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Tag: brink

  • Here’s who misses checks if the U.S. hits the debt brink in June

    Here’s who misses checks if the U.S. hits the debt brink in June

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    While its far from certain how, exactly, the Treasury Department would handle a default — including whether it would prioritize certain payments or delay paying the government’s bills — the think tank noted that about $50 billion in Social Security benefits are set to go out in the first half of June, in addition to more than $20 billion in payments to Medicaid providers, $6 billion in federal salaries, $12 billion in veterans benefits and $1 billion in SNAP benefits, also known as food stamps.

    And those hugely significant payments are just a few that could be affected, the Bipartisan Policy Center cautioned, and don’t represent an “exhaustive” list “of all cash flows on a particular day.”

    The Biden administration has already dismissed the untested idea of paying some bills but not others, arguing that it would be unfair to average Americans, cause widespread economic disruption and prove logistically impossible. A more likely scenario, in the event of a default, is that Treasury would choose to delay all bills, waiting until there’s enough revenue to cover all payments for any given day, the Bipartisan Policy Center said.

    The think tank’s new projection piles further urgency onto Tuesday’s debt limit meeting at the White House, despite slim prospects for a major breakthrough between Democrats insisting on a straightforward hike and Republicans pushing for major concessions in return for their debt votes. What remains unclear, though, is whether the Treasury Department can limp along paying the bills until June 15, when quarterly tax receipts would provide a cash infusion and likely stave off default through the end of next month.

    If Treasury can hold off a default until the end of June, it would be able to tap into about $145 billion in new “extraordinary measures,” buying the government a little more borrowing power into the summer. The coming weeks will offer more clarity about whether Treasury can make it to mid-June and give Congress and the White House a longer ramp to negotiate a debt limit deal, said Shai Akabas, BPC’s director of economic policy.

    “I still don’t think now is the time for panic, but it’s certainly time to start getting concerned,” Akabas said, noting that Treasury “is skating on very thin ice” next month due to low cash flows.

    The Treasury cash crunch that could cripple the U.S. economy in the coming weeks stems in part from a disappointing tax season, mixed with delayed tax filing deadlines for residents of states like California that sit in designated disaster areas, Akabas said.

    Other estimates that point to a potential debt catastrophe in early June also underscore that considerable variability in the X-date will remain — until perhaps just days before the U.S. would officially default — thanks to the often unpredictable nature of federal cash flows.

    After Yellen issued her warning last week, the independent Congressional Budget Office also said it sees “a significantly greater risk that the Treasury will run out of funds in early June.”

    Mark Zandi, the chief economist for Moody’s Analytics, told senators during a Budget Committee hearing on Thursday that the X-date could fall on June 8. He added that Yellen’s early warning of June 1 is also very possible, as is a “best case scenario” of Aug. 8.

    The distress signals from government and outside forecasters have done nothing to jumpstart talks between the White House, which is insisting on a “clean” debt limit increase, and Republicans, who are demanding spending cuts in exchange for lifting the borrowing cap. The Biden administration has refused to negotiate, vowing to keep government funding on a separate track.

    A number of Republicans aren’t feeling the pressure either, viewing Yellen’s early June projection as nothing more than a political ploy aimed at squeezing the GOP to swallow a clean debt hike. Akabas said Yellen’s warning is consistent with how the Bipartisan Policy Center is analyzing the situation, however, noting that “no risk is too small a risk to flag.”

    “Yeah, I don’t think she’s playing games,” Zandi concurred in an interview last week.

    Experts say that financial markets are starting to signal trouble ahead amid the debt standoff, particularly among yields in short-term Treasury securities, and that those cracks will only start to worsen as the country lurches closer to the limit. The U.S. is also at risk of another credit rating downgrade, a painful consequence of the debt ceiling standoff that gripped Washington more than a decade ago.

    Pressure from the markets is what may ultimately force action, Zandi said.

    “I don’t think lawmakers will act until they’re pushed to act by the stock market and the bond market saying, ‘If you guys don’t, this is what’s going to happen’,” Zandi said. “There’s going to be a lot of red on the screen, a lot of 401Ks are going to be diminished and there’s going to be a lot of angry people.”

