<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen?_gl=1*3y8f6k*_ga*NzUzNDA5ODIxLjE2NzkzMjkzNzM.*_ga_CZKR9ZYKJP*MTY3OTQwNjAxOS42LjEuMTY3OTQxMTc2Ni41Ny4wLjA." target="_blank" rel="noopener">Janet Yellen</a> commented on Tuesday that deposit withdrawals from regional <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banks</a> have stabilized and affirmed that authorities will protect smaller financial institutions.
The recent collapse of <a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a>, where the vast majority of accounts exceeded the $250,000 threshold guaranteed by the Federal Deposit Insurance Corporation, prompted the government-backed company to secure all accounts at the firm to prevent more bank runs. Yellen said in <a href="https://home.treasury.gov/news/press-releases/jy1354" target="_blank" rel="noopener">remarks</a> at a summit of the American Bankers Association that the Biden administration and the Federal Reserve successfully mitigated fallout in the financial sector.
“As everyone in this room knows, the American economy relies on a healthy banking system that can provide for the credit needs of families and businesses,” Yellen said. “Let me be clear: the government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings and the banking system remain safe.”
Silicon Valley Bank provided services to half of venture-backed technology and health care firms in the United States. The current deposit insurance threshold of $250,000 is suitable for most individuals and households, yet businesses such as those served by Silicon Valley Bank often retain larger sums to conduct operations and pay employees.
Yellen added that “the situation is stabilizing” and characterized the banking system as “sound.” She noted that regulators are examining the causes of the failures at Silicon Valley Bank, which covered withdrawal requests by selling a bond portfolio that had declined substantially in value amid Federal Reserve actions to hike interest rates.
One recent <a href="https://www.dailywire.com/news/nearly-200-other-banks-vulnerable-to-svb-style-collapse-study-says" target="_blank" rel="noopener">study</a> from analysts associated with the National Bureau of Economic Research revealed that monetary tightening from the Federal Reserve has caused bank asset values to decrease by 10%, indicating that the overall financial system’s assets are $2 trillion lower than their book value. The “substantial losses in the value of banks’ long-duration assets” indicate that “banks are much more fragile” to runs by uninsured depositors.
Approximately 1,619 of the 4,800 financial institutions evaluated by the researchers would not be able to withstand all uninsured account holders demanding their funds, while 186 banks would not be unable to withstand half of uninsured depositors demanding their funds. Both scenarios assume that the banks would not be forced to sell their long-term assets at fire sale prices to cover withdrawals.
Sen. James Lankford (R-OK) <a href="https://www.dailywire.com/news/janet-yellen-admits-community-banks-in-middle-america-might-not-be-protected-like-silicon-valley-bank" target="_blank" rel="noopener">questioned</a> Yellen last week about whether uninsured deposits at community banks in his state “regardless of their size” would likewise be “fully insured.” She initially responded that authorities would collectively decide whether failure of the institutions would “create systemic risk and significant financial and economic consequences” but vowed at the American Bankers Association that smaller banks would receive protection.
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“Given recent developments, I think it is important to reaffirm a broader point: our dynamic and diverse banking system is critical to the American economy,” she commented. “Large banks play an important role in our economy, but so do small and mid-sized banks. These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector, and often have specialized knowledge and expertise in the communities they invest in.”

Treasury Secretary Yellen Speaks At The American Bankers Association’s Washington Summit

Banking System Is ‘Sound’ And Government Will Back Deposits At Smaller Banks, Yellen Promises

‘The Situation Is Stabilizing’: Yellen Says Banking System Is ‘Sound’ And Government Will Back Deposits At Smaller Banks

Banks

Economy

Janet Yellen

Silicon Valley Bank

Treasury Department

U.S.

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> admitted in a <a href="https://www.dailywire.com/topic/u-s-senate" target="_blank" rel="noopener">Senate</a> Finance Committee hearing Thursday that the Federal Deposit Insurance Corporation and the Federal Reserve might not guarantee large deposits at small community <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banks</a> like they did for a failed California bank.
The vast majority of deposits at <a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a>, which offered services to nearly half of the venture-backed technology and healthcare firms in the United States before its <a href="https://www.dailywire.com/news/parent-company-of-silicon-valley-bank-explores-bankruptcy" target="_blank" rel="noopener">collapse</a> last week, exceeded the $250,000 threshold insured by the FDIC. Regulators scrambled to guarantee all deposits at Silicon Valley Bank such that the remainder of the financial system, in which roughly half of deposits surpass $250,000, would remain safeguarded against bank runs.
Sen. James Lankford (R-OK) questioned Yellen about whether uninsured deposits at community banks in his state “regardless of their size” would likewise be “fully insured.” Yellen replied that a bank “only gets that treatment” if supermajorities of board members at the FDIC and Federal Reserve, as well as she and President Joe Biden, decide that “the failure to protect uninsured depositors would create systemic risk and significant financial and economic consequences.”
Community banks typically operate in small geographic areas and focus on the needs of businesses and families in their immediate vicinity.
Lankford noted that such an approach to deposit insurance has already prompted sizable account holders to move their funds into large financial institutions.
“We have seen the mergers of banks over the past decade,” the lawmaker said. “I am concerned you are about to accelerate that by encouraging anyone who has a large deposit in a community bank to say, ‘We are not going to make you whole, but if you go to one of our preferred banks, we will make you whole.’”
When Yellen said that her agency and other financial regulators are by no means attempting to push large depositors away from small banks, Lankford responded that the phenomenon is “happening right now” because “you are fully insured, no matter what the amount is, if you are in a big bank,” while “you are not fully insured if you are in a community bank.”
Yellen, originally scheduled to testify on the <a href="https://www.dailywire.com/news/more-taxes-and-more-spending-heres-what-you-need-to-know-about-president-bidens-newest-budget" target="_blank" rel="noopener">budget proposal</a> submitted last week by the White House, started her <a href="https://www.dailywire.com/news/yellen-tells-lawmakers-that-the-american-banking-system-remains-sound-after-two-banks-collapse" target="_blank" rel="noopener">remarks</a> by informing lawmakers that the Treasury Department, the Federal Reserve, and the FDIC successfully protected all deposits at Silicon Valley Bank and Signature Bank. The assets for account holders at both defunct financial institutions were provided by the Deposit Insurance Fund, which is funded by fees on banks.
Lankford also expressed concern that community banks in Oklahoma would be forced to pay an additional special assessment to protect the deposits of the “large number of Chinese investors” and “companies directly connected to the Chinese Communist Party” who had accounts at Silicon Valley Bank. Yellen confirmed that all uninsured investors “will be made whole in that bank,” including foreign depositors, since there is no “legal basis to discriminate among uninsured depositors.”
Sen. Marco Rubio (R-FL) raised similar concerns in a <a href="https://www.rubio.senate.gov/public/index.cfm/press-releases?id=965E5182-B8C8-4625-8D8C-7E60AF2E425D" target="_blank" rel="noopener">letter</a> to Yellen which noted that Silicon Valley Bank had partnered with Shanghai Pudon Development Bank to finance startups in China. The lawmaker requested information regarding whether Chinese depositors can “expect to receive federal reimbursements from the Deposit Insurance Fund and other federal relief.”

Treasury Secretary Janet Yellen Testifies To Senate Committee On President Biden’s FY2024 Budget

Janet Yellen Admits Community Banks In Middle America Might Not Be Protected Like Silicon Valley Bank

Yellen Makes Shocking Admission About Banking System In Exchange With Oklahoma Senator

Senate

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> told members of the Senate Finance Committee on Thursday morning that the American <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">financial</a> system “remains sound” despite two recent <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> failures.
The Federal Deposit Insurance Corporation presently manages the $212 billion in assets maintained by <a href="http://dailywire.com/topic/silicon-valley-bank" target="_blank" rel="noopener">Silicon Valley Bank</a>, which state regulators in California closed on Friday, in order to strengthen confidence in the financial system. Similar actions were taken for the $110 billion in assets maintained by Signature Bank in New York, which was closed on Sunday.
Yellen, originally scheduled to testify on the <a href="https://www.dailywire.com/news/more-taxes-and-more-spending-heres-what-you-need-to-know-about-president-bidens-newest-budget" target="_blank" rel="noopener">budget proposal</a> submitted last week by President Joe Biden, started her <a href="https://home.treasury.gov/news/press-releases/jy1348" target="_blank" rel="noopener">remarks</a> by informing lawmakers that the Treasury Department, the Federal Reserve, and the FDIC successfully protected the deposits of the two failed banks.
“I can reassure the members of the Committee that our banking system remains sound, and that Americans can feel confident that their deposits will be there when they need them,” she commented. “This week’s actions demonstrate our resolute commitment to ensure that depositors’ savings remain safe.”
The economist added that customers of Silicon Valley Bank and Signature Bank were “able to access all of the money in their deposit accounts so they could make payroll and pay the bills” as of Monday morning. The assets were provided by the Deposit Insurance Fund, which is funded by fees on banks, while federal officials did not protect shareholders and debtholders.
“This week, the government took decisive and forceful actions to strengthen public confidence in our banking system,” Yellen said. “The Federal Reserve is providing additional support to the banking system with a new lending facility. This will help financial institutions meet the needs of all of their depositors.”
The financial tumult also colored the opening statements of Senate Finance Committee Chair Ron Wyden (D-OR) and Senate Finance Committee Ranking Member Mike Crapo (R-ID). “Nerves are frayed at the moment,” Wyden <a href="https://www.finance.senate.gov/imo/media/doc/Wyden%20Hearing%20Statement%20on%20the%20Treasury%20Budget%20Proposal.pdf" target="_blank" rel="noopener">acknowledged</a> to Yellen. “One of the most important steps the Congress can take now is make sure there are no questions about the full faith and credit of the United States.”
Silicon Valley Bank announced a $1.75 billion share sale last week after the company suffered heavy losses from the liquidation of long-term assets in a $21 billion bond portfolio, raising concerns among venture capital firms and startups with ties to the company about the safety of their deposits. The portfolio had declined in value due to the higher economy-wide interest rate environment caused by actions from the Federal Reserve to decrease inflation.
Yellen, alongside Federal Reserve Chair Jerome Powell and FDIC Chairman Martin Gruenberg, remarked in a <a href="https://www.fdic.gov/news/press-releases/2023/pr23017.html" target="_blank" rel="noopener">statement</a> on Sunday that the banking system “remains resilient and on a solid foundation, in large part due to reforms that were made after the financial crisis that ensured better safeguards for the banking industry.” They promised that “no losses” associated with the collapse of Silicon Valley Bank would be “borne by the taxpayer.”
The vast majority of deposits at Silicon Valley Bank, which offered services to nearly half of the venture-backed technology and healthcare firms in the United States, exceeded the $250,000 threshold typically insured by the FDIC. Regulators scrambled to guarantee all deposits at Silicon Valley Bank such that the remainder of the financial system, in which roughly half of the deposits surpass $250,000, would remain protected.
“I am concerned about the precedent of guaranteeing all deposits and the market expectation moving forward,” Crapo <a href="https://www.finance.senate.gov/imo/media/doc/Crapo%20Statement%20at%20Hearing%20on%20The%20President's%20FY2024%20Budget_031623.pdf" target="_blank" rel="noopener">told</a> Yellen, noting that “rising interest rates” induced by Federal Reserve efforts to combat inflation are “impacting household budgets, the federal government’s coffers, and, as we saw this week, our banking system.”

Yellen Tells Lawmakers That The American Banking System ‘Remains Sound’ After Two Banks Collapse

Yellen Says The Banking System ‘Remains Sound’ After Two Banks Collapse

House Oversight Chairman James Comer (R-KY) announced a breakthrough on Tuesday in his <a href="https://www.dailywire.com/news/james-comer-says-hunter-biden-probe-critical-for-legislative-fix" target="_blank" rel="noopener">investigation into the Biden family&#8217;s business dealings</a>.
&#8220;After two months of dragging their feet, the Treasury Department is finally providing us with access to the suspicious activity reports for the Biden family and their associates’ business transactions,&#8221; Comer said in a statement.
House Republicans hope the <a href="https://www.occ.treas.gov/topics/supervision-and-examination/bank-operations/financial-crime/suspicious-activity-reports/index-suspicious-activity-reports.html" target="_blank" rel="noopener">suspicious activity reports</a>, which financial institutions can use to flag possible criminal behavior, will help root out any evidence of international influence peddling schemes that may involve President Joe Biden.
&#8220;We are going to continue to use bank documents and suspicious activity reports to follow the money trail to determine the extent of the Biden family’s business schemes, if Joe Biden is compromised by these deals, and if there is a national security threat,&#8221; Comer said.
In recent weeks, Comer accused the Treasury Department of making <a href="https://oversight.house.gov/wp-content/uploads/2023/02/2023-02-24-Letter-Treasury.pdf" target="_blank" rel="noopener">&#8220;several excuses&#8221;</a> for delaying compliance with his demands for information and began to increase pressure by seeking a transcribed interview with the agency official tasked with communicating with Congress. Now with the Treasury Department providing an &#8220;in camera&#8221; review of the suspicious activity reports, Comer said plans for an interview had been postponed.
The Daily Wire reached out to the Treasury Department for comment.
The White House has painted Republican probes into the Biden family, including Hunter&#8217;s art sales, as being steeped in politics. &#8220;Instead of working with President Biden to address issues important to the American people, like lower costs, congressional Republicans&#8217; top priority is to go after President Biden with politically motivated attacks chock-full of long-debunked conspiracy theories,&#8221; <a href="https://www.bbc.com/news/world-us-canada-63665351" target="_blank" rel="noopener">said White House spokesman Ian Sams</a>.
Democrats in Congress vociferously oppose the probes run by Republicans into the Biden family, including the president&#8217;s brothers and his son, Hunter Biden, whose financial dealings are also being scrutinized by federal prosecutors.
Rep. Jamie Raskin (D-MD), the ranking member of the House Oversight Committee, sent a letter to Comer over the weekend <a href="https://oversightdemocrats.house.gov/sites/democrats.oversight.house.gov/files/FINAL%202023.03.12.%20JBR%20to%20Comer%20re%20Mazars%20BofA%20Subpoena.pdf" target="_blank" rel="noopener">raising concerns</a> that a subpoena the chairman sent to Bank of America seeking 14 years of records involving people linked to Hunter Biden was geared toward giving former President Donald Trump an edge in a possible 2024 election rematch.
&#8220;I fear this wildly overbroad subpoena suggests that your interest in this investigation is not in pursuing defined facts or informing public legislation but conducting a dragnet of political opposition research on behalf of former President Trump,&#8221; Raskin wrote.
Comer defended his subpoena this week, saying that his committee learned John “Rob” Walker, who has been identified as a business associate of Hunter Biden in a venture with executives from CEFC China Energy, received a $3 million wire from two individuals associated with the Chinese Communist Party about two months after Joe Biden left the office of vice president.
Within a day, Walker&#8217;s account started transferring money into three different Biden family members&#8217; accounts, including a &#8220;new&#8221; member who has not yet been part of the GOP investigations, Comer said during an <a href="https://www.youtube.com/watch?v=EScaBsWMJz4" target="_blank" rel="noopener">interview on Fox News</a> on Tuesday. Although Comer did not reveal the identity of that &#8220;new&#8221; Biden family member, he stressed that this discovery &#8220;really changes things.&#8221;

