Latest news with #national debt
BBC News
4 days ago
- Business
- BBC News
World Business Report Sacre bleu! Will the French allow their PM to reduce the number of public holidays?
Will ending two public holidays in France help to reduce national debt? Rahul Tandon talks to a professor at the Toulouse School of Economics. Indonesia also agreed to purchase $15 billion in US energy, $4.5 billion worth of agricultural products and 50 Boeing jets, 'many of them 777's,' Trump said later on social media. The US technology giant Nvidia says it will soon resume sales of its high-end artificial intelligence chips to China The move reverses a ban on sales of its chips to Beijing, a ban imposed by President Donald Trump's administration in April, over national security concerns. And we look at the new trend - hiring etiquette coaches for Gen Z employees. You can contact us on WhatsApp or send us a voicenote: +44 330 678 3033.
Wall Street Journal
5 days ago
- Business
- Wall Street Journal
Historic Dollar Decline Tests Travelers, Investors
The Trump administration's trade policies , concerns over the growing national debt and the shrinking gap between interest rates in the U.S. and other major economies have weighed on the dollar this year. Many expect the world's reserve currency to drop further. And while its decline has made exports cheaper (a boon to U.S.-based industry) and opened opportunities for Americans to invest in foreign stocks, it has made traveling overseas more costly than it has been in years. Read more:
Washington Post
12-07-2025
- Business
- Washington Post
After GOP hypocrisy, Democrats see opening to abolish debt ceiling
For someone who hates debt, Rep. Tim Burchett made a remarkable acknowledgment after voting this month for a massive bill that included a $5 trillion hike to the nation's credit card limit. 'I feel like we ought to just do away with the debt ceiling. I mean, it's a joke,' the Tennessee Republican told reporters July 3. Now in his fourth term, Burchett had just cast his first vote for legislation that increased the limit on the Treasury's borrowing authority, something dozens of archconservatives vowed to never do. But they surrendered in an anticlimax to a roiling debate that for years defined GOP lawmakers after President Donald Trump demanded they include the hike as part of the just-passed massive legislation that covered everything from tax cuts to border security to defense spending. Of the almost 275 Republicans in the House and Senate, all but five supported the 'One Big Beautiful Bill Act,' as Trump named it. Of those five, only two Republicans cited the debt ceiling as a reason to oppose the legislation. The bill itself is no model of fiscal restraint: The national debt is expected to jump by $3.4 trillion over 10 years, per one estimate by the Congressional Budget Office. Current law sets limits on how much total debt the U.S. government can hold, a little more than $36 trillion. Under the latest hike, that will rise to more than $41 trillion. Annual deficits — the difference between how much the federal government spends each year and how much it takes in from taxes and other sources — are now so large and interest payments so high that such a large lift in overall debt will last only about two-and-a-half years before the new ceiling is hit. Now that Republicans have crossed this red line, some conservatives like Burchett admit that hypocrisy is everywhere on the issue, and that the debt ceiling is no longer a useful tool for fiscal restraint. 'It's a worthless piece of paper. It's a relic of a bygone era,' he told reporters. Democrats now see an opening to change the rules governing how much money the Treasury can borrow. 'This is the de facto end, at long last, of the debt ceiling as a political issue on the right,' Rep. Brendan Boyle (Pennsylvania), the top Democrat on the House Budget Committee, said in an interview this week. Such a boast would have seemed foolhardy two years ago, when a debt limit showdown between President Joe Biden and House Republicans went down to the wire and ended after modest concessions from the administration. But Boyle, who is a leader in the effort to get rid of the debt ceiling altogether, is already mapping out a negotiation in late 2027, when he hopes Democrats will be in the House majority and he will be the point person for his caucus when the next debt ceiling standoff is expected to hit. In that scenario, Trump would be heading into his final year in office as a lame duck looking to burnish his legacy and certainly trying to avoid a calamitous debt default that would tank the economy. 'The only thing I would support is a permanent resolution of this,' Boyle said. He has introduced legislation that is complicated but ultimately does not allow Congress to hold Washington hostage over the debt limit. Supporters of the debt law see it as one of the only ways to force lawmakers to at least ponder the burden of a growing national debt, and many archconservatives still support keeping the limit. 