Politics

WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen urged members of the U.S. House of Representatives on Friday to raise the federal debt ceiling without conditions, warning that a default on U.S. debt would cause an “economic and financial catastrophe.”

Yellen, in budget testimony before the Republican-controlled House Ways and Means Committee, said that failure to increase the $31.4 trillion borrowing cap would threaten the economic progress that the United States has made since the COVID-19 pandemic.

“In my assessment – and that of economists across the board – a default on our debt would trigger an economic and financial catastrophe,” Yellen said in prepared remarks. “I urge all members of Congress to come together to address the debt limit – without conditions and without waiting until the last minute.

Some Republicans have demanded spending concessions from U.S. President Joe Biden in exchange for raising the debt ceiling. Yellen has refused to negotiate over raising the debt ceiling, arguing that it is about making good on Congress’ past spending decisions.

(Reporting by David Lawder; Editing by Paul Simao)

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By David Lawder

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen urged members of the U.S. House of Representatives on Friday to raise the federal debt ceiling without conditions, warning that a default on U.S. debt would cause “economic and financial collapse.”

Yellen, in budget testimony before the Republican-controlled House Ways and Means Committee, said that failure to increase the $31.4 trillion borrowing cap would threaten the economic progress that the U.S. has made since the COVID-19 pandemic.

“In my assessment – and that of economists across the board – a default on our debt would trigger an economic and financial catastrophe,” Yellen said. “I urge all members of Congress to come together to address the debt limit – without conditions and without waiting until the last minute.”

Asked about the possibility of prioritizing payments to cover U.S. debt payments first from available cash resources, as some Republicans have suggested, Yellen said that was “not a solution to the debt ceiling issue.”

“Prioritization is simply not paying all of the government’s bills when they come due. That is something we have never done since 1789. And that really is just default by another name.”

The only option to avoid a crushing spike in interest rates following a default is for the U.S. to commit to pay its bills on time, she said.

“If we don’t do that and think that there’s some shortcut around it that will avoid economic chaos, we’re kidding ourselves because not paying the government’s bills will produce economic and financial collapse,” she said.

Some Republicans have demanded spending concessions from U.S. President Joe Biden in exchange for raising the debt ceiling. Yellen has refused to negotiate over raising the debt ceiling, arguing that it is about making good on Congress’ past spending decisions.

(Reporting by David Lawder; Editing by Paul Simao and Josie Kao)

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By Andrea Shalal

WASHINGTON (Reuters) -Three U.S. senators blasted the Treasury Department on Thursday for what they called its failure to act more swiftly on countering climate risks, and they urged Secretary Janet Yellen to appoint a new climate counselor to lead the effort.

In a letter to Yellen viewed by Reuters, Democratic Senators Elizabeth Warren, Sheldon Whitehouse and Edward Markey criticized the work done by John Morton, Yellen’s first climate counselor. Morton stepped down in December and returned to the private sector.

The senators said nearly two years had passed since Treasury created a “Climate Hub” and named Morton to coordinate its strategies, but the results have been disappointing.

Yellen has not yet named a replacement for Morton, although Treasury has dozens of people working on climate-related issues, including some in key senior positions.

Treasury spokesperson Julia Krieger underscored the key role the department and the Climate Hub had played on climate issues, including through passage of the Inflation Reduction Act’s clean energy tax incentives, its work to better understand climate-related financial risks and international efforts.

“Treasury has been central to delivering on the Biden Administration’s climate agenda,” she said, when asked about the senators’ letter. “The Climate Hub has played a critical role coordinating this overall agenda and providing expertise to support climate-related policy development and implementation.”

A second Treasury official said the criticism of Morton was frustrating, given his leadership on key initiatives, including $279 billion in clean energy tax credits under the IRA and in mobilizing capital for climate-friendly energy transitions around the world.

In their letter, the senators also faulted Treasury’s leadership of climate work by the Financial Stability Oversight Council, which identified climate change as an “emerging and increasing threat to U.S. financial stability” in October 2021.

The second Treasury official, who was not authorized to speak publicly, said the independent agencies grouped under FSOC were taking action, but those steps followed prescribed processes. No Treasury climate counselor could speed up that work since the agencies were independent, the official said.

The senators also said Treasury had failed to use its power as the largest shareholder in the International Monetary Fund to halt lending that enabled fossil fuel expansion in other countries, noting that other countries were moving faster.

They asked Yellen to respond to over a dozen questions on Treasury’s efforts to mitigate risks to the U.S. economy posed by accelerating climate change and a timeline for doing so.

Yellen this week told an advisory panel climate change was already having a major economic and financial impact on the United States and may trigger asset value losses in coming years that could cascade through the U.S. financial system.