James Comer

Biden Family Probe Reaches Breakthrough With Treasury Department

Congress

Department of the Treasury

Executive

Hunter Biden

Politics

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> contended on Tuesday that <a href="http://dailywire.com/topic/climate-change" target="_blank" rel="noopener">climate change</a> may lead to “declines in asset values” and warned that a “delayed and disorderly transition” to renewable energy sources could harm the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">financial</a> system.
Yellen delivered the comments at the first meeting of the Climate-Related Financial Risk Advisory Committee, a body created to “understand and mitigate the risks that climate change poses” to economic stability. The economist’s remarks correspond to assertions from other Biden administration officials who have claimed that carbon emissions may impact the economy.
“As climate change intensifies, natural disasters and warming temperatures can lead to declines in asset values that could cascade through the financial system,” Yellen said in prepared remarks obtained by The Daily Wire. “And a delayed and disorderly transition to a net-zero economy can lead to shocks to the financial system as well. These impacts are not hypothetical. They are already playing out.”
Yellen cited storms and wildfires in California, Florida, and Louisiana as evidence that climate change is posing economic harm, even as scientists <a href="https://www.dailywire.com/news/after-newsom-others-tie-california-weather-to-climate-change-experts-say-not-so-fast" target="_blank" rel="noopener">reject</a> the notion that there is a proven link between individual weather phenomena and a warming climate. “Taking climate change into account is prudent risk management,” Yellen nevertheless continued. “Our work builds on the scientific consensus regarding the projected effects of climate change and is based on a widely accepted understanding of how the financial system works.”
Members of the Climate-Related Financial Risk Advisory Committee include Catherine Ansell, the executive director of climate risk at investment bank JPMorgan Chase, as well as Cecilia Martinez, the principal advisor for resilience and communities at the Bezos Earth Fund. Several academics also sit on the body, which was established by the Financial Risk Advisory Committee last year, according to a <a href="https://home.treasury.gov/news/press-releases/jy0987" target="_blank" rel="noopener">press release</a> from the Treasury Department.
“Some of you have very specialized expertise in modeling climate risks and working with climate data,” Yellen said. “Others have experience helping financial institutions respond to and manage their own climate risks. And others have experience advancing environmental justice. I’m excited for this group to begin meeting, and for us to benefit from your expertise.”
The first meeting of the Climate-Related Financial Risk Advisory Committee occurs after the Labor Department introduced a <a href="https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/final-rule-on-prudence-and-loyalty-in-selecting-plan-investments-and-exercising-shareholder-rights" target="_blank" rel="noopener">final rule</a> that would allow retirement fiduciaries to weigh “the economic effects of climate change and other ESG considerations” as long as such concerns are relevant to a risk-and-return analysis. The new rule, which <a href="https://www.dailywire.com/news/trump-barred-retirement-plans-from-mixing-wokeness-with-profits-biden-is-reversing-that-rule" target="_blank" rel="noopener">reverses</a> a prohibition formerly created under former President Donald Trump, would “safeguard the financial security of America&#8217;s families, businesses and workers from climate-related financial risk that may threaten the life savings and pensions of America&#8217;s workers and families.”
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Republican members of the House and Senate, as well as a handful of Democrats, overturned the final rule last week. President Joe Biden is <a href="https://www.dailywire.com/news/house-and-senate-send-rebuke-of-bidens-esg-agenda-to-his-desk" target="_blank" rel="noopener">expected</a> to veto the lawmakers’ resolution.
Critics of the environmental, social, and corporate governance movement, often abbreviated as ESG, assert that the investment philosophy mingles political and social causes, such as reducing carbon emissions and achieving racial diversity, in a manner that compromises or distracts from profitability. The previous <a href="https://www.dol.gov/newsroom/releases/ebsa/ebsa20201030" target="_blank" rel="noopener">rule</a> established by the Trump administration barred retirement fund managers from “selecting investments based on non-pecuniary considerations” and required them to “base investment decisions on financial factors” alone.

Treasury Secretary Yellen And Fed Chair Powell Testify Before House Financial Committee On Coronavirus And CARES Act

Treasury Secretary Janet Yellen Claims Effects Of Climate Change Could ‘Cascade Through The Financial System’

Yellen: Climate Change Could ‘Cascade Through The Financial System’