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    ( With inputs from : www.politico.com )

  • Macron on the brink: How French pensions revolt could wreck his presidency

    Macron on the brink: How French pensions revolt could wreck his presidency

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    PARIS — French President Emmanuel Macron will face a moment of reckoning Thursday as lawmakers gear up for a final vote on the government’s deeply unpopular pension reform.

    The controversial bill, a centerpiece of Macron’s second term, has sparked weeks of nationwide protests led by trade unions and faced intense criticism from both the far left and the far right in the National Assembly.

    The French president wants to increase the legal age of retirement to 64 from 62 and extend contributions for a full pension in an effort to balance the accounts of France’s state pensions system — among the most generous in the world. According to projections from France’s Council of Pensions Planning, the finances of the pensions system are balanced in the short term but will go into deficit in the long term.

    Despite government concessions on various aspects of the bill in recent weeks, opposition to the reform remains very high, with polls saying two-thirds of French citizens oppose it.

    Speculation is running high that Macron might not have enough support in the National Assembly, and may choose a constitutional maneuver to bypass parliament — in a move that could unleash a political storm in France.

    On Thursday, the French Senate and the National Assembly are expected to cast a crucial vote on the second reading of the bill, after the Senate voted in favor last week. The outcome will determine the shape of Macron’s second term and stands to bear heavily on his legacy.

    The worst case: Macron loses the vote in parliament

    Losing the parliamentary vote would be a stunning defeat for the French president, who pinned his bid for a second term on his promises to reform France’s pensions system. But political commentators have been speculating in recent days that Macron’s Renaissance party doesn’t have enough votes to pass the bill.

    The French president lost its absolute majority in the National Assembly in parliamentary elections last June. He has since been forced into making ad-hoc deals with MPs from France’s conservative party Les Républicains. But the once-mighty conservatives appear split on the reform, despite assurances this week from their leader Olivier Marleix that there was “a clear majority” backing the bill.

    A defeat in parliament would have seismic and long-term repercussions for Macron’s second term and it is likely that the president’s trusted lieutenant Prime Minister Elizabeth Borne would have to resign in such a scenario. Party heavyweights however say they will not shy away from seeking a vote.

    “There will be a vote, we want a vote, everyone must take its responsibilities,” said Aurore Bergé, leader of the Renaissance group in the National Assembly.

    “There can be an accident … we’ll manage it as we can,” admitted Jean-Paul Mattei, a centrist MP who belongs to Macron’s coalition, with reference to a defeat in parliament.

    However, this is the most unlikely scenario as expectations are that the government will bypass a vote if they sense that they are short on votes.

    GettyImages 1248321611
    Protestors hold an effigy of French President Emmanuel Macron, during a demonstration on the 8th day of strikes and protests across the country against the government’s proposed pensions overhaul in Paris on March 15, 2023 | Alain Jocard/AFP via Getty Images

    Pretty bad: Macron bypasses parliament and loses credibility

    In the face of a potential defeat in the National Assembly, Macron has a nuclear option: invoke article 49.3 of the French constitution. This mechanism allows the government to force through legislation without submitting it to a vote.

    While the constitutional maneuver may seem like an easy way out, it’s a highly risky move as it allows lawmakers to table a motion of no confidence within 24 hours. Macron’s government has faced down motions of no confidence in the past but the stakes are much higher this time around.

    Beyond surviving a motion of no-confidence, Macron and Borne will also come under fire for refusing to submit to the democratic process.

    According to Frédéric Dabi, general director of the IFOP polling institute, the impact on public opinion if the government uses the 49.3 article as opposed to passing a tight vote in parliament would be “radically different.”

    “Public opinions on the 49.3 article have changed … it is regarded as a tool to brutalize the National Assembly: it’s now seen as authoritarian instead of merely authoritative. People want more transparency, more democracy today,” he said.

    France’s hardline unions would no doubt use this to stoke unrest and call for further strike action.