(Reporting by Andrea Shalal; Editing by Tom Hogue and Hugh Lawson)

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By Jason Lange and Alexandra Ulmer

WASHINGTON (Reuters) -A fundraising group tied to Florida Governor Ron DeSantis raised close to $10 million in February, a major haul as the Republican eyes running for president next year, according to a financial disclosure released on Friday.

The disclosure by the Friends of DeSantis group, which was formed to back DeSantis’ campaigns in Florida’s 2018 and 2022 gubernatorial elections, points to it having about $80 million in the bank at the end of last month.

Even though DeSantis easily won re-election months earlier in November, Friends of DeSantis last month took in some of its biggest contributions in years, including $2.5 million from billionaire options trader Jeff Yass, the disclosure showed.

Public opinion polls show DeSantis as the strongest threat to former President Donald Trump for their party’s nomination for next year’s presidential contest.

DeSantis made his first trip to the early nominating state of Iowa on Friday as he tests the waters for a presidential bid, only days before Trump is slated to campaign there.

Friends of DeSantis’ bank account puts DeSantis on a similar financial footing as Trump, who unlike DeSantis has formally launched a 2024 presidential campaign.

Trump and an allied Super PAC he has financed reported having close to $80 million across several fundraising accounts at the end of 2022.

Those accounts include Trump’s Save America group, which was registered with election regulators to support allied campaigns rather than his own, but has transferred at least $60 million to a pro-Trump Super PAC expected to support his campaign.

Super PACs are big-money groups that can legally raise and spend limitless sums to help a candidate as long as the spending isn’t controlled by the candidate’s campaign. They typically get substantial funding from the wealthiest Americans.

The Friends of DeSantis group, which is registered in Florida to support DeSantis’ gubernatorial campaigns, would also be unable to legally finance a presidential run by DeSantis.

But Friends of DeSantis is also expected to transfer money to a Super PAC backing the Florida politician’s presidential aspirations.

On Thursday, a former senior official in Trump’s administration announced he had formed a Super PAC with the aim of getting DeSantis to enter the White House race.

Government watchdogs have attempted legal challenges against such transfers in the past and one is currently seeking to block Trump’s financing of the Make America Great Again Inc Super PAC.

But because leadership at the Federal Election Commission typically deadlocks on sensitive partisan questions, the regulator is unlikely to challenge transfers to Super PACs, said Shanna Ports, a campaign finance lawyer with the Campaign Legal Center, a non-partisan government watchdog.

“The FEC has laid out a roadmap for how candidates can get away with it,” Ports said.

Paul S. Ryan, an election law expert at the Funders’ Committee for Civic Participation, said he was concerned about money from local elections being used in federal campaigns, as state contributions limits can be more lax than federal ones. “The Supreme Court has said repeatedly over decades that big contributions can buy access and influence,” said Ryan.

DeSantis’ political team did not immediately respond to a request for comment.

Friends of DeSantis said in its disclosure that it has raised $222 million since its founding, including $9.9 million in February, and has spent $140 million.

If DeSantis joins the presidential race, he will also have to compete with former South Carolina Governor Nikki Haley, as well as other potential candidates such as former U.S. Secretary of State Mike Pompeo.

(Reporting by Jason LangeEditing by Alistair Bell)

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By David Morgan

WASHINGTON (Reuters) – The hardline U.S. House Freedom Caucus responded to President Joe Biden’s $6.8 trillion budget proposal on Friday, with a list of demands including a near freeze on discretionary spending and an end to multiple programs, in exchange for raising the debt ceiling.

The caucus of at least 37 members, which can stymie legislation in the narrowly divided House of Representatives, issued a position paper that would keep defense spending flat and reset nondefense discretionary spending at pre-COVID-19 pandemic levels while holding annual spending growth to 1%.

Biden’s proposal and the hardline response are just early salvos in a budget negotiation that has higher-than-usual stakes because House Republicans have said they will not vote to lift the nation’s $31.4 trillion debt ceiling unless Biden agrees to spending cuts.

With the Senate narrowly controlled by Biden’s Democrats and the House narrowly held by Republicans, neither proposal is likely to pass unaltered.

Dubbed “Shrink Washington, Grow America,” the plan also calls for ending Biden’s student loan forgiveness program, rescinding unspent COVID-19 relief funding and recouping $80 billion allocated by Congress last year for the Internal Revenue Service.

House Freedom Caucus Chairman Scott Perry said the plan would mean a $131 billion spending cut for fiscal 2024, which begins on Oct. 1, and save $3 trillion over a decade.

The plan, which parallels some of the priorities being pursued by House Budget Committee Chairman Jodey Arrington, comes amid a standoff over the $31.4 trillion debt ceiling that has raised concerns about a political standoff between Biden and House Republicans that could lead to the nation’s first-ever default.

The House Freedom Caucus, whose members forced House Speaker Kevin McCarthy to endure 15 floor votes before being elected to his top post, is among a number of congressional groups hoping to influence the budget that Arrington’s panel is due to produce in coming weeks.

“America will not default on our debts unless President Biden chooses to do so,” Perry told reporters at a news conference. “To ensure America does not default on our debts, the House Freedom Caucus is offering a responsible solution.”

On Thursday, Biden unveiled a budget that would cut deficits by nearly $3 trillion over 10 years by raising taxes on those earning more than $400,000 a year. It would also increase federal spending in 2024 to $6.8 trillion from the $6.2 trillion expected to be spent in the current fiscal year.

“To president Biden: your budget is dead on arrival,” said Representative Byron Donalds, a House Freedom Caucus member.

Biden said the Freedom Caucus wants to retain $2 trillion in tax cuts enacted under former President Donald Trump, without imposing new tax levies on the wealthy. “And in addition to that, on top of that, they’re going to say we have to cut 25% of every program across the board,” Biden said. “I don’t know (that) there’s much to negotiate on.”

A House presentation on U.S. fiscal health by the nonpartisan Congressional Budget Office this week laid out 17 deficit-reduction options including several that contained either new or higher taxes.

Those with the biggest deficit-reducing potential were new consumption and payroll taxes, and new limits on tax deductions, each of which could cut the deficit by as much as $2.3 trillion-$3 trillion over a decade.

Spending cuts would have significantly less impact, the CBO said, according to a copy of its presentation posted online.

(Reporting by David Morgan in Washington; Editing by Matthew Lewis)

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By James Oliphant

DAVENPORT, Iowa (Reuters) -Florida Governor Ron DeSantis made his first trip to the early nominating state of Iowa on Friday as he tests the waters for a presidential bid, coming to the state only days before fellow Republican Donald Trump is slated to campaign there.

Iowa could be particularly crucial for DeSantis, who is expected to jump into the 2024 White House race later in the spring. The state will hold the first Republican nominating contest early next year, and a win there would show DeSantis is a viable candidate against Trump.

The former president, who is campaigning for the Republican presidential nomination, is highly popular in the state and holds a large organizational advantage due to his two previous presidential campaigns.

Addressing a welcoming crowd at a casino in Davenport, Iowa, DeSantis boasted about his policy record in Florida and blasted the Democratic Biden administration on issues such as crime and immigration.

In Florida, “we get things done and in the process, we beat the left day after day, week after week, month after month,” he said.

And as he often does in remarks, he assailed what he called a radical leftist ideology in education, medicine and business.

“We will never surrender to the woke mob,” DeSantis said.

He gave no overt indication that he is planning a presidential run, but the Iowa trip is part of a series of events he has staged across the country in recent weeks as he builds his national profile and courts deep-pocketed donors.

Craig Robinson, a former political director of the Iowa Republican Party, believes Iowa voters are eager to hear from DeSantis, who polls show to be Trump’s biggest rival for the nomination.

Randy Yaddof, 71, of Davenport described himself as a Trump supporter but said after listening to DeSantis he was considering backing the Florida governor. “It’s a very good possibility,” Yaddof said.

Jim Girts, 61, of Davenport said he came because he wanted to see how DeSantis, 44, handled himself in public. “I wanted to see if he was comfortable talking to people,” he said.

Girts, who said he did not vote for Trump, said he was looking for a younger candidate and would consider voting for DeSantis next year.

A Des Moines Register/Mediacom poll released on Friday showed declining favorability ratings for Trump among Iowa Republicans. The number of Republicans who said they would “definitely” vote for Trump in next year’s general election dropped to 47% from a high of 69% in a poll taken in 2021.

Robinson cautioned that if DeSantis hopes to win the state and strike an early blow against Trump, he will have to engage in the kind of extensive retail campaigning that has paid off for other Republican candidates.

Mike Huckabee in 2008, Rick Santorum in 2012 and Ted Cruz in 2016 all crisscrossed the state relentlessly and pulled off surprise upsets in the caucuses.

The only way to counter Trump “is to log the miles and meet Iowans where they are,” Robinson said.

The Midwestern state will remain the first electoral test for Republican presidential candidates. The Democratic Party is trying to shake up its 2024 primary calendar by replacing Iowa with South Carolina as the state that kicks off its presidential nominating process.

