close video Market optimistic over debt negotiations: Ben Levisohn
Ben Levisohn, Jack Hough and Carleton English discuss the impact of debt negotiations on the markets, Foot Lockers shares and earnings performance as well as the resignation of Morgan Stanleys CEO James Gorman.
The Treasury Deptartment is expected to run out of the cash necessary to fund the federal government’s obligations by June 8 or 9 unless the debt ceiling is lifted, according to a report by Goldman Sachs.
Since the U.S. ran up against its $31.4 trillion debt limit in January this year, the Treasury has been using "extraordinary measures" which are accounting maneuvers that involve shifting funds between certain accounts to pay the government’s bills. Treasury is only able to use the extraordinary measures so long as balances in those accounts remain above $30 billion, at which point it can no longer fulfill all the federal government’s obligations.
Negotiators representing the Biden administration and congressional Republicans have been operating under the assumption June 1 will be the date on which Treasury exhausts its extraordinary measures, which could give lawmakers extra time to finalize a deal if the June 8 or 9 estimate from the Goldman Sachs note pans out. However, the report noted that there’s still a chance June 1 will be the deadline.
"The estimate is subject to substantial uncertainty so there is certainly a chance that receipts could slow more than expected and leave the Treasury short of cash by June 1 or 2," Goldman economists Alec Phillips and Tim Krupa wrote in the note to clients, which Bloomberg first reported.
YELLEN SAYS ODDS OF US PAYING ALL ITS BILLS BY JUNE 15 IS ‘QUITE LOW’ AS DEBT CEILING DEADLINE LOOMS
A report by a pair of economists from Goldman Sachs indicates the Treasury may have until June 8 or 9 until it’s unable to pay all the government’s obligations. (Fox News)
The Goldman Sachs economists noted that on Thursday last week, Treasury’s cash balance was at a little more than $57 billion after it had about $92 billion the day before. The Treasury's cash balances ebb and flow day-to-day based on incoming tax receipts and spending levels as federal bills come due, but the extraordinary measures will eventually be tapped out.
"We are confident that Congress will avoid going past the deadline without action, but there are many paths this could take," wrote the economists, who assigned a 30% chance of the two sides agreeing to a deal this week, along with a 30% chance of a deal "shortly before" the deadline is reached.
"While we expect a deal to occur ahead of the deadline, we also expect a few more twists along the way, and suspect that markets are likely to price in additional risk before the debt limit is finally raised," they explained.
DEBT CEILING DEADLINE IS CLOSER THAN PREVIOUSLY EXPECTED – HERE’S WHY
Treasury Secretary Janet Yellen has said the debt limit needs to be increased by June 1 or the U.S. will face difficult choices about which bills to pay. (Drew Angerer/Getty Images / Getty Images)
Treasury Secretary Janet Yellen said Sunday during an interview on NBC’s "Meet the Press" the likelihood of the U.S. making it to mid-June without the Treasury exhausting its extraordinary measures is "quite low" and that June 1 remains the hard deadline.
"And my assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills will go unpaid," Yellen added without going into specifics.
Senate Minority Leader Mitch McConnell (R-Ky.), Speaker of the House Kevin McCarthy (R-Calif.) and President Joe Biden, meet with other lawmakers in the Oval Office of the White House to discuss the debt limit on May 9, 2023. (Anna Moneymaker/Getty Images / Getty Images)
Negotiations between President Biden and House Speaker Kevin McCarthy, R-Calif., have picked up over the last week after weeks of little movement as the two sides press to strike a deal that staves off the fast-approaching threat of default.
House Republicans want to see a deal that contains spending caps, particularly on non-defense discretionary spending, while Democrats have been reluctant to agree to budget cuts.
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Biden and McCarthy are scheduled to meet Monday when the president returns from a trip to Japan for the G-7 that was cut short due to the state of negotiations, while staffers from the two sides will meet Sunday night.
McCarthy has said that a deal in principle would likely need to be reached this weekend to give Congress enough time to turn the deal into legislative text and pass the bill through the House and Senate ahead of the June 1 deadline.
FOX Business’ Stephen Sorace contributed to this report.
Schaefer had two goals in a 3-2 victory over the Columbus Blue Jackets. Schaefer, who turned 18 on Sept. 5, became the youngest defenseman in NHL history with a multigoal game, moving in front of Hall of Famer Bobby Orr (18 years, 248 days on Nov. 23, 1966).
Schaefer, the No. 1 pick in this year’s NHL draft, has five goals and five assists in his first 12 games with New York.
“It has been fun to watch. He’s great skater. He’s super poised,” Islanders teammate Simon Holmstrom said. “He was able to score two big goals for us tonight.”
Schaefer scored a power-play goal when he converted a booming shot 5:53 into the first period. He tied it at 2 with 1:07 left in the third, and Holmstrom tapped a loose puck past goaltender Elvis Merzlikins for the winning score with 38 seconds left.
“Oh wow, it’s fun hockey to play and fun hockey to watch,” Schaefer said after the victory. “A couple of big goals in the last minute.”
Schaefer again heard his name chanted by the home crowd at UBS Arena. It was a similar scene when he scored his first NHL goal during the Islanders’ home opener on Oct. 11.
“That was a big shift. That’s what happens when you put pucks on net,” Schaefer said of his tying goal. “A big grind out of the guys.”