    Trade union leader Laurent Berger has warned the government against using the 49.3 article, saying that it would be “incredible and dangerous.”

    “Nobody can predict what will happen, the protest movement seems to be running out of steam, but if the government invokes article 49.3 it could be read as forcing the issue and may relaunch the protest movement,” said Dabi.

    Still not great: Macron wins vote but faces mass protests

    If the French president wins the vote in parliament, it’ll be seen as a victory but one that may completely drain his political capital, and whip up protests on the streets.

    “It’ll be a victory for Macron, but it’ll only bear its fruit in the long term. In the short term, he’ll face a tense country where relations have become very strained,” said Chloé Morin, a writer and political analyst.

    Trade union leader Berger has said that he would “take on board” the result of Thursday’s vote in parliament. But protests, which have been almost weekly since January, may continue nonetheless across the country in an effort to force the government into backing down and withdrawing the text.

    Morin thinks it is unlikely there will be “an explosion of protests” after the vote as people are resigned to seeing it pass.

    GettyImages 1248236061
    French police officers intervene during a protest by local council employees against the government’s retirement reform in front on the prefecture in Seine Saint-Denis, in Bobigny, a surburb of Paris on March 14, 2023 | Thomas Samson/AFP via Getty Images

    “However, the protest movement might become more radical with lightning protests or sabotages, led by a minority in the citizens’ movement,” said Morin.

    In October last year, industrial action in France’s refineries led to nationwide shortages at petrol stations, forcing the government to intervene in what was seen as Macron’s biggest challenge since his re-election last year.

    There are dangerous precedents for Macron too. In December 2019, the government was forced to abandon a new green tax when faced with the explosive Yellow Vests protests that shook the political establishment.



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    ( With inputs from : www.politico.eu )

  • Washington teeters on the brink of a Cold War over Social Security

    Washington teeters on the brink of a Cold War over Social Security

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    “Democrats, for the whole time I’ve been here, say: ‘Social Security is easy to fix, just raise taxes,’” Coons said, adding that he supports that position. “Republicans refuse to do that. Republicans say ‘this is easy to fix, simply raise the age of eligibility or [otherwise] reduce benefits over time.’ Democrats refuse to do that.”

    Coons’ description of the two parties’ entrenched positions helps explain why the Senate entitlements group — led by Angus King (I-Maine) and Bill Cassidy (R-La.) — is offering few specifics about what exactly their months-long work entails. Not only is the King-Cassidy gang not done yet, but its members are keenly aware that as soon as they unveil a plan, it’s going to come under immediate attack.

    King and Cassidy are taking a “very different” approach to try and avoid those pitfalls, Coons said. But this still isn’t “The West Wing,” the TV show where a fictional president cut a bipartisan Social Security deal in a single day.

    “People are a little nervous,” said Senate Majority Whip Dick Durbin (D-Ill.), who voted for a Reagan-era Social Security fix in the 1980s. “Right now it’s not a welcoming context for a bipartisan solution with big changes.”

    Cassidy’s response: “Is there ever a good time? The answer is always no.”

    Meanwhile, their group isn’t the only corner of Washington where there’s fresh interest in changing Medicare, Social Security or both. President Joe Biden will propose raising Medicare taxes on high earners as part of his budget this week. Progressive Democrats want to remove a $160,000 payroll tax cap in order to shore up Social Security.

    But when concrete policy ideas get proposed for the two retirement programs, it usually gets ugly, and fast, as King and Cassidy may soon find out. Case in point: Republicans shot down Biden’s Medicare proposal hours after he rolled it out Tuesday.

    Senate Minority Leader Mitch McConnell immediately torched the pitch as “massive tax increases.”

    “That is a Band-Aid, that is not a fix … it doesn’t do anything but win him political points,” Sen. Thom Tillis (R-N.C.) said of Biden’s plan. “It’s pretending that he’s making headway, but he’s being dishonest with the American people. You can’t fill that bucket with the few drops he’s talking about.”

