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How China, Russia Might Capitalize on US Debt Limit ‘Chaos’

US officials are warning that China and Russia would capitalize on the ‘chaos’ that would ensue if the United States defaulted on its debt. The warnings come amid a monthslong standoff between President Joe Biden and Republicans in securing congressional approval to raise the nation’s debt limit. White House Bureau Chief Patsy Widakuswara has the story.
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Republicans Subpoena FBI for Biden Records

A top House Republican subpoenaed FBI Director Chris Wray on Wednesday for what he claimed are bureau records related to President Joe Biden and his family, basing the demand on newly surfaced allegations he said an unnamed whistleblower made to Congress.

The White House said it was the latest example in the years-long series of “unfounded, unproven” political attacks against Biden by Republicans “floating anonymous innuendo.”

Kentucky Rep. James Comer, chairman of the House Oversight Committee and Accountability, is seeking a specific FBI form from June 2020 that is a report of conversations or interactions with a confidential source. Comer, in a letter to Wray with Republican Sen. Chuck Grassley of Iowa, said that “it has come to our attention” that the bureau has such a document that “describes an alleged criminal scheme” involving Biden and a foreign national “relating to the exchange of money for policy decisions” when Biden was vice president and includes “a precise description” about it.

The subpoena seeks all so-called FD-1023 forms and accompanying attachments and documents.

The lawmakers used the word “alleged” three times in the opening paragraph of the letter and offