Biden 'optimistic' on debt talks with Republicans as default looms

WASHINGTON —President Joe Biden said Sunday he remains "optimistic" about finding an agreement with his Republican opponents to raise the US debt limit and avoid a default, which his administration warned would cause "catastrophic" consequences.

Congressional Republicans are demanding budget cuts in exchange for lifting the US borrowing limit, while the White House has insisted for months that the nation's credit should not be up for negotiation.

Alarm bells are meanwhile ringing over the possibility of a first-ever US default, with uncertainty over the actual date the government would stop being able to pay its bills.

The two sides have remained at an impasse despite weeks of warnings from government officials and bankers that a default could unleash drastic consequences, including a possible recession and likely global financial contagion.

Nonetheless, Biden said Sunday he thinks he will eventually be able to reach a deal.

"I remain optimistic because I'm a congenital optimist, but I really think there's a desire on their part as well as ours to reach agreement. I think we'll be able to do it," Biden told reporters while out on a bike ride near his beach home in Delaware.

A much-anticipated new round of debt-ceiling talks between Biden and Republican leaders, including House Speaker Kevin McCarthy, was postponed from Friday until the coming week.

Asked if the Tuesday meeting was still on, Biden said: "I think so."

Treasury Secretary Janet Yellen has warned a default could occur by June 1, while the nonpartisan Congressional Budget Office forecast on Friday the date of June 15.

"We shouldn't be here," Deputy Treasury Secretary Wally Adeyemo said Sunday on CNN's "State of the Union."

"If Congress failed to raise the debt limit by the time of default, we would go into a recession and it'd be catastrophic," he warned.

"The United States of America has never defaulted on its debt -- and we can't."

'MASSIVE CUTS' 

Biden has stated he wants a "clean" hike of the debt ceiling, but Republicans are insisting any extension of the country's borrowing authority, currently capped at $31.4 trillion, come with substantial curbs on spending.

"It's time to bring spending levels back to pre-Covid, and then we can talk about raising the debt ceiling," Byron Donalds, a Republican representative from Florida, told FOX News on Sunday.

"If Joe Biden brings nothing to the table, if all he does is sit there with his hands in his pockets... then he's the one leading our nation into default."

Former president Donald Trump has encouraged Republican lawmakers to hold out for a default if Biden doesn't agree to "massive cuts."

The looming possibility of a default has also threatened Biden's upcoming trip to Asia for a G7 leaders meeting, among other events in the region.

Asked by reporters Sunday if he still planned to leave this week, Biden said: "That's my plan as it stands now."

'CONSTRUCTIVE' NEGOTIATIONS 

Adeyemo acknowledged "constructive" negotiations were ongoing at the staff level, while pushing back on assertions that Biden does not want to address ballooning US debt.

"The president's laid out a plan that includes $3 trillion in debt relief over 10 years," Adeyemo said, referring to Biden's budget request unveiled in March, which featured tax increases on the wealthy and businesses.

Congressional leaders should address ways to hammer out a deal on fiscal policy, "but as we have that conversation, there is no reason we shouldn't raise the debt limit and prevent default in this country, a default that could lead to a massive recession that would cost us millions of jobs," he said.

Lael Brainard, director of the White House's National Economic Council, maintained that a deal would be reached.

"Our expectation is that Congress will do what is necessary" to avoid a default, Brainard, a former Federal Reserve vice chair, told CBS Sunday show "Face the Nation."

Biden addressed the issue on Saturday in Delaware, where he talked briefly to reporters.

"They're moving along," he said of the talks. But while there was "real discussion," he added the two sides were "not there yet."

Agence France-Presse 

Yellen warns of 'chaos' if US fails to raise debt ceiling

WASHINGTON, United States - US Treasury Secretary Janet Yellen warned Sunday that unless Congress acts soon to raise the nation's debt ceiling, "financial and economic chaos would ensue."

Republicans have been pressing President Joe Biden to strike a deal to provide spending cuts in exchange for lifting the national borrowing limit, but Yellen insisted the onus remains on US lawmakers.

"It simply is unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling," she told ABC talk show "This Week."