'I disagree, with all due respect to Tim, he's a good man. But the debt ceiling's important, we ought to hold on to it,' Rep. Chip Roy (R-Texas), a leader of the far-right House Freedom Caucus, told reporters. But to critics like Boyle, the risk-reward scale tilts far too close to risk. The potential for breaching the limit threatens a default that would lead independent financial analysts to downgrade the Treasury's credit rating and potentially erode the full faith and credit that the U.S. dollar provides for global finances. The United States is the only developed nation to have such a quirky law, which started during World War I and was formalized in 1939. Over the next 15 or so years, the national debt fluctuated between $300 billion and $275 billion, fueled by spending on wars. After a real scare of breaching the limit in 1979, the House adopted a rule that made increasing the debt limit a perfunctory vote upon approving the budget. But then politics interfered. After the 2008 collapse of Wall Street and the Great Recession, the tea party movement rose up against government spending. When Republicans took the House majority in 2011, they turned the debt ceiling into a standoff against President Barack Obama, demanding a dramatic scaling back of his early agenda. The conflict resulted in one of the only genuine efforts to truly rein in spending via the debt ceiling law. Obama considered new cuts to entitlement programs that his Democratic base would oppose, while House Speaker John A. Boehner (R-Ohio) entertained the type of tax hikes on the rich that the GOP base loathed. Instead, amid rebellion on both sides, they adopted a budget framework that indiscriminately reduced future increases in federal agency budgets by $2 trillion over the next decade. Ever since then, fights over the debt limit have served little purpose, each side playing a familiar role. The ceiling gets raised every time, but not before partisan howling and dramatics that threaten to send the nation's fiscal health spiraling. And those fights created debt ceiling puritans such as Burchett, who hails from a rural East Tennessee district that has favored the GOP presidential candidate by at least 30 points in five straight elections. Since arriving in Congress in January 2019, Burchett had voted against the first four laws that raised the debt limit. Having spent 15 years in the state legislature, he liked how Tennessee was 'constitutionally bound' to have a balanced budget and wanted Congress to do the same. 'I don't like debt. I'm from Tennessee, we're a debt-free state,' Burchett told reporters a few days before a May 2023 debt vote. But Trump, a real estate developer familiar with debt and bankruptcy, never liked the national debt limit and once proposed eliminating it, before GOP leaders walked him back from that position. Once he reclaimed the presidency in November, Trump told House Speaker Mike Johnson (R-Louisiana) and other GOP leaders to take care of that issue so that his presidency wasn't handcuffed by those restraints. Rather than handling it in a bipartisan manner, Republicans decided to tuck one of the largest debt increases ever into the tax-and-border legislation. And they used parliamentary rules to pass some budget matters entirely with Republican votes, not needing to clear a 60-vote filibuster hurdle in the Senate and allowing them to avoid making any concessions to Democrats in a bipartisan bill. For budget policy wonks, this was a Nixon-goes-to-China moment. Four years ago, as Democrats pursued their own sweeping policy agenda, some encouraged Biden and their leaders to take this unilateral approach, to avoid any potential GOP effort to use the debt ceiling as a political hostage. But senior Democrats were afraid of the political optics of a several-trillion-dollar debt hike when they were pursuing an agenda of roughly the same size. So they spent part of 2021 and all spring 2023 haggling with Republicans to boost the debt limit. But Democrats always overestimated the public's interest in runaway government spending, and who would get the blame for it. The bigger the U.S. debt got, the more each party shared the blame, and the less it became a campaign issue. When Trump started his presidency, the debt limit hit $20 trillion. The new law extends that limit to about $41 trillion. One study of the 2022 midterm elections showed that just $9 million worth of ads mentioned 'debt,' 'debt ceiling' or 'debt limit,' a minuscule fraction of the roughly $8 billion that went into political advertising during those elections. This time, Trump was not going to make the same political mistake as Biden and Democrats. Deficit hawks like Roy and Burchett objected to Trump's suggestion of having Biden sign a debt increase into law on his way out, but that just led to Trump demanding Republicans fall in line and boost the debt limit on their own several months later. Roy acknowledged that, while he voted for the overarching legislation, he did not like increasing the debt limit. He sheepishly compared his powers to his standing as one member in a 435-member House and 100-member Senate competing against the executive and judiciary branches. 'I wouldn't have increased the debt ceiling $5 trillion. But, you know, I'm one-435th, of one-half, of one-third. So that's my voting power,' he said. Burchett believes Congress needs to work on debts and deficits outside of this quirky law, but lays some blame at the feet of voters who voice conflicting concerns. 'They say, 'You all don't have any restraint,' and then,' he said, 'they say, 'Hey, can you give me that bridge or that ballfield in my district?'' And Boyle is lying in wait, hoping to have the chance to end this battle, once and for all. 'Finally, we can bury this thing,' he said.