    Tillis also criticized former President Donald Trump for taking a hard line against any structural changes to entitlements. Trump’s attacks on potential 2024 presidential rivals Nikki Haley, Mike Pence and Ron DeSantis have jolted the GOP and divided the party over how to handle popular programs that, according to some estimates, could have serious problems within a decade absent significant changes.

    But 10 years might as well be an eon in Congress, where imminent problems are far more likely to force action. Former President Ronald Reagan and former Speaker Tip O’Neill cut their 40-year-old Social Security deal amid fast-approaching fiscal calamity — which today’s negotiators fear may happen again for no reason other than politics.

    At the moment, Cassidy said only that his and King’s unfinished proposal may include automatic triggers that would kick in to make necessary fiscal changes to preserve Social Security. Even so, it’s pretty hard for Capitol Hill veterans to envision solving long-running entitlement funding problems while more immediate challenges, like the debt ceiling, remain unaddressed.

    Speaker Kevin McCarthy has ruled out entitlement changes as part of this year’s debt limit negotiations. And in the immediate future, most Republicans would much rather look at almost any other kind of spending.

    “We need to be working on the national debt. That’s not the place to start,” Sen. Tommy Tuberville (R-Ala.) said. “Social Security/Medicare right now is not in great shape, but it’s not to the point we need to be messing with it.”

    The Democratic Party could be even harder to sway. Biden has cast himself as a firm defender of the two programs, and his party marshaled a broadside against Sen. Rick Scott (R-Fla.) for suggesting last year that all government programs should sunset after five years. Recently, Scott clarified that his idea would not pertain to Social Security and Medicare, but he’d already put Democrats on offense on the issue.

    Which means anything that smacks of cuts — hitting current or future retirees — is going down in flames with Biden’s party.

    “There is zero chance we’re going to reduce Social Security benefits now or in the future,” Sen. Brian Schatz (D-Hawaii) said. “So if we want to talk about how to make this program stronger, let’s do it. I think we win the argument.”

    Schatz’s preferred solution is lifting the cap on payroll taxes that fund Social Security and increasing benefits. But Republicans are generally not in the business of considering tax increases, particularly with a presidential election next year.

    So Democrats’ proposal to bolster both Medicare and Social Security with some tax increases is not going to fly with most Republicans.

    “No, it’s not,” Sen. Kevin Cramer (R-N.D.) said. “But what I hope it leads to is a more complete discussion.”

    If that’s what’s happening behind closed doors among King and Cassidy’s group — which numbers roughly a dozen senators, according to two people familiar with the talks — then the hardest part is yet to come. Should they eventually agree on any final proposal, King and Cassidy need to create buy-in across Congress, including party leaders in both chambers.

    “There’s the policy. There’s the politics and the process. The policy is absolutely ready for primetime,” Cassidy argued. “The politics and the process is what we have to work now. We have a strong bipartisan group in the Senate, but until you get the White House and the House of Representatives … you really can’t go far.”

    Both men face their own competing pressures as they lead the group. Cassidy voted to convict Trump in his second impeachment trial and got intimately involved in the last Congress’ bipartisan gangs, moves that both raised eyebrows among conservatives. And King, an independent who caucuses with Democrats, is taking a significant risk looking at entitlements as he pursues a reelection campaign in a state with one of America’s oldest populations.

    King said he hasn’t spoken to Senate Majority Leader Chuck Schumer about the group’s work, in part because he doesn’t yet have something concrete to present. But when he does, he seems to think it’s a risk worth taking.

    “It’s tough. There’s no question. But to not do anything, there’s no doubt about what’s coming at us,” King said, referring to projections of Medicare and Social Security insolvency. “I came here to try and solve problems. And this is a big one.”

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    ( With inputs from : www.politico.com )

  • Pervez Musharraf: Kargil War’s architect, brought Pak & India to brink of war

    Pervez Musharraf: Kargil War’s architect, brought Pak & India to brink of war

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    Islamabad: Pakistan’s former military dictator General Pervez Musharraf, the architect of the Kargil War, toppled the democratically-elected government in a bloodless military coup in 1999 and ruled the country for nine years during which he survived numerous assassination bids.