Yellen had warned on Monday that the United States could run out of money to pay its financial obligations as early as June 1.

The ceiling on US public debt is legally fixed and can be raised only by passage of congressional legislation signed into law by the president.

The Republican-led House of Representatives, positioning itself for a showdown with Biden, voted in late April to lift the borrowing limit but only with drastic cuts to rein in what that party sees as excessive spending.

The bill has no chance of being adopted in the Senate, with its Democratic majority.

Biden has so far refused to negotiate, noting that the debt ceiling has routinely been raised scores of times over the years -- including under former Republican president Donald Trump.

But Republicans insist Biden's refusal to talk is the principal obstacle.

"The president has refused to negotiate," Senator James Lankford, a Republican on the Senate Appropriations Committee, told ABC. "That has been the most stunning part about this."

Biden is set to meet on Tuesday with the leaders of both parties in Congress.

"I know he wants to set up a process in which spending priorities and levels are discussed," said Yellen, "but these negotiations should not take place with a gun pointed at the head of the American people."

She sidestepped questions about the possibility Biden might use a novel interpretation of the US Constitution to simply keep paying the nation's bills, saying that in the absence of congressional action, "there are simply no good options."

The impasse has raised the possibility of the country's first-ever default, with profound implications for the US and global economies.

Analysts say markets would be shaken and interest rates would lastingly rise, causing households and businesses to pull back on spending.

A default, Biden's economic advisors warn, could cause the loss of eight million jobs and send GDP plunging by six percent.

Since the United States hit its $31.4 trillion borrowing limit in January, the Treasury has taken extraordinary measures to allow it to continue financing the government's activities.

But as Yellen said Monday, those measures will soon be exhausted.

Agence France-Presse

Biden admits 'very slight' US recession possibility

WASHINGTON - US President Joe Biden conceded Tuesday that a "slight" recession was a possibility following a downcast IMF economic forecast, amid rising inflation and uncertainty after the Russian invasion of Ukraine.

"I don't think there will be a recession," Biden told CNN. "If it is, it'll be a very slight recession. That is, we’ll move down slightly."

Agence France-Presse

US stocks fall for a 4th day

NEW YORK—Wall Street couldn’t shrug off doubts about the US economy and government gridlock on Tuesday.

Mixed economic reports and concern about a government shutdown dragged stocks lower in the final half-hour of trading. They had been positive most of the day.

The modest losses extended the losing streak for the Standard & Poor’s 500 index to four days. It was the longest run of declines in a month. The Dow Jones industrial average also dropped for a fourth straight day.

Investors struggled with conflicting news about the economy on Tuesday. One report showed that home prices in July rose the most in more than seven years. Another showed that Americans’ confidence in the economy slipped in September.

Investors are searching for direction after the Federal Reserve’s surprise decision last Wednesday to keep its stimulus program intact. They had expected a reduction in the Fed’s $85 billion in monthly bond purchases. Investors are now parsing economic reports and comments from Fed officials to gauge the central bank’s next move.

Some are also nervous about political gridlock in Washington. They were concerned that the federal government could shut down because Washington lawmakers appear to be making little progress in budget talks.

“A government shutdown starting next week is looking increasingly likely,” said Jim Russell, a regional investment director at US Bank. “That will not be welcomed by the capital markets.”

But Brad Sorensen, director of market and sector research at Charles Schwab, thought that worries about a government shutdown would ultimately be short-lived.

“Investors are becoming a little bit immune to the games that Washington has started to play,” Sorensen said. “Investors with a stronger stomach should probably buy the dip.”

Stocks, for example, plummeted in the summer of 2011 as lawmakers wrangled about raising the debt ceiling. The market also sagged in October last year before the Presidential elections, on concerns that a divided government would be unable to agree on tax reform. Each time though, backed by the Fed’s economic stimulus, the market came back stronger.

After falling 2 percent in October of last year, the Standard & Poor’s 500 index rose for seven straight months, gaining 15 percent.

On Tuesday, the Dow closed down 66 points, 0.4 percent, to 15,334. The S&P 500 index fell four points, or 0.3 percent, to 1,697. The Nasdaq composite, however, edged up three points, or 0.1 percent, to 3,768.

Stocks edged lower in early trading before moving modestly higher in the late morning and afternoon. Those gains then fizzled out at the end of trading.

Phone company stocks were the biggest decliners among the 10 industry groups that form the S&P 500. Industrial stocks were the biggest gainers.

Before the market opened, a survey showed that home prices rose the most since February 2006. A revival in housing has been one of the bright spots for the economy.

In another key economic gauge, the Conference Board, a New York-based private research group, said that its consumer confidence index dropped to 79.7 in September, down from August’s 81.8.

Consumers’ confidence is closely watched because their spending accounts for 70 percent of US economic activity. Confidence has grown since the Great Recession, but it hasn’t hit a reading of 90, which typically accompanies a healthy economy.

They S&P 500 index is just 28 points below its all-time high reached last Wednesday, when investors were initially thrilled that the Fed extended its economic stimulus. Since then, the market has fallen each day as doubts emerge about the outlook for the economy, and budget negotiations.

In government bond trading, the yield on the 10-year Treasury note rose fell as investors bought bonds. The yield dropped from 2.70 percent late Monday to 2.66 percent, its lowest level in six weeks. The yield on the note is a benchmark for rates of consumer loans.

Among stocks making big moves:

— Software company Red Hat fell $6.20, or 12 percent, to $46.73 after it reported lower-than-expected quarterly billings and issued disappointing revenue forecasts.

—Carnival fell $2.86, or 8 percent, to $34.54 after the cruise ship operator warned revenue could drop more than its prior forecast.

— Applied Materials, a manufacturer of chip-making equipment, rose $1.45, or 9 percent, to $17.45 after it agreed to acquire a rival.

— Facebook rose $1.26, or 3 percent, to $48.45 after Citigroup upgraded the company’s stock to a “buy” recommendation from “neutral.” Facebook should continue to grow, helped by increasing advertising revenue contributions from its mobile website, Citigroup said.—Steve Rothwell

source: business.inquirer.net

US stocks follow global markets lower

WASHINGTON — Wall Street stocks opened lower Wednesday following a global rout as weaker-than-expected data on private jobs creation underscored weakness in the US economy.

Five minutes into trade, the Dow Jones Industrial Average was down 43.17 points (0.28 percent) at 15,134.37.

The broad-based S&P 500 lost 4.54 (0.28 percent) at 1,626.84, while the tech-rich Nasdaq Composite fell 8.49 (0.25 percent) to 3,436.77.

Providing a possible picture for the official May job creation and unemployment numbers to be released Friday, payroll firm ADP reported Wednesday that the US private sector added 135,000 jobs in May, less than the 157,000 jobs analysts had expected.

source: business.inquirer.net

Romney concedes defeat, Obama wins second term

Washington — President Barack Obama rolled to re-election and a second term in the White House on Nov. 6 (Wednesday, Philippine time) with a victory over Republican challenger Mitt Romney as the Democrat overcame deep doubts about his handling of the US economy.

Romney, closeted with advisers in Boston, did not immediately concede defeat because of questions about whether Obama had really won the pivotal state of Ohio. But other projected Obama victories in Virginia, Nevada, Iowa and Colorado carried the president past the 270 electoral votes needed for victory.

He later went live on national television to congratulate Obama.

Republican Mitt Romney conceded the US presidential election to Obama early on Wednesday morning after a hard-fought campaign.

"This is a time of great challenges for America and I pray that the president will be successful in guiding our nation," Romney told supporters in Boston after calling Obama to congratulate him.

Obama defeated Romney in a number of key swing states, despite the weak economic recovery and stubbornly high unemployment that dogged his campaign.

Television networks called the election late on Tuesday, but the Romney campaign waited more than an hour to agree on the results in Ohio.

"I so wish, I so wish, that I had been able to fulfill your hopes to lead the country in a different direction, but the nation chose another leader," Romney said in his concession speech.

This is the second time the former Massachusetts governor has made a run for the presidency. Romney had promised to revive the nation's economy through reforming the tax code, reducing the debt and confronting China on its trade practices.