Yahoo
11-07-2025
- Business
- Yahoo
Public finances on ‘unsustainable' path due to spending promises, says OBR
The UK's state finances are on an 'unsustainable' path due to a raft of public spending promises the Government 'cannot afford' in the longer term, the boss of UK's official forecaster has warned. It came as the Office for Budget Responsibility said public finances are in a 'relatively vulnerable position' amid pressure from recent U-turns on planned spending cuts. State finances are facing 'mounting risks' but recent governments have had only limited success in improving the fiscal outlook, the OBR said. Richard Hughes, chairman of the organisation, indicated that governments will need to adjust spending plans in the longer term to avoid national debt ballooning. Downing Street however rejected suggestions that the Government is failing to heed warnings about the future of the public finances. Mr Hughes told a briefing in Liverpool that the projected rise in state pension spending linked to the triple lock commitment for annual increases was contributing to growth in national debt. He said the triple lock 'is one of a series of age-related pressures that pushes public spending upwards steadily over a number of years and, as you saw in our previous report, when you project trends in both pension spending and health and other age-related spending forward, the UK public finances are in an unsustainable position in the long-run. 'The UK cannot afford the array of promises that are displayed to the public if you just leave those unchanged, based on a reasonable assumption about growth rates in the economy and in tax revenues.' The triple-lock, which means state pensions increase by the highest of inflation, earnings growth of 2.5%, and a larger number of people above the pension age have caused a surge in spending on state pensions. The forecaster said the cost of the state pension has 'risen steadily over the past eight decades', from around 2% of GDP in the mid-20th century to the current 5% of GDP, or £138 billion, and is estimated to rise to 7.7% of GDP in the early 2070s. It added: 'Due to inflation and earnings volatility over its first two decades in operation, the triple lock has cost around three times more than initial expectations.' The OBR's annual fiscal risks and sustainability report suggested reversals of planned tax increases and spending reductions, such as the recently proposed welfare Bill and winter fuel allowance cuts, contributed to a continued rise in Government debt. The report said: 'Efforts to put the UK's public finances on a more sustainable footing have met with only limited and temporary success in recent years in the aftermath of the shocks, debt has also continued to rise and borrowing remained elevated because governments have reversed plans to consolidate the public finances. 'Planned tax rises have been reversed, and, more significantly, planned spending reductions have been abandoned.' UK public sector debt stood at 96.4% of GDP (gross domestic product) in May, according to latest figures from the Office for National Statistics (ONS). The OBR said its annual fiscal risks and sustainability report that debt is projected to be 'above 270% of GDP by the early 2070s'. The forecaster added that recent rises in debts have led to 'a substantial erosion of the UK's capacity to respond to future shocks and growing pressures on the public finances'. The report also indicated that the state finances are likely to come under pressure in the longer-term from issues including significant growth in the cost of state pensions and climate-related factors. The OBR report also highlighted that the UK's finances faces 'daunting' risks in the near term, such as challenging conditions across the global economy, which have pushed up borrowing costs for governments. The yield on long-term UK Government bonds, called gilts, currently sits near to record highs, making it more costly for the Treasury to pay down its debt bill. It also highlighted that commitments for increased defence spending also pose another risk to the sustainability of public finances. Meeting the new Nato target that countries should spend 3.5% of GDP on core defence by 2035 will increase spending by a further £38.6 billion, the report said. Another major risk highlighted is potential cyber attacks, in light of recent assaults on the Legal Aid Agency, HMRC and Marks & Spencer. It predicted that a cyberattack on critical national infrastructure has the potential to temporarily increase borrowing by 1.1% of GDP. Climate change also 'poses significant risks to economic and fiscal outcomes in the UK'. There is 'an increasing likelihood of more severe impacts of climate change on economies', the OBR said, as the latest analysis now accounted for 'the impacts of higher precipitation and temperature variability'. As a result, the OBR has updated its estimates for the economic damage caused by climate change in both its best case scenario, 2C of warming, and its worst case, an increase of 3C. GDP could fall by 3.3% by 2060 in the event of 2C warming, the watchdog said, and 7.8% by 2060 in the 3C scenario. A Number 10 spokesman said: 'We recognise the realities set out in the OBR's report and we're taking the decisions needed to provide stability to the public finances.' Asked whether the Government was failing to heed alarm bells being sounded by the Office for Budget Responsibility (OBR), the official said: 'No, I don't accept that. 