Climate Change

After decades of near-uninterrupted budget deficits and unprecedented spending during the COVID pandemic, the U.S. national debt is $31.5 trillion and growing.
Congress is currently embroiled in a fight over raising the debt ceiling — increasing the amount that the federal government is allowed to borrow. Republicans insist that the federal government must cut its spending in order for them to agree to raise the debt ceiling, but so far they have not <a href="https://www.nytimes.com/2023/01/31/us/politics/republicans-spending-debt-ceiling.html" target="_blank" rel="noopener">specified</a> which spending measures should be cut.
Without a deal, the government could run out of money by as early as this summer, <a href="https://www.nytimes.com/2023/02/22/business/economy/us-debt-limit.html" target="_blank" rel="noopener">according</a> to both Treasury Secretary Janet Yellen and an analysis from the Bipartisan Policy Center. Many have reported that the failure to raise the debt ceiling would mean a default on the nation&#8217;s debt, which even the most optimistic forecasts warn would cause extensive damage to the nation&#8217;s economy.
The regularity and indecisiveness of these debt battles highlight the fact that politicians from both major parties have chronically avoided concrete solutions to spending and the debt. The Tea Party made concerns about the national debt — which stood at a retrospectively quaint $13 trillion in 2010 — one of the pillars of their movement. Other than these periodic debt ceiling battles, however, the Republican Party has offered very few solid policy proposals for tackling the problem aside from vague calls to &#8220;cut spending&#8221; not unlike the GOP&#8217;s current demand in the debt ceiling fight.
While most elected officials are pretty short on answers in regard to the issue, solutions are indeed out there.
The two most notable plans to tackle the debt are the Simpson-Bowles Plan and the plan developed by the Domenici-Rivlin Task Force.
The Simpson-Bowles Plan was <a href="https://www.pgpf.org/finding-solutions/comprehensive-plans" target="_blank" rel="noopener">formulated</a> by former Republican Wyoming Sen. Alan Simpson and former Bill Clinton Chief of Staff Erskine Bowles while the two sat on the National Commission on Fiscal Responsibility and Reform.
The plan called for raising federal revenue to 21% of GDP, which was only 14.6% of GDP in 2010, while simultaneously reducing spending to 21% of GDP, which was 23.4% that year. In 2019, before the fiscal chaos of the coronavirus pandemic, federal expenditure was 21% of GDP, but federal revenue was only 16.3%, <a href="https://www.cbo.gov/publication/55824" target="_blank" rel="noopener">according</a> to the Congressional Budget Office. To get the 2019 revenue up to 21% of GDP, it would have <a href="https://www.cbo.gov/system/files/2019-11/55824-CBO-MBR-FY19.pdf" target="_blank" rel="noopener">required</a> an increase of over $1 trillion.
Additionally, the plan called for reducing the overall tax rate for Americans but eliminating almost all deductions and tax credits. The plan also recommended strict caps on future spending and a reform of Social Security.
The Domenici-Rivlin Task Force was <a href="https://www.pgpf.org/finding-solutions/comprehensive-plans" target="_blank" rel="noopener">created</a> by the Bipartisan Policy Center in 2010 and also included a former Republican senator and former Clinton administration official — Pete Domenici of New Mexico and Alice Rivlin, respectively. Its plan shared several measures with Simpson-Bowles, but it recommended a reduction in spending to 23% of GDP instead of 21%, a full freeze on all spending after that reduction, and a thorough reform of entitlements.
In 2019, the Peter G. Peterson Foundation <a href="https://www.pgpf.org/Solutions-Initiative-2019" target="_blank" rel="noopener">hosted</a> the Fiscal Summit, which brought together prestigious think tanks like the American Enterprise Institute, the Manhattan Institute, and the Center for American Progress to present potential solutions to the national debt. The overall impact that each plan would have on the national debt varied widely, but all seven proposals followed the same basic structure of the two plans from 2010: reduce spending, increase revenue, reform the tax code, and make adjustments to entitlements.
Almost every realistic plan to appreciably reduce or eliminate the national debt will include some combination of those measures. However, there are some actions that could help put a dent.
A drastic increase in legal immigration could help increase federal revenue. In theory, the more people there are in the country, the higher the demand for goods and services, thereby <a href="https://fiscalpolicy.org/immigrants-are-part-of-our-economic-growth-blame-congress-not-immigrants-if-americas-taxes-dont-pay-for-our-expenses" target="_blank" rel="noopener">growing</a> the economy and the tax revenue gleaned from it, and these new taxpayers would help bolster entitlement programs like Social Security. Immigrants also <a href="https://www.investopedia.com/financial-edge/0611/june-20-5-ways-the-u.s.-can-get-out-of-debt.aspx" target="_blank" rel="noopener">start</a> businesses at twice the rate of natural-born American citizens, and accepting highly skilled immigrants who would most likely pay higher taxes could be an effective method of increasing revenue.
The labor force participation rate is still <a href="https://www.usatoday.com/story/money/2023/02/23/men-leaving-workforce-economy-fed-interest-rates/11326201002/" target="_blank" rel="noopener">low</a> after the shock of the pandemic, and there is an acute shortage in highly skilled job applicants, so filling those positions with immigrants who would then pay taxes could be an effective strategy.
The U.S. government could also sell federal land to quickly raise revenue. The Bureau of Economic Analysis <a href="https://www.bea.gov/research/papers/2015/new-estimates-value-land-united-states#:~:text=New%20Estimates%20of%20Value%20of%20Land%20of%20the%20United%20States%20(PDF)&amp;text=Estimates%20suggest%20that%20this%201.89,held%20by%20the%20federal%20government." target="_blank" rel="noopener">estimated</a> in 2015 that all federally owned land in the contiguous United States was worth around $1.8 trillion. Barring the sale of federal land used for military installations and national parks, the remaining value of federal land would most likely <a href="https://www.cato.org/blog/can-federal-assets-cover-national-debt" target="_blank" rel="noopener">stand</a> at less than $1 trillion, but that would be $1 trillion the federal government would not have to acquire through cutting important social programs or raising taxes.
The starkest solution would be to simply default on the debt, wherein the federal government would declare that it is unable to repay its obligations to its debtors.
The economic consequences of a full-fledged default would be <a href="https://www.nbcwashington.com/news/local/what-is-the-debt-limit-and-what-happens-if-the-us-defaults/3257735/#:~:text=The%20U.S.%20has%20never%20defaulted,backdrop%20of%20slowing%20economic%20growth." target="_blank" rel="noopener">severe</a>. The country&#8217;s credit rating would almost certainly be downgraded. The stock market would most likely take a severe hit, the U.S. dollar would weaken, interest rates would rise, and most Americans&#8217; retirement savings would be impacted.
“Nobody knows for sure what will happen, because it’s never happened before,&#8221; Eric Swanson, an economics professor at UC Irvine, <a href="https://time.com/6248656/what-debt-ceiling-means-for-you/" target="_blank" rel="noopener">told</a> TIME back in January.
Some commentators have argued that the short-term consequences of a default might be agonizing, but in the long run, it may not be as catastrophic as many warn.
In 2011, as a consequence of another debt ceiling standoff between House Republicans and then-President Barack Obama, the United States&#8217; credit rating was <a href="https://www.ai-cio.com/news/what-happens-if-us-debt-defaults-just-short-term-pain-sages-say/" target="_blank" rel="noopener">downgraded</a> from AAA to AA+. That caused some turbulence in the market at the time, but it has not significantly impacted the nation&#8217;s ability to borrow, and the stock market recovered fairly quickly.
Even if we default and short-term economic disruptions ensue, the United States is so prosperous and such an integral part of the world economy that both foreign and domestic investors will still be enticed to purchase any future debt in the form of bonds. Additionally, if the nation enacts strict fiscal measures in some variation of the Simpson-Bowles Plan along with a default, it could prove that it is dedicated to a more responsible path and quickly regain the confidence of investors.
The U.S. could also selectively default. It could choose to just default on the portion of the debt <a href="https://www.pgpf.org/blog/2022/09/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt" target="_blank" rel="noopener">owned</a> by foreign entities, roughly 33% of the public debt; the portion owned by government agencies, <a href="https://www.thebalancemoney.com/who-owns-the-u-s-national-debt-3306124" target="_blank" rel="noopener">around</a> $7 trillion; or that which is owned by individuals in the top 1% of income or wealth. That could eliminate large portions of the debt while possibly avoiding the worst outcomes of a full-on default.
However, a recent opinion piece <a href="https://www.wsj.com/articles/default-on-u-s-debt-is-impossible-deficit-treasury-cbo-janet-yellen-supreme-court-constitution-public-debt-clause-federal-reserve-328dafe5" target="_blank" rel="noopener">published</a> in The Wall Street Journal argued that a default is unconstitutional. According to the piece, Section 4 of the 14th Amendment stipulates, &#8220;The validity of the public debt of the United States, authorized by law &#8230; shall not be questioned.&#8221; It&#8217;s unclear if that includes the debt held by intra-governmental agencies, which is roughly 20% of the total.
So, barring a Supreme Court case re-interpreting that section of the amendment or a new constitutional amendment to change that section, the nation is stuck with the vast majority of its debt.
Besides the nuclear option of default, most comprehensive plans to fix the national debt rely on simple premises. Get spending under control, increase federal revenues, reform the tax code, etc. Politicians, especially those in the GOP, have been advocating for similar measures for decades, but whenever they are in power, the opportunity to take action seems to pass them by. They are well aware that spending cuts and tax increases are deeply unpopular with the constituents of both parties, and election season is always just around the corner.
The biggest obstacle to fixing the debt doesn&#8217;t seem to be the lack of a plan, but the lack of will to enact it.

