pat Toomey (PA), all of whom now say the U.S. could weather three or four days of missed interest payments, as long as the U.S. debt ceiling were quickly lifted, and a credible debt reduction plan signed into law.

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Syria

Obama Imposes Tougher Sanctions On Syria

Susan Crabtree | May 18, 2011, 2:45PM

Syrian President Bashar al-Assad

President Obama Wednesday announced tougher sanctions against Syria and its President, Bashar al Assad, as well as other senior officials in his government, in an effort to turn up the pressure on his regime and their increasingly deadly crackdown against peaceful protesters.

Previously, the United States has frozen assets and banned trade deals with senior Syrian government officials including al Assad in an effort to convince him to end the violent response rebel groups in Syria and their desire to institute democratic reforms.

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Social Security

Parsing The Game Of Six: Will They Try To Cut Social Security Benefits?

Brian Beutler | April 21, 2011, 1:17PM

Sen. Dick Durbin (D-IL)

The bipartisan group of six senators privately drafting a debt and deficit reduction plan have been unusually tight-lipped about their negotiations. That's probably necessary internally if the group's goal is to come to an agreement. But it's led to intense speculation about what's on the table, what shape their policy options are taking, and whether progressives will get a raw deal.

Of the six -- Dick Durbin (D-IL), Mark Warner (D-VA), Kent Conrad (D-ND), Saxby Chambliss (R-GA), Tom Coburn (R-OK), and Mike Crapo (R-ID) -- only Durbin could be fairly described as a progressive. So the race is on to figure out where his bright lines are, and to what, if any, extent he's willing to walk away if the final agreement completely undermines progressive interests. But while his public statements in recent weeks don't lay out exactly what those bright lines are, he's tipped his hand in two important ways.

One big tell was his official public response to the House Republican budget, which doesn't meaningfully touch Social Security but basically obliterates Medicare and Medicaid, while not raising any new revenue, and lowering taxes on wealthy Americans.

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Government Shutdown

Top Treasury Official: Government Shutdown May Be Unavoidable

Brian Beutler | March 11, 2011, 10:11AM

President Barack Obama

A senior Treasury department official told reporters Thursday that a brief government shutdown may be unavoidable as the only feasible way to de-escalate the confrontation over government spending dividing Democrats and Republicans on Capitol Hill. The official said the administration still hopes to avoid such a flashpoint because of the impact it would have on the economy, but added that President Obama will not sign short-term stop-gap government funding measures in perpetuity.

The comments were made in a briefing with reporters conducted on deep background, meaning no direct quotes could be attributed to the official.

The official's remarks represent the most serious indication yet that the administration is willing to endure a short term shutdown despite the unknown political costs, to focus congressional leadership on brokering a long-term deal. But they also come at a time of ongoing negotiations between the White House and congressional Republicans, and are a signal that the administration isn't resigned to getting rolled by the GOP. Whether that's tough talk designed to move negotiations, a bluff, or an indication that the White House is prepared to go the brink on this remains to be seen.

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Timothy Geithner

Geithner: Warren 'Would Be A Very Strong Leader' Of Consumer Bureau

Brian Beutler | July 22, 2010, 10:10AM

Treasury Secretary Timothy Geithner

Amid reports that he's actively sought to block progressive darling Elizabeth Warren from being appointed to head a soon-to-be-created Consumer Financial Protection Bureau, Treasury Secretary Timothy Geithner sung her praises to reporters today. But when pressed, he stopped short of endorsing her or saying that her nomination would please him.

"It's important to recognize that she is, I think, one of the most effective advocates for [financial] reform in the country," Geithner said at a Christian Science Monitor breakfast this morning. "She has enormous credibility.... She would be a very strong leader of this bureau, but that's a choice the President will have to make."

Geithner added that he'd not yet made an official recommendation to President Obama, but suggested one will be coming soon.

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Barack Obama

Obama Signs Wall Street Reform Into Law

Brian Beutler | July 21, 2010, 11:49AM

President Barack Obama

After several pen strokes, and plenty of pomp, the Wall Street reform bill became law this afternoon. At signing ceremony at DC's Ronald Reagan building, President Obama declared "These reforms represent the strongest consumer financial protections in history," adding that "unless your business relies on cutting corners or bilking customers, you have nothing to fear from reform."

Now the legislation must be implemented, which will be no small task. Some of the bills provisions are subject to years-long study by regulators before they become binding. Others are intentionally delayed for a variety of reasons. And still more simply take months to build up the capacity to enforce. At the White House yesterday, Deputy Treasury Secretary Neal Wolin told reporters he expects the newly-created Consumer Financial Protection Bureau to be running autonomously within a year.

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Financial Reform

Axelrod: Warren A Candidate To Lead New Consumer Protection Bureau

Brian Beutler | July 16, 2010, 12:51PM

Press Secretary Robert Gibbs, Treasury Secretary Timothy Geithner, and Director of the Office of Management and Budget Peter Orszag

The Obama administration is in cleanup mode, after the Huffington Post reported that Treasury Secretary Timothy Geithner has actively sought to keep consumer watchdog Elizabeth Warren from being named to head a soon-to-be-created Consumer Financial Protection Bureau.

On a conference call with reporters this afternoon, President Obama's top political adviser David Axelrod sought to calm the waters. "Elizabeth is certainly a candidate to lead it," he said.

That sentiment was echoed this morning by Michael Barr, Assistant Treasury Secretary for Financial Institutions. "I don't know where that came from," he said on a conference call. "She's been working closely with me and Secretary Geithner for a year and half to push for this consumer protection bureau. I believe and Secretary Geithner believes that she's exceptionally well-qualified to run it."

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Wall Street

Could The Wall Street Reform Bill Make The U.S. More Susceptible To Financial Collapse?

Brian Beutler | July 6, 2010, 1:59PM

Rep. Barney Frank (D-MA), Senate Majority Leader Harry Reid (D-NV) , Speaker of the House Nancy Pelosi (D-CA) and Sen. Christopher Dodd (D-CT)

President Obama might be on the verge of signing a Wall Street reform bill that makes the U.S. economy more vulnerable to a major financial crisis. At least, that's the view of some experts, both in the Obama administration, on the Hill, and outside, who believe that, amid the anti-bailout fervor consuming the country, Congress and the Treasury Department became too eager to eliminate all future bailouts, and robbed the government of the legal authority they might need in the future to save the economy.

"In general, this is a symptom of the panic that Congress has developed about being seen to allow any form of future bailout," says Doug Elliott, a financial expert at the Brookings Institution, "I say 'panic' because it has prompted a number of limitations that we may come to sharply regret in a few decades when we hit the next truly severe financial crisis."

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Financial Reform

Obama Administration Sided With Scott Brown On Wall Street Bill Loophole

Brian Beutler | June 28, 2010, 4:46PM

President Obama and State Sen. Scott Brown (R-MA)

As the final Wall Street negotiations came to a close last week, the Obama administration quietly sided with Sen. Scott Brown (R-MA) against most Democrats in support of a loophole in one of the key provisions of the financial reform bill.

Several Democratic Hill aides tell TPMDC that the Treasury Department, which wielded tremendous influence over the shape of the legislation, changed its position on the Volcker rule during the final deliberations, endorsing an exemption that will allow banks to invest in outside hedge funds.

"Treasury's official position went from opposed to [the loophole] to supportive," one aide says. "They may have [even] overshot Brown's desires by a bit."

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Wall Street

Not Forgotten: The Four Other Wall Street Reform Biggies

Brian Beutler | June 25, 2010, 2:43PM

Most of our Wall Street reform attention has been focused on a couple of the most high-stakes pivot points in the legislation, like whether it would create strict rules governing derivatives trading (sort of), move derivative trading desks out of federally insured financial institutions and in to separate affiliates? (mostly) or limit -- or end -- banks' ability to gamble with their profits (largely.)

But what about the other major pieces of the bill? The provisions over which people fought early in the game, like consumer protection, that fell out of the headlines because there was never any doubt they'd survive in some form or another? Here are your answers:

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Financial Reform

On Financial Reform, White House Frustrates Wall Street And Progressives

Brian Beutler | May 28, 2010, 1:38PM

President Barack Obama

The White House's heavy hand continues to guide financial reform negotiations as they enter their last days, creating a dynamic that has been frustrating to those who want to truly change the way business is done on Wall Street. As House and Senate principals put their heads together to iron out the differences between their two bills, the Obama administration is closing off most opportunities to impose the sorts of new rules that critics say will be needed in order to prevent another financial crisis.

And though the Obama administration is on guard against some of the flagrant efforts on the part of lobbyists to weaken the bill, it has also set strict parameters on the extent of the legislation, leaving some of the bill's supporters concerned that the overall approach simply isn't strong enough.

Perhaps the best example of this dynamic revolves around a far-reaching proposal to regulate derivatives. The White House and its lieutenants in the House and Senate are prepared to scale back or remove a provision that would require big financial firms to spin off their derivatives trading desks. And they're arguing to members that a different measure, limiting the extent to which those firms can engage in speculative trades with their profits, will accomplish the same goals as the spin off plan.

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