Obama, America's first black president, won by convincing voters to stick with him as he tries to reignite strong economic growth and recover from the worst recession since the Great Depression of the 1930s. An uneven recovery has been showing some signs of strength but the country's 7.9 percent jobless rate remains stubbornly high.

Obama's victory in the hotly contested swing state of Ohio - as projected by TV networks - was a major step in the fight for the 270 electoral votes needed to clinch the White House and ended Romney's hopes of pulling off a string of swing-state upsets.

Obama scored narrow wins in Ohio, Wisconsin, Iowa, Pennsylvania and New Hampshire - all states that Romney had contested - while the only swing state captured by Romney was North Carolina, according to television network projections.

The nationwide popular vote remained extremely close.

There was no immediate word from the Romney camp on the reported results, with some Republicans questioning whether Obama had in fact won Ohio despite the decisions by election experts at all the major TV networks to declare it for the president.

The later additional of Colorado and Virginia to Obama's tally - according to network projections - meant that even if the final result from Ohio is reversed, Romney still could not reach the needed number of electoral votes in America's state-by-state system of choosing a president.

While Obama supporters in Chicago were ecstatic, Romney's Boston event was grim as the news was announced on television screens there. A steady stream of people left the ballroom at the Boston convention center.

At least 120 million American voters had been expected to cast votes in the race between the Democratic incumbent and Romney after a campaign that was focused on how to repair the ailing US economy.

The same problems that dogged Obama in his first term are still there to confront him again.

He faces a difficult task of tackling $1 trillion annual deficits, reducing a $16 trillion national debt, overhauling expensive social programs and dealing with a gridlocked US Congress that kept the same partisan makeup.

The next four years

Obama's victory will set the country's course for the next four years on spending, taxes, healthcare, the role of government and foreign policy challenges such as the rise of China and Iran's nuclear ambitions.

Each man offered different policies to cure what ails America's weak economy, with Obama pledging to raise taxes on the wealthy and Romney offering across-the-board tax cuts as a way to ignite strong economic growth.

Whether both Democrats and Republicans will now be able to come together and craft a compromise is an open question as Republican congressional leaders vow to stick to their pledges not to raise taxes on anyone.

Inside Obama's Chicago campaign headquarters, staffers erupted into cheers and high fives as state after state was called for the president.

Romney, who would have become America's first Mormon president, made last-minute visits to Ohio and Pennsylvania on Tuesday to try to drive up turnout in those states, while Vice President Joe Biden was dispatched to Ohio.

Republicans are likely to face questions about their ability to appeal to non-white voters as Hispanics, a growing minority, voted heavily for the president.

Obama's Democrats held their Senate majority, while Romney's Republicans retained House of Representatives control.

Democrat Claire McCaskill retained her US Senate seat from Missouri, beating Republican congressman Todd Akin, who stirred controversy with his comment in August that women's bodies could ward off pregnancy in cases of "legitimate rape."

Democrats gained a Senate seat in Indiana that had been in Republican hands for decades after Republican candidate Richard Mourdock called pregnancy from rape something that God intended. Democratic congressman Joe Donnelly won the race.

In another high-profile Senate race, Democrat Elizabeth Warren, a law professor who headed the watchdog panel that oversaw the government's financial sector bailout, defeated incumbent Massachusetts Republican Senator Scott Brown.

Former Maine Governor Angus King won a three-way contest for the Senate seat of retiring Republican Olympia Snowe. King ran as an independent, but he is expected to caucus with Democrats in what would amount to a Democratic pick-up.

Florida Democratic Senator Bill Nelson easily beat back a challenge from Republican congressman Connie Mack to win a third term, while Democratic congressman Chris Murphy beat Republican Linda McMahon, a businesswoman who had served as chief executive of a professional wrestling company. — Reuters

source: gmanetwork.com

Obama camp assails 'vampire' Romney in new ad

WASHINGTON — U.S. President Barack Obama’s camp unleashed a fierce assault on his Republican foe Mitt Romney Monday, slamming the former venture capitalist as a “vampire” who got rich by bleeding dry ailing firms.

A new campaign ad airing in battleground states related how Romney’s firm Bain Capital took over and ultimately closed a steel plant in Kansas City, Missouri and featured emotive testimony from workers who lost their jobs.