US hits debt limit, taking ‘extraordinary measures’ to avoid default

Congress Continues To Ignore Plans To Fix The National Debt In Favor Of Endless Can-Kicking

Congress Continues To Ignore Plans To Fix The National Debt For Endless Can-Kicking

Federal Government

National Debt

Readers Pass

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> contended on Monday that <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> is decreasing as a result of efforts from the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a>.
The senior Biden administration official and former chair of the Federal Reserve said during an <a href="https://www.cnn.com/2023/02/27/economy/yellen-inflation-debt-ceiling-ukraine" target="_blank" rel="noopener">interview</a> with CNN that inflationary pressures are lessening as policymakers increase the target federal funds rate, a measure that increases borrowing costs for businesses and consumers.
“I would say, ‘So far, so good.’ Obviously there are risks, and the global situation we face is very uncertain,” Yellen remarked, expressing optimism that central bankers can protect the strong labor market and decrease inflation without inducing a recession. “There can be shocks from it. But look, inflation still is too high, but generally if you look over the last year, inflation has been coming down. And I know the Fed is committed to continuing the process of bringing it down to more normal levels, and I believe they’ll be successful with it.”
Inflation was charted at 1.4% when President Joe Biden was inaugurated in January 2021. After reaching a height of 9.1% in June 2022, the most recent readings from the Bureau of Labor Statistics <a href="https://www.dailywire.com/news/inflation-rises-more-than-expected-in-january-after-biden-claimed-prices-are-coming-down" target="_blank" rel="noopener">indicate</a> that price levels are increasing at a 6.4% rate as of January 2023. The somewhat lower headline metric comes despite stubborn cost pressures in categories such as shelter and food: expenses for food at home increased 11.3% between January 2022 and January 2023, while costs for food away from home rose 8.2% over the same period.
Rising price levels have applied pressure to household budgets as purchasing power continues to decline. Real wages, which account for inflationary pressures, decreased 1.5% between January 2022 and January 2023, according to <a href="https://www.bls.gov/news.release/realer.htm#:~:text=Real%20average%20hourly%20earnings%20decreased,weekly%20earnings%20over%20this%20period." target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
Biden <a href="https://www.dailywire.com/news/biden-claims-families-have-a-little-bit-more-breathing-room-after-another-dismal-inflation-report" target="_blank" rel="noopener">responded</a> to another recent inflation data release by contending that “we have made progress on inflation, but we have more work to do.” He touted efforts from his administration to reduce prices and said Republicans undermine the economy by opposing his spending agenda.
​​“When I travel the country, I see optimism for this year and the years ahead. The optimism of families with just a little bit more breathing room thanks to our work to get workers back into jobs. The optimism of a record number of Americans applying to start a small business,” the commander-in-chief said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/24/statement-from-president-joe-biden-on-january-pce-report/" target="_blank" rel="noopener">statement</a> from the White House. “But the fight is not over. We must finish the job in transitioning to stable and steady growth that benefits all Americans, while laying the foundation for strong and shared growth for years to come.”
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Yellen delivered her remarks to CNN from Ukraine, where she made an <a href="https://www.dailywire.com/news/treasury-boss-janet-yellen-makes-surprise-visit-to-ukraine" target="_blank" rel="noopener">unannounced</a> visit to discuss economic assistance packages meant to fund the war-torn nation’s government during its conflict with Russia. The federal government allocated more than $113 billion in combined humanitarian and military assistance for Ukraine last year, according to an <a href="https://www.crfb.org/blogs/congress-approved-113-billion-aid-ukraine-2022" target="_blank" rel="noopener">analysis</a> from the Committee for a Responsible Federal Budget.
The United States and other Western nations have meanwhile imposed a variety of economic sanctions on Russia. “We will see an increasing toll on Russia’s economic trajectory over time,” Yellen commented. “And their ability to replenish the military equipment that’s been destroyed in their attacks on Ukraine, that’s been very greatly jeopardized.”

UKRAINE-RUSSIA-WAR-DIPLOMACY-US-FINANCE

‘So Far So Good’: Treasury Secretary Janet Yellen Says Inflation Is ‘Coming Down’

Janet Yellen Says Inflation Is ‘Coming Down’