'We have non-negotiable fiscal rules. Stability is the bedrock of growth as we've always said and that is why those fiscal rules are in place. 'But we recognise the long-standing economic realities the OBR sets out in its report.' The Conservatives criticised Labour's handling of the economy amid warnings from the OBR about the unsustainable future of public finances. Shadow chancellor Mel Stride said: 'While working families are tightening their belts, Labour have lost control of the public finances. 'The OBR's report lays bare the damage: Britain now has the third-highest deficit and the fourth-highest debt burden in Europe, with borrowing costs among the highest in the developed world. 'Under Rachel Reeves' economic mismanagement and Keir Starmer's weak leadership, our public finances have become dangerously exposed – vulnerable to future shocks, welfare spending rising unsustainably, taxes rising to record highs and crippling levels of debt interest.'
Yahoo
01-06-2025
- Business
- Yahoo
Jamie Dimon warns that the US's biggest problem is not China but ‘the enemy within'
JPMorgan Chase CEO Jamie Dimon has warned that China isn't the biggest threat to the U.S., it's 'the enemy within.' Dimon appeared at the Reagan National Economic Forum in Simi Valley, California, on Friday, arguing that 'tectonic plates are shifting.' 'Those tectonic plates are the geopolitics with these terrible wars, terrible proxy terrorist activity around the world, North Korea, the potential proliferation of nuclear weapons over time, which is the greatest threat to mankind,' said Dimon, one of America's top bankers. He said the other tectonic shift is the global economy, before going on to seemingly criticise the aggressive trade policies and the apparent breaking up of traditional Western alliances by President Donald Trump. 'The other tectonic shift is … the global economy. So the global military umbrella of America, and then the global economy, of which trade is a part,' he said. 'The other parts are, do people want to partner with you? Do you have your alliances? You have investment agreements and all those various things. And they're changing.' 'Then our debt … We added $10 trillion in five years,' he noted about the national debt, which stands at more than $36 trillion. 'You had [former President Ronald] Reagan up there talking about deficits. The debt-to-GDP was 35 percent, and the deficit was three and a half percent. Today, it's 100 percent debt to GDP … and a deficit of almost seven percent.' 'We go into recession, that seven percent will be 10 percent, and so we have problems, and we've got to deal with them. And then the biggest one underlying both, that is the enemy within,' he said. 'China is a potential adversary — they're doing a lot of things well, they have a lot of problems,' Dimon added. 'But what I really worry about is us. Can we get our own act together — our own values, our own capability, our own management?' The CEO made the comments amid a sharp decline in trade between China and the U.S. following the implementation of Trump's widespread tariffs. The president's trade policy has been in flux amid new agreements and court rulings. The tariffs have prompted further uncertainty in a trade relationship that significantly impacts the rest of the world. The dispute with China escalated on Friday as Trump claimed the Chinese 'totally violated' the most recent trade agreement. 'They're not scared, folks. This notion they're gonna come bow to America, I wouldn't count on that,' said Dimon. He added that he concurs with Warren Buffett, the outgoing Berkshire Hathaway CEO, that while the U.S. is usually 'resilient,' this time could be different. 'We have to get our act together,' said Dimon. 'We have to do it very quickly.' The CEO argued that the U.S. has a 'mismanagement' problem and that a litany of things needed to be done, including fixing regulations, permitting, immigration, taxation, inner city schools, as well as the health care system. Dimon said the U.S. could grow three percent a year if those things are taken care of. Referencing previous speakers at the conference, Dimon said: 'What you heard today on stage was the amount of mismanagement is extraordinary. By state, by city, for pensions … and that stuff is going to kill us.' Sign in to access your portfolio