Schaefer became the third-youngest player in the NHL’s expansion era, since the 1967-68 season, to record two goals in a game. Only Jordan Staal (18 years, 41 days on Oct. 21, 2006) and Pierre Turgeon (18 years, 54 days on Oct. 21, 1987) accomplished the feat at a younger age.
Schaefer played junior hockey last season for the Erie Otters. Now he is manning the point on New York’s power play, regularly logging major minutes and contributing well beyond the scoresheet.
He is quick to deflect praise, crediting Islanders captain Anders Lee with successfully impeding the view of Merzlikins on the tying goal.
“Teammates, I just have to rely on them,” Schaefer said. “I don’t think that’s going in if Leezy is not there screening the goalie. I don’t think he really saw much.”
Nigel Farage has said Reform UK could cut the minimum wage for young people, saying there is “an argument” that it is currently “too high”.
Speaking at a news conference, he also said his manifesto promises at the last general election to bring in sweeping tax cuts were “only ever aspirations”, and “substantial tax cuts” are “not realistic”.
In a broader defence of his insurgent party, Mr Farage insisted Reform UK is “not a one-man band”, and he is building a team with expertise across a wide range of policy areas.
The Reform UK leader made the comments in a speech and news conference with journalists in the City of London in which he pledged the party would be “the most pro-business, the most pro-entrepreneurship government that has been seen in this country in modern times”.
Asked in the news conference afterwards if he believes the minimum wage is too high, Mr Farage replied: “There’s an argument that minimum wage is too high for younger workers, particularly given that we’ve lowered the level at which NIC [employers’ national insurance] is paid to £5,000 a year.”
This is a reference to Chancellor Rachel Reeves’s decision at the last budget to reduce the threshold at which employers start paying national insurance contributions from £9,100 per year in salary to £5,000.
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1:39
Sky’s Deputy Political Editor Sam Coates asks Nigel Farage why we should trust Reform UK’s economic plans.
Making the argument that the change puts too much of a tax burden on businesses, stifling growth, Mr Farage told the chancellor to “do one or the other, do one or the other – either lift the cap at which NI is due, or lower the minimum wage for younger workers”.
The current hourly national minimum wage for apprentices and people under 18 is £7.55, for 18-20 year olds is £10, and for aged 21 and over is £12.21.
But Mr Farage is also being accused of U-turning on the tax cuts he pledged in Reform UK’s 2024 general election manifesto, which was called “Our Contract With You”.
Key measures in the document included raising the minimum threshold of income tax to £20,000, raising the higher rate threshold from £50,271 to £70,000, abolishing stamp duty for properties below £750,000, and abolishing taxes on inheritances below £2m.
But speaking on Monday, the Reform UK leader said: “We want to cut taxes. Of course, we do. But we understand – substantial tax cuts, given the dire state of debt and our finances, are not realistic at this current moment in time.”
He said he would make “some relatively modest changes” immediately, which included scrapping the inheritance tax imposed on family farms, as well as family-run business, and “raise the thresholds at which people start to pay tax” – although he was not specific about the level at which he would put the thresholds.
Challenged by a journalist on whether he is breaking his promises in order to join the mainstream of economic thinking, the Reform UK leader insisted the promises included in the party’s 2024 manifesto “were only ever aspirations”, and the changes made today are about the party “being realistic about the state of the economy”.
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28:21
Watch in full: Nigel Farage outlines Reform UK’s economic policies.
‘It’s not a one-man band’
Mr Farage also insisted that the Reform UK project is not his alone, saying they will be announcing new people to cover various different policy areas in the coming weeks.
He said: “What I’ve tried to do really hard this year is to get away from this idea, this criticism, that somehow it’s a one-man band. It’s not a one-man band.
“There’s a broadening team. They’re sitting there in front of you on the front row – from David Bull, to Lee Anderson, to Richard Tice, to Danny Kruger, and indeed Zia Yusuf as well. And there are others, and there’ll be more.”
He also explained he is not yet ready to say who his chancellor might be, or who would fill the top cabinet roles in a potential future Reform government.
Image: Nigel Farage says Reform UK is expanding its bench of talent. Pic: PA
Reform UK is ‘in chaos’
In response to the speech, a Labour Party spokesperson said: “Nigel Farage has promised a return to damaging austerity, taking an axe to public services, with no cuts off the table. He complained the minimum wage is too high for young workers, while doubling down on his golden giveaway to foreign billionaires.
“Reform would slash the NHS, schools, and pensions – and cancel Labour’s investment in local roads, rail, and clean energy, putting millions of jobs at risk and wreaking havoc on family finances.
“Only this Labour government is fixing the long-term damage to our economy to renew Britain.
And the Conservative shadow chancellor Sir Mel Stride said Mr Farage “left the public with far more questions than answers” by not specifying which parts of his manifesto his party stands by.
He added Reform could not be taken seriously on the economy “when their promises disintegrate after five minutes, and they remain committed to extra welfare spending and a huge expansion of the state”.
“After this rambling, incoherent speech, it is clear Reform’s economy policy is in chaos,” Sir Mel said.
“Farage might claim he’s not a ‘one-man band’, but he can’t even tell us who his chancellor would be. This is not serious, it is just more announcements without a plan.”
Following a presidential pardon that sparked debate over influence and access, crypto companies and PACs are ramping up political spending as the sector matures into a Washington power player.