Democratic leaders called on Wednesday for additional spending to boost the sluggish US economy, setting up a fresh hurdle for bipartisan efforts in Washington to head off a government debt default this summer.
Democrats’ demand for new stimulus spending is at odds with the work of negotiators, led by US Vice President Joe Biden, who are trying to find trillions of dollars in savings as part of a deal that would allow the US Congress to sign off on new government borrowing before the US runs out of money to pay its bills.
Those talks, which resumed on Wednesday, have largely focused on spending cuts over the next 10 years. Senate Democrats want the deal to include more money for highway construction, a payroll tax cut and clean-energy subsidies to bring down the 9.1 percent unemployment rate.
“Get the recovery right before you get in this deficit-cutting mode,” Assistant Senate Democratic Leader Dick Durbin told reporters. “Get people back to work. Let’s start moving in that direction.”
Republicans, who favor deep spending cuts, said that idea was not likely to go far in the Biden-led talks.
“They’re not talking about spending money in there. That’s not what they’re trying to do,” said Ryan Patmintra, spokesman for Senator Jon Kyl, one of two Republicans participating in the talks. Many Republicans view US President Barack Obama’s 2009 stimulus package as an US$830 billion failure.
However, as negotiators met for the second day this week, US Federal Reserve Chairman Ben Bernanke called into question a key part of the Republican approach for healing the economy.
“I don’t think that sharp, immediate cuts in the deficit would create more jobs,” Bernanke told reporters.
“In the short run ... fiscal tightening is at best neutral and probably somewhat negative for job creation,” he said.
The conflict between stimulus and austerity underscores the precarious state of US finances.
The Biden group, which includes six Republican and Democratic lawmakers, is racing to complete a deal by next week, but negotiators are at odds over the big-ticket items.
Republicans say they will not consider tax increases, while Democrats have said they won’t back cuts to expensive healthcare benefit programs.
The group is trying to find a way to reduce stubborn budget deficits by US$4 trillion over the next 10 years to give lawmakers the political cover to raise the US$14.3 trillion debt ceiling by a large enough increment to cover borrowing needs through next year’s elections.
US Treasury Secretary -Timothy Geithner has warned that the country could default on its loans if Congress doesn’t act by Aug. 2, a scenario that could push the country back into recession and upend financial markets.
Obama and House of Representatives Speaker John Boehner, the top Republican in Washington, want the Biden group to wrap up its work by Friday next week to give them time to hammer out the final details. Any new stimulus efforts could enter the discussion at that point, a congressional aide said.
The deal would then have to win approval from the Republican-controlled House of Representatives and the Democratic-controlled Senate — a tough task for party leaders.
Some Republicans have suggested that Congress may have to approve a short-term fix if the Biden group fails to reach agreement soon, which would allow more time to reach a broad deal to help ensure the budget gets under control.
Durbin told reporters he thought that effort could become a “two-step” process containing a “serious downpayment on the deficit” followed by more work on long-term savings.
However, others in Congress do not want to focus on the issue any longer than necessary, particularly in an election year.
Investors see a temporary fix that delayed a long-term budget plan until next year as a bad move.
They said it would likely cost the US its coveted “AAA” credit rating, raising borrowing costs and hurting the fragile economic recovery.
Nearly half of China’s major cities are suffering “moderate to severe” levels of subsidence, putting millions of people at risk of flooding, especially as sea levels rise, according to a study of nationwide satellite data released yesterday. The authors of the paper, published by the journal Science, found that 45 percent of China’s urban land was sinking faster than 3mm per year, with 16 percent at more than 10mm per year, driven not only by declining water tables, but also the sheer weight of the built environment. With China’s urban population already in excess of 900 million people, “even a small portion
‘IN A DIFFERENT PLACE’: The envoy first visited Shanghai, where he attended a Chinese basketball playoff match, and is to meet top officials in Beijing tomorrow US Secretary of State Antony Blinken yesterday arrived in China on his second visit in a year as the US ramps up pressure on its rival over its support for Russia while also seeking to manage tensions with Beijing. The US diplomat tomorrow is to meet China’s top brass in Beijing, where he is also expected to plead for restraint as Taiwan inaugurates president-elect William Lai (賴清德), and to raise US concerns on Chinese trade practices. However, Blinken is also seeking to stabilize ties, with tensions between the world’s two largest economies easing since his previous visit in June last year. At the
UNSETTLING IMAGES: The scene took place in front of TV crews covering the Trump trial, with a CNN anchor calling it an ‘emotional and unbelievably disturbing moment’ A man who doused himself in an accelerant and set himself on fire outside the courthouse where former US president Donald Trump is on trial has died, police said yesterday. The New York City Police Department (NYPD) said the man was declared dead by staff at an area hospital. The man was in Collect Pond Park at about 1:30pm on Friday when he took out pamphlets espousing conspiracy theories, tossed them around, then doused himself in an accelerant and set himself on fire, officials and witnesses said. A large number of police officers were nearby when it happened. Some officers and bystanders rushed
Beijing is continuing to commit genocide and crimes against humanity against Uyghurs and other Muslim minorities in its western Xinjiang province, U.S. Secretary of State Antony Blinken said in a report published on Monday, ahead of his planned visit to China this week. The State Department’s annual human rights report, which documents abuses recorded all over the world during the previous calendar year, repeated language from previous years on the treatment of Muslims in Xinjiang, but the publication raises the issue ahead of delicate talks, including on the war in Ukraine and global trade, between the top U.S. diplomat and Chinese