Trump has already begun to put a campaign team together in the state that includes Eric Branstad, the son of former Republican Governor Terry Branstad, according to his campaign.

Trump on Monday will travel to Davenport to outline his education plan at a campaign event. He will likely touch upon many of the same issues DeSantis has focused on in Florida, where he has opposed diversity and equity programs in schools and the teaching of gender-identity concepts to children.

The Iowa events will be the closest the men have come to a head-to-head match-up ahead of a Republican contest that is still taking shape.

Trump’s former U.N. ambassador Nikki Haley, who entered the race in February, and other potential candidates including former Vice President Mike Pence and U.S. Senator Tim Scott have visited Iowa in recent months.

The eventual Republican nominee will likely face off with President Joe Biden in November 2024. He is widely expected to launch his re-election campaign soon.

(Reporting by James Oliphant in IowaEditing by Colleen Jenkins, Ross Colvin and Alistair Bell)

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WASHINGTON (Reuters) – The Biden administration told Congress on Thursday its pick to head the Federal Aviation Administration (FAA) is fully qualified and does not violate a law requiring civilian leadership.

Republicans in Congress have questioned whether Denver International Airport Chief Executive Officer Phil Washington has the required aviation experience needed to serve as the top U.S. aviation regulator.

Department of Transportation General Counsel John Putnam said in a letter on Thursday reviewed by Reuters that Washington met the legal requirements for the job, adding “the fresh perspective he will bring to his top-to-bottom assessment of the FAA’s culture and operations will be a benefit.”

(Reporting by David Shepardson; Editing by Christian Schmollinger)

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By Kanishka Singh

WASHINGTON (Reuters) – A federal jury convicted former Ohio House of Representatives Speaker Larry Householder and former Ohio Republican Party chair Mathew Borges of participating in a $60 million bribery scheme, the U.S. Justice Department said on Thursday.

Householder, 63, and Borges, 50, were charged in 2020 in the federal bribery case stemming from a bill passed in 2019 to bail out Ohio’s nuclear power plants. Federal prosecutors called it the biggest corruption case in the state’s history. The legislature revoked the bill in 2021.

Following his arrest in 2020, the Ohio House of Representatives voted to remove Householder from the speakership position.

Prosecutors had alleged that energy distributor FirstEnergy Corp gave $60 million to Generation Now, a political nonprofit operated by Householder. Those funds were used for lobbying that secured passage of the $1.5 billion bill in 2019, according to prosecutors.

Householder and Borges were convicted of participating in the racketeering conspiracy, the Justice Department said in a statement on Thursday. The racketeering conspiracy as charged in this case is punishable by up to 20 years in prison.

FirstEnergy agreed to pay $230 million in 2021 to settle U.S. government charges in the case. It admitted it paid millions of dollars to state officials to pursue legislation on nuclear subsidies and other policies that would benefit it.

“Larry Householder illegally sold the statehouse, and thus he ultimately betrayed the great people of Ohio he was elected to serve,” U.S. Attorney Kenneth Parker said on Thursday. “Matt Borges was a willing co-conspirator, who paid bribe money for insider information to assist Householder.”

(Reporting by Kanishka Singh in Washington; Editing by Bradley Perrett)

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By Andrea Shalal

WASHINGTON (Reuters) – Three U.S. senators blasted the Treasury Department on Thursday for its failure to act more swiftly to counter climate risks, and urged Secretary Janet Yellen to appoint a new climate counselor to lead the effort.

In a letter to Yellen viewed by Reuters, Democratic Senators Elizabeth Warren, Sheldon Whitehouse and Edward Markey criticized the work done by John Morton, Yellen’s first climate counselor. Morton stepped down in December and returned to the private sector.

The senators said nearly two years had passed since Treasury created a “Climate Hub” and named Morton to coordinate its strategies, but the results have been disappointing.

Yellen has not yet named a replacement for Morton, although Treasury has dozens of people working on climate-related issues, including some in key senior positions.

Treasury spokesperson Julia Krieger underscored the central role the department had played in advancing the Biden administration’s climate agenda, including through passage of the Inflation Reduction Act’s clean energy tax incentives and work to better understand climate-related financial risks.

A second Treasury official said the criticism of Morton was “frustrating and unfair,” given his leadership on key initiatives, including $279 billion in clean energy tax credits under the IRA and in mobilizing capital for climate-friendly energy transitions around the world.

In their letter, the senators also faulted Treasury’s leadership of climate efforts by the Financial Stability Oversight Council, which identified climate change as an “emerging and increasing threat to U.S. financial stability” in October 2021.