Federal Reserve

Inflation

<a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> made an unannounced visit to <a href="http://dailywire.com/topic/ukraine" target="_blank" rel="noopener">Ukraine</a> on Monday to support the nation’s <a href="https://www.dailywire.com/topic/ukraine-russia-war" target="_blank" rel="noopener">war</a> effort against Russia and tout the extensive financial assistance packages provided by the United States.
The senior official’s mission comes one week after President Joe Biden <a href="https://www.dailywire.com/news/biden-makes-secret-trip-to-ukraine-appears-with-zelensky" target="_blank" rel="noopener">walked</a> the streets of Kyiv with Ukrainian President Volodymyr Zelensky in another surprise visit. Treasury Department spokeswoman Lily Adams <a href="https://twitter.com/adamslily/status/1630238156145713152?ref_src=twsrc%5Etfw" target="_blank" rel="noopener">said</a> that Yellen visited the country to “discuss critical economic assistance and our efforts to hold Russia accountable for their illegal and brutal war.”
Yellen met with Zelensky to discuss sanctions against Russia from the United States and its allies, reforms meant to address rampant corruption in Ukraine, and a $9.9 billion assistance package intended to assist the operations of the nation’s government, according to the Treasury Department.
“Over the past year, Ukraine has been writing the next chapter of its history with its heroic fight for freedom. Today, I am witnessing firsthand the devastating toll of Putin’s brutal war,” Yellen remarked during a wreath-laying ceremony in Kyiv. “We have pledged to do our part to support the Ukrainian people, not only with words, but with actions. We will continue to work with our international coalition to provide military, economic, and humanitarian assistance to Ukraine. And we will continue to impose severe costs on the Kremlin for its illegal war. As President Biden has said, we will stand by Ukraine for as long as it takes.”
The Biden administration has so far sent Ukraine more than $24.2 billion in military assistance over the past year, according to a <a href="https://www.defense.gov/News/Releases/Release/Article/3261263/more-than-3-billion-in-additional-security-assistance-for-ukraine/#:~:text=In%20total%2C%20the%20United%20States,beginning%20of%20the%20Biden%20Administration." target="_blank" rel="noopener">report</a> from the Defense Department. The federal government has also provided $9.9 billion in humanitarian aid and $15.1 billion in budgetary aid, according to an <a href="https://www.cfr.org/article/how-much-aid-has-us-sent-ukraine-here-are-six-charts" target="_blank" rel="noopener">analysis</a> from the Council on Foreign Relations, a sum that far surpasses the assistance offered by European Union institutions and member states.
The United States allocated more than $113 billion in combined humanitarian and military assistance for Ukraine last year, according to another <a href="https://www.crfb.org/blogs/congress-approved-113-billion-aid-ukraine-2022" target="_blank" rel="noopener">analysis</a> from the Committee for a Responsible Federal Budget.
Yellen contended in an <a href="https://www.nytimes.com/2023/02/27/opinion/janet-yellen-ukraine-russia.html" target="_blank" rel="noopener">opinion piece</a> for the New York Times corresponding with her visit that assistance from the United States is “crucial” to the Ukrainian war effort.
“We’re proud to be Ukraine’s largest bilateral donor, and just as proud to be joined by an international coalition of supporters, including the European Union and other members of the Group of 7,” she wrote. “Our assistance has received broad bipartisan backing, and we’ve made sure to deploy these funds with accountability and transparency.”
Some lawmakers have <a href="https://www.dailywire.com/news/its-worth-a-shot-rand-paul-approves-of-ohio-gov-posing-as-zelensky-to-get-federal-assistance" target="_blank" rel="noopener">questioned</a> the White House’s emphasis on the Ukraine conflict amid a host of domestic challenges, including record inflation and a national debt that recently surpassed $31.5 trillion. Biden was recently criticized for his own clandestine journey to the eastern European nation, which came ahead of his <a href="https://www.dailywire.com/news/biden-defends-decision-to-not-visit-east-palestine-and-to-not-speak-with-mayor-after-toxic-train-accident" target="_blank" rel="noopener">announcement</a> that he would not visit East Palestine, Ohio, where residents are struggling in the wake of a train derailment and subsequent chemical fallout.
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Private companies in the United States, including asset management company BlackRock and investment bank JPMorgan Chase, have meanwhile sought to <a href="https://www.dailywire.com/news/jpmorgan-will-help-rebuild-ukraine-with-fund-as-large-as-30-billion" target="_blank" rel="noopener">coordinate</a> reconstruction funds for Ukraine. “We are proud of our long-standing support of Ukraine and committed to doing our part to lift up the country and its people,” JPMorgan Chase CEO Jamie Dimon said earlier this month, adding that the company’s “full resources” are available to the nation.

Treasury Boss Janet Yellen Makes Surprise Visit To Ukraine

Treasury Secretary Janet Yellen Makes Surprise Visit To Ukraine

Biden Administration

Ukraine

Ukraine-Russia War

Volodymyr Zelensky

House Oversight Committee James Comer (R-KY) accused the Biden administration of &#8220;operating in bad faith&#8221; and obstructing his committee&#8217;s investigation into the Biden family&#8217;s finances.
Comer said in a letter to the Treasury Department revealed on Monday that the department has been suspiciously slow to respond to committee requests for Suspicious Activity Reports filed over deals members of President Joe Biden&#8217;s family made with foreign businessmen.
&#8220;During the Committee&#8217;s dialogue with Treasury, you have made several excuses for Treasury&#8217;s delay regarding this production,&#8221; Comer wrote. &#8220;Given the amount of time that has passed since our initial request and Treasury&#8217;s inability to provide a projected timeframe when the [Suspicious Activity Reports] will be produced, the Committee believes Treasury may be delaying its production to hinder our investigation and operating in bad faith.&#8221;
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">
The Treasury Department is obstructing our investigation into the Biden family’s business schemes.
We are done with the excuses. <a href="https://twitter.com/RepJamesComer?ref_src=twsrc%5Etfw">@RepJamesComer</a> is calling on <a href="https://twitter.com/USTreasury?ref_src=twsrc%5Etfw">@USTreasury</a> to testify on March 10 about the department’s failure to produce documents. <a href="https://t.co/H7TQ1Hole4">pic.twitter.com/H7TQ1Hole4</a>
&mdash; Oversight Committee (@GOPoversight) <a href="https://twitter.com/GOPoversight/status/1630227971993632769?ref_src=twsrc%5Etfw">February 27, 2023</a></blockquote>
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Last week, Isabella More, the deputy assistant secretary for oversight at the Treasury, told congressional investigators that the department must still meet with “law enforcement partners” because of the sensitivity of the documents requested by the committee. “[T]his entire process takes considerable time to complete,” More said, according to Comer’s letter.
“Treasury’s excused and delay tactics are unavailing given you have known about our requests since last year and previously produced relevant [Suspicious Activity Reports] to others,” Comer wrote.
The committee chairman said More could better explain herself in a meeting before the committee, and he invited the Treasury official to testify before the committee on March 10.
Comer’s investigation into the Biden family’s finances is one of multiple investigations House Republicans have launched in the Biden administration since taking Congress’s lower chamber in the midterm elections. Comer has taken up investigating questions about President Biden’s family’s foreign business deals as one of his primary endeavors, however.
Much of the focus of Comer’s probe is on two of Biden’s direct relatives: his son Hunter and brother James, both of whom were involved in overseas business deals in countries such as China, Turkey, and Ukraine. Comer is seeking to uncover the extent to which President Biden knew about and was involved in any of those deals.
The president has denied on numerous occasions knowing anything about his son’s overseas business dealings, though evidence found in Hunter’s abandoned laptop has suggested otherwise. A voicemail the president left his son in 2018 <a href="https://www.dailywire.com/news/joe-biden-spoke-with-hunter-about-dealings-with-chinese-oil-tycoon-voicemail-reveals">showed</a> that Biden knew something of his son’s dealings; he left a message for Hunter about a New York Times story on one of Hunter’s former business partners, Chinese businessman Ye Jianming.
This is a breaking story. Check back for updates.

‘Bad Faith’: Treasury Department Obstructing Investigation Into Biden Family Finances, House Republican Says

Joe Biden

Washington D.C.