The assault marked a key moment in the campaign ahead of November’s election, as Obama seeks to shred Romney’s main argument that his business background qualifies him to revive the US economy.

“Since Romney’s central premise is that he’s an economic wizard who can grow the economy—it’s worth examining what that wizardry is all about,” said Stephanie Cutter, Obama’s deputy campaign manager.

“Mitt Romney’s business experience wasn’t about growing companies and creating jobs and long-term economic growth.

“In deal after deal, Romney’s first priority was to make a personal profit, regardless of the cost to others.”

Romney’s campaign seemed ready for the attack—within hours they issued their own ad lauding Bain’s role in starting up another steel firm, which now employs 6,000 people.

The Obama spot, which will air in Iowa, Colorado, Pennsylvania, Ohio and Virginia, features the story of several steelworkers who lost their jobs, pension benefits and health care coverage in the plant’s closure.

“Bain Capital walked away with a lot of money made off this plant. We view Mitt Romney as a job destroyer,” said John Wiseman, a steel worker who lost his job when GST Steel closed.

Jack Cobb, who was a steelworker for 31 years, added of Bain’s purchase of their firm: “It was like a vampire, it came in and sucked the life out of us.”

The ad juxtaposes clips of Romney saying that he cares about jobs and the unemployed with the testimony of steelworkers thrown out of work when Bain Capital finally closed down their firm in 2001 with the loss of 750 jobs.

“It was like watching an old friend bleed to death,” said steelworker Joe Soptic, in the ad, relating the moment the last steel was made in the plant.

Romney’s campaign hit back at the president’s economic record, which the former Massachusetts governor wants to make the central point of the campaign ahead of the election.

“We welcome the Obama campaign’s attempt to pivot back to jobs and a discussion of their failed record,” said Romney spokeswoman Andrea Saul.

The Romney ad told the story of Steel Dynamics an Indiana-based firm founded with the help of money from Bain Capital.

“American workers in a small town-proving that anything is possible in America,” the ad’s narrator said.

The Obama campaign however accused Romney of being selective with the truth arguing that Bain’s $18.2 million investment was dwarfed by the $77 million contribution from Indiana tax payers.

It also said that while Bain was invested in the firm, it only employed 600 people, far short of the 6,000 jobs supported by the company after its later merger with other steel workers.

Romney says that his experience as a venture capitalist responsible for building brands like the Staples office supplies store, have given him a unique understanding of the economy.

But Obama’s campaign sees Romney’s past as a perfect match for the president’s narrative that a greed-laced rampage by Wall Street firms deprived the middle class of a “fair shake” at the American Dream.

source: japantoday.com

US confirms economy grew 3% in Q4

WASHINGTON — The US economy grew at an annual rate of 3 percent in the fourth quarter of 2011, the Commerce Department said in its final estimate Thursday.

The department’s third estimate for gross domestic product growth in the period was unrevised from its prior estimate and capped a year of steadily accelerating growth. GDP grew 1.8 percent in the third quarter.

The Commerce Department said the fourth-quarter pick-up was in part thanks to an uptick in private inventory investment and stronger consumer spending that were partially offset by a decline in federal government spending and slowing exports.

The world’s biggest economy also saw an increase in imports, a factor that subtracts from GDP growth calculations.

For all of 2011, the economy grew 1.7 percent, compared with 3 percent in 2010.

Recent data indicates GDP growth slackened in the first quarter.

Scott Hoyt at Moody’s Analytics said the seeds of the slowdown were sown in the fourth quarter as businesses rapidly built up inventories, a pace that would not be maintained.

Other factors that will drag on growth, he said, are reduced government spending and trade “as the recession in Europe undermines exports.”

Nonetheless, Hoyt said, the economy “appears increasingly solid.”

“Looking beyond temporary factors such as the warm winter, GDP appears to be expanding at an annual rate near 2.5 percent,” he said.

“While hardly a boom pace, this is strong enough to expand employment and reduce joblessness in coming months.”

source: http://business.inquirer.net/51761/us-confirms-economy-grew-3-in-q4