The second Treasury official, who was not authorized to speak publicly, said the independent agencies grouped under FSOC were taking action, but those steps followed prescribed processes. No Treasury climate counselor could speed up that work since the agencies were independent, the official said.

The senators also faulted Treasury for failing to use its power as the largest shareholder in the International Monetary Fund to halt lending that enabled fossil fuel expansion in other countries, noting that other countries were moving faster.

They asked Yellen to respond to over a dozen questions on Treasury’s efforts to mitigate risks to the U.S. economy posed by accelerating climate change.

Yellen this week told an advisory panel climate change was already having a major economic and financial impact on the United States and may trigger asset value losses in coming years that could cascade through the U.S. financial system.

(Reporting by Andrea Shalal; Editing by Tom Hogue)

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By Katharine Jackson

WASHINGTON (Reuters) -U.S. President Joe Biden on Thursday delivered a budget proposal that includes a robust spending agenda, higher taxes on the wealthy and plans to reduce the deficit, a document that forms the blueprint for his expected 2024 re-election bid.

Here is reaction to Biden’s budget proposal to Congress for the 2024 fiscal year:

U.S. HOUSE BUDGET COMMITTEE CHAIR JODEY ARRINGTON, A REPUBLICAN FROM TEXAS:

“His policies have led to 40-year record inflation, soaring interest rates, and the prospect of a sustained economic recession. Unfortunately, Biden’s latest budget is more of the same bloated bureaucracy at the expense of working families, while sticking our grandchildren with the bill.”

U.S. HOUSE DEMOCRATIC LEADER HAKEEM JEFFRIES:

“The Biden budget plan protects Social Security, strengthens Medicare and invests in our children. House Republicans continue to hide their extreme plans from the American people.”

U.S. HOUSE SPEAKER KEVIN McCARTHY, HOUSE MAJORITY LEADER STEVE SCALISE, HOUSE MAJORITY WHIP TOM EMMER AND REPUBLICAN CONFERENCE CHAIR ELISE STEFANIK, IN A JOINT STATEMENT:

“President Joe Biden’s budget is a reckless proposal doubling down on the same Far Left spending policies that have led to record inflation and our current debt crisis.”

REPUBLICAN U.S. HOUSE MEMBER BEN CLINE, OF VIRGINIA, ON FOX BUSINESS:

“I think his budget in the Republican House of Representatives is going to be about as popular as Pete Buttigieg in East Palestine, Ohio. I don’t think it’s going to get a, well, very good reception. His tax increases are dead on arrival. We’re working on a budget that is going to get rid of the woke and weaponized government that Joe Biden has been pushing for years now.”

U.S. SENATE MAJORITY LEADER CHUCK SCHUMER, IN REMARKS ON SENATE FLOOR:

“The president’s budget is set to be a bold, optimistic, and serious proposal for strengthening our economy and creating opportunities to climb into the middle class, as well as helping people stay there once they get in the middle class.”

REPUBLICAN U.S. SENATOR CHUCK GRASSLEY:

“Even with near-record revenues, President Biden wants to raise taxes on every segment of America. Under his plan, the government’s bite out of the economy would be the largest since World War II. And despite all that, he’s somehow managed to continue adding to our national debt at a breakneck speed. It’s an unserious proposal, and will be treated as such by both parties in Congress.”

JOSH BIVENS, ECONOMIC POLICY INSTITUTE DIRECTOR OF RESEARCH:

“If there’s a quibble on the tax side, it’s that it doesn’t ask enough of plenty of American households who could afford to pay more.”

U.S. CHAMBER OF COMMERCE EXECUTIVE VICE PRESIDENT NEIL BRADLEY:

“The administration’s proposed budget is a recipe for economic and fiscal disaster. Nearly $2 trillion in spending increases would result in an economy where one out of every four dollars is government spending. An unprecedented $5 trillion in tax increases would hit businesses of all sizes and lead to lower wages for working Americans.”

U.S. SENATE ARMED SERVICES COMMITTEE CHAIR JACK REED, A DEMOCRAT FROM RHODE ISLAND, REGARDING BIDEN’S REQUESTED $886 BLN IN NATIONAL DEFENSE SPENDING:

“This topline request serves as a useful starting point.”

U.S. HOUSE ARMED SERVICES COMMITTEE CHAIR MIKE ROGERS, A REPUBLICAN FROM ALABAMA:

“A budget that proposes to increase non-defense spending at more than twice the rate of defense is absurd. The President’s incredibly misplaced priorities send all the wrong messages to our adversaries.”

(Reporting by Katharine Jackson, Trevor Hunnicutt, Andrea Shalal and Mike StoneEditing by Alistair Bell)

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