Sen. <a href="https://www.dailywire.com/topic/richard-blumenthal" target="_blank" rel="noopener">Richard Blumenthal</a> (D-CT) and Sen. Jerry Moran (R-KS) exhorted <a href="https://www.dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> to force the divestment of <a href="https://www.dailywire.com/topic/tiktok" target="_blank" rel="noopener">TikTok</a> from ByteDance, its <a href="http://dailywire.com/topic/china" target="_blank" rel="noopener">Chinese</a> parent company.
ByteDance, which is located in Beijing, has been accused of maintaining close ties with the <a href="https://www.dailywire.com/topic/ccp" target="_blank" rel="noopener">Chinese Communist Party</a>. Blumenthal and Moran suggested in a Thursday <a href="https://www.blumenthal.senate.gov/imo/media/doc/20230216cfiustiktok.pdf" target="_blank" rel="noopener">letter</a> to Yellen that the Committee on Foreign Investment in the United States, a board composed of nine cabinet-level officials charged with reviewing the national security implications of foreign investments into American companies, should compel ByteDance to jettison operations for TikTok within the United States.
“TikTok, which collects the sensitive information of tens of millions of American users and plays an increasing role in our society, is well within the scope of CFIUS’s national security mandate,” the lawmakers contended. The letter referenced CFIUS requiring that Beijing Kunlun Company <a href="https://crsreports.congress.gov/product/pdf/RL/RL33388" target="_blank" rel="noopener">divest</a> itself of LGBTQ dating site Grindr and healthcare platform PatientsLikeMe four years ago under the Trump administration.
Blumenthal and Moran also noted how ByteDance acknowledged at the end of last year that staff members had “spied on the private data of journalists and others in order identify sources behind articles critical of the company.” The revelation confirmed an earlier <a href="https://www.dailywire.com/news/tiktoks-parent-company-in-china-planned-to-use-platform-to-track-locations-of-specific-americans-report" target="_blank" rel="noopener">report</a> from Forbes which indicated that ByteDance planned to track the location of specific American citizens.
“This bombshell disclosure demonstrates that TikTok and ByteDance cannot be trusted by CFIUS or its tens of millions of users in the United States,” the letter continued. “Therefore, CFIUS should impose structural separations and firm restrictions on ByteDance’s ability to: access Americans’ personal data; make decisions about content moderation; control its algorithmic recommendation systems; and oversee its U.S. operations.”
The two lawmakers are the latest from both sides of the aisle to observe the national security implications of permitting American consumers to utilize TikTok. Sen. Michael Bennet (D-CO) <a href="https://www.dailywire.com/news/democrat-senator-urges-apple-and-google-to-ban-tiktok-from-app-stores" target="_blank" rel="noopener">pressed</a> Apple CEO Tim Cook and Google CEO Sundar Pichai earlier this month to remove the site from the companies’ app stores.
President Joe Biden <a href="https://www.dailywire.com/news/senate-unanimously-votes-to-ban-tiktok-on-government-devices" target="_blank" rel="noopener">signed</a> legislation prohibiting TikTok from devices owned by the federal government, while several states, including Nebraska, Alabama, and Iowa, had previously banned the platform from government devices. TikTok CEO Shou Zi Chew is scheduled to <a href="https://www.dailywire.com/news/tiktok-ceo-will-testify-before-congress-as-national-security-privacy-concerns-grow" target="_blank" rel="noopener">testify</a> before members of the House Energy and Commerce Committee next month.
Renewed controversy over TikTok and broader Sino-American relations occurs after at least one Chinese surveillance balloon recently traversed the continental United States. The vessel crossed Montana, the home of many defense assets and missile silos, then <a href="https://www.dailywire.com/news/chinese-spy-balloon-flies-out-of-montana-and-over-new-u-s-state" target="_blank" rel="noopener">traveled</a> over states such as Kansas and Missouri before the object was <a href="https://www.dailywire.com/news/u-s-military-shoots-down-chinese-spy-balloon-after-biden-let-it-travel-across-country" target="_blank" rel="noopener">shot down</a> off the coast of the Carolinas.
The White House is now <a href="https://www.dailywire.com/news/white-house-refining-executive-order-banning-american-companies-from-investing-in-key-chinese-sectors" target="_blank" rel="noopener">expected</a> to unveil an executive order that would ban American funds from enabling the development of Chinese advanced semiconductors, quantum computing, artificial intelligence, and other technologies with surveillance and military applications, according to a recent <a href="https://www.nytimes.com/2023/02/09/business/us-china-investing-tech-biden.html" target="_blank" rel="noopener">report</a> from The New York Times. Yellen and other senior administration officials spent months contacting industry leaders to forecast the economic implications of the executive order, according to another <a href="https://www.axios.com/2023/01/12/white-house-biden-china-executive-order-cfius" target="_blank" rel="noopener">report</a> from Axios released last month. News of the nearly completed measure came as lawmakers threatened to pursue their own investment restrictions in the absence of federal plans.

Senator Blumenthal Discusses His Legislation To End US Arms Sales To Saudi Arabia