    Born in a middle-class family of Urdu-speaking Mohajir parents in Delhi in 1943, Musharraf migrated to Pakistan with his family after the Partition in 1947.

    Pakistan’s last military dictator died on Sunday as a forgotten man in politics after spending his final years in self-exile in the UAE to avoid criminal charges against him in his country.

    He died in the Gulf country after a prolonged illness.

    During his stint as the head of the Pakistan government, Musharraf allied with America in the war against terror after the 9/11 attacks on the US and cracked down on Islamist groups and banned dozens of radical outfits, a move that angered radicals. He even escaped assassination attempts in later years.

    Musharraf, who was appointed the chief of army staff by the then prime minister Nawaz Sharif in 1998, engineered the Kargil War that took place months after Sharif signed a historic peace accord with his Indian counterpart Atal Bihari Vajpayee in Lahore.

    After his failed misadventure in Kargil, Musharraf deposed Sharif in a bloodless coup and ruled Pakistan from 1999 to 2008 in various positions first as the chief executive of Pakistan and later as the President.

    “‘Pervez Musharraf, Former Pakistani President, Dies of Rare Disease’: once an implacable foe of India, he became a real force for peace 2002-2007,” former minister of state for external affairs Shashi Tharoor said in a tweet.

    “I met him annually in those days at the @UN & found him smart, engaging & clear in his strategic thinking. RIP,” Tharoor said.

    Musharraf, who announced elections in 2008 under domestic and international pressure, was forced to resign as president following the polls and went into self-imposed exile in Dubai.

    In 2010, he formed his own party, the All Pakistan Muslim League and declared himself the party president. He voiced his opinion of actively taking part in Pakistan’s politics sometime in the future.

    He returned to Pakistan in March 2013 to contest polls after living in self-exile for about five years but was hauled to court in different cases – including the 2007 assassination of former premier Benazir Bhutto, treason under article 6 of Pakistan Constitution and murder of Bugti tribe chief Nawab Akbar Khan Bugti.

    In 2006, on the orders of Gen Musharraf, the Pakistan Army killed the former junior interior minister and Governor of Balochistan Bugti and over two dozen of his tribesmen, leading to widespread unrest in the area and a surge in the Baloch nationalist sentiment in the province.

    In 2019, Musharraf was sentenced to death in absentia by a special court which found him guilty of high treason, for imposing a state of emergency on November 3, 2007, by keeping the country’s constitution in abeyance.

    The judgement angered the country’s powerful Army which has ruled over Pakistan for most of the period since its existence. It was the first time a former top military official had faced such a sentence for treason in Pakistan. The death sentence was later annulled by the Lahore High Court.

    Musharraf, who was living in Dubai since March 2016, was also declared a fugitive in the Benazir Bhutto murder case and Red Mosque cleric killing case.

    During his tenure, Pakistan saw some structural reforms – ranging from the economic and social sectors to administrative and political restructuring.

    Musharraf visited India for the failed Agra summit in 2001 and made two more visits in 2005 as President to watch an India-Pakistan One-day Cricket match and in 2009 to attend a media event after shedding power.

    Musharraf, the second of three brothers, spent his early years in Turkey, from 1949 to 1956, as his father Syed Musharrafu-ud-din was posted in Ankara.

    On his return from Turkey, Musharraf studied at Saint Patrick’s High School, Karachi, and then at FC College, Lahore. He joined the Pakistan Military Academy in 1961 and was commissioned into the Artillery Regiment in 1964.

    He fought in the Indo-Pakistan War of 1965 as a young officer, and also participated in the Indo-Pak War of 1971 as a Company Commander in the Commando Battalion.

    Musharraf rose to the rank of General and was appointed as the Chief of Army Staff on October 7, 1998, by then prime minister Sharif.

    He was given additional charge of the Chairman Joint Chiefs Staff Committee on April 9, 1999. Six months later, he toppled the Sharif government and became the head of the state designated as Chief Executive.

    Musharraf got married in 1968 and has two children-a son and a daughter.

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    ( With inputs from www.siasat.com )