Republican And Democrat Senators Join Forces In Call For TikTok Crackdown

Republican And Democrat Senators Want Treasury Secretary To Crack Down On TikTok

China

Global Politics

Richard Blumenthal

TikTok

<a href="https://www.dailywire.com/topic/congressional-budget-office-cbo" target="_blank" rel="noopener">Congressional Budget Office</a> Director Phillip Swagel revealed on Wednesday that the federal government could “run out of funds” between July and September.
The federal <a href="http://dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a>, an arbitrary cap on the <a href="http://dailywire.com/topic/national-debt" target="_blank" rel="noopener">national debt</a> established by Congress, exceeded the statutory limit of nearly $31.4 trillion last month, prompting Treasury Secretary Janet Yellen to <a href="https://www.dailywire.com/news/yellen-warns-congress-extraordinary-measures-have-begun-after-debt-ceiling-breached" target="_blank" rel="noopener">launch</a> “extraordinary measures” intended to continue funding the government through the month of June. Swagel, whose agency is tasked with providing analyses of budget and economic information to Congress, said in a <a href="https://www.cbo.gov/publication/58940" target="_blank" rel="noopener">statement</a> that lawmakers should address the debt limit before the government defaults on obligations.
“We project that, if the debt limit remains unchanged, the government’s ability to borrow using extraordinary measures will be exhausted between July and September,” he said. “The projected exhaustion date is uncertain because the timing and amount of revenue collections and outlays over the intervening months could differ from our projections. In particular, income tax receipts in April could be more or less than we estimate.”
President Joe Biden and House Speaker Kevin McCarthy are presently engaged in negotiations to lower federal spending ahead of any changes to the debt ceiling. Republican lawmakers <a href="https://www.dailywire.com/news/here-are-the-concessions-house-speaker-kevin-mccarthy-gave-to-republican-holdouts-to-win-their-support" target="_blank" rel="noopener">struck a deal</a> with McCarthy under which the party’s new majority will introduce a budget that must refrain from increasing the debt limit in the name of fiscal responsibility.
“If the debt limit is not raised or suspended before the extraordinary measures are exhausted, the government would be unable to pay its obligations fully,” Swagel added. “As a result, the government would have to delay making payments for some activities, default on its debt obligations, or both.”
Policymakers at the Federal Reserve have <a href="https://www.dailywire.com/news/federal-reserve-raises-target-interest-rates-by-quarter-point-marking-slowdown-of-aggressive-hikes" target="_blank" rel="noopener">increased</a> target federal funds rates substantially over the past several months, resulting in higher interest rates across the economy as central bankers attempt to quell inflationary pressures. Interest payments on the national debt are therefore slated to be larger than defense expenditures within the next five years, according to a <a href="https://www.dailywire.com/news/interest-payments-on-the-national-debt-on-pace-to-surpass-military-spending" target="_blank" rel="noopener">projection</a> from Moody’s Analytics.
The national debt currently exceeds $31.5 trillion. Swagel said “newly enacted legislation and changes to the economic forecast that boost interest costs and spending on mandatory programs” mean that the cumulative deficit between 2023 and 2032 is slated to increase by $3 trillion. “The increase in mandatory spending is driven by rising costs for Social Security and Medicare,” he continued. “As the cost of financing the nation’s debt grows, net outlays for interest increase substantially.”
Biden and McCarthy have nevertheless <a href="https://www.dailywire.com/news/sparing-the-sacred-cow-republicans-and-democrats-refuse-to-touch-social-security-as-debt-crisis-looms" target="_blank" rel="noopener">vowed</a> not to discuss amendments to Social Security and Medicare. The two programs marked 46% of the federal budget during the last fiscal year alongside other health initiatives, according to <a href="https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/" target="_blank" rel="noopener">data</a> from the Treasury Department. Both trust funds managed by Social Security are slated to be insolvent by 2035, according to a <a href="https://crsreports.congress.gov/product/pdf/RL/RL33514" target="_blank" rel="noopener">report</a> from the Congressional Research Service. The agency recommended increasing payroll taxes or reducing payouts to avoid an automatic reduction for all recipients.
Biden <a href="https://www.whitehouse.gov/briefing-room/speeches-remarks/2023/02/07/remarks-of-president-joe-biden-state-of-the-union-address-as-prepared-for-delivery/" target="_blank" rel="noopener">claimed</a> during his most recent State of the Union address that he oversaw “the largest deficit reduction” in the nation’s history during his first two years in office. Although he presided over a decline in the deficit from $3.1 trillion in fiscal year 2020 to $1.4 trillion in fiscal year 2022, according to <a href="https://fred.stlouisfed.org/series/FYFSD" target="_blank" rel="noopener">data</a> from the Office of Management and Budget, he failed to mention that the record spending occurred due to legislation passed in response to the lockdown-induced recession. The deficit last year still exceeded those witnessed in the years before the crisis.

The U.S. Treasury Building

Congressional Budget Office Reveals When Government Will Run Out Of Cash

Government Will Run Out Of Cash Sometime This Summer Or Fall

Congressional Budget Office (CBO)

Debt Ceiling

<a href="http://dailywire.com/topic/treasury-department" target="_blank" rel="noopener">Treasury</a> Secretary <a href="http://dailywire.com/topic/janet-yellen" target="_blank" rel="noopener">Janet Yellen</a> asserted on Saturday that <a href="http://dailywire.com/topic/house-republicans" target="_blank" rel="noopener">House Republicans</a> attempting to negotiate spending cuts amid the renewed <a href="http://dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a> battle are “very irresponsible.”
The official <a href="https://www.dailywire.com/news/yellen-warns-congress-extraordinary-measures-have-begun-after-debt-ceiling-breached" target="_blank" rel="noopener">informed</a> House Speaker Kevin McCarthy (R-CA) and other lawmakers in a recent <a href="https://home.treasury.gov/news/press-releases/jy1196" target="_blank" rel="noopener">letter</a> that the debt ceiling, an arbitrary cap on the <a href="http://dailywire.com/topic/national-debt" target="_blank" rel="noopener">national debt</a> established by Congress, exceeded the statutory limit of nearly $31.4 trillion as of this week. Yellen said in an <a href="https://apnews.com/article/politics-us-department-of-the-treasury-united-states-government-district-columbia-china-0f7f0d85ed38353940a18cd262de8b09?utm_source=homepage&amp;utm_medium=TopNews&amp;utm_campaign=position_01" target="_blank" rel="noopener">interview</a> with the Associated Press that House Republicans calling for spending cuts are risking a “self-imposed calamity in the United States and the world economy.”
“This is about paying bills that have already been incurred by decisions with this and past Congresses and it’s not about new spending,” she said, commenting that sustainable expenditures cannot be “negotiated over whether or not we’re going to pay our bills.”
Yellen, who is currently touring multiple African countries for a trip centered on the continent’s economic development, said that the position of withholding a debt ceiling hike until more spending cuts occur is “a very irresponsible thing to do” and added the position could have serious consequences even before “the day of reckoning.” Her letter to lawmakers said that new investments into the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund have been tentatively suspended; the “extraordinary measures” adopted by the Treasury Department to keep the government solvent are expected to last until June.
Yellen nevertheless forecasts that lawmakers will defuse the situation because they understand the economic calamity that would be spurred by the federal government defaulting on obligations. Beyond the possibility of a default, diminished trust in the government’s ability to repay debt can also cause “markets to become quite concerned,” she continued.
The federal government has relied upon sizable budget deficits over the past several decades to continue deficit-driven expenditures. Social Security, Medicare, and other health initiatives constituted 46% of the federal budget during the last fiscal year, according to <a href="https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/" target="_blank" rel="noopener">data</a> from the Treasury Department, even as <a href="https://www.dailywire.com/news/interest-payments-on-the-national-debt-on-pace-to-surpass-military-spending" target="_blank" rel="noopener">maintenance costs</a> on the national debt soar due to the present rise in interest rates across the economy.
Yellen, who previously directed the Federal Reserve, said in another <a href="https://home.treasury.gov/news/press-releases/jy1188" target="_blank" rel="noopener">notice</a> last week that “failure to meet the government’s obligations” would mean “irreparable harm” to the domestic economy and the global financial system. “Presidents and Treasury Secretaries of both parties have made clear that the government must not default on any obligation of the United States,” she wrote. “Yet the use of extraordinary measures enables the government to meet its obligations for only a limited amount of time.”
As McCarthy plans to meet with President Joe Biden to discuss the debt ceiling negotiations, House Republicans have called upon their Democratic counterparts to determine possibilities for spending cuts. Ways and Means Committee Chairman Jason Smith (R-MO) remarked in a <a href="https://waysandmeans.house.gov/smith-democrats-need-to-come-to-the-table-to-address-reckless-spending-and-debt-limit/" target="_blank" rel="noopener">statement</a> that “reckless spending” has produced “the worst spike in prices in forty years” and resultant decreases in living standards.
“Instead of attacking his political opponents, President Biden should be spending this time working with House Republicans to address the debt ceiling in a way that imposes some fiscal sanity. Otherwise, the President is simply scheduling America’s next debt crisis,” he continued. “We can find commonsense solutions to halt reckless spending, put American’s finances on stable footing, and ensure we meet our debt obligations.”

‘Very Irresponsible’: Yellen Blasts House Republicans For Wanting Spending Cuts Amid Debt Showdown

Yellen Calls Republicans 'Very Irresponsible' For Wanting Deficit Reductions

House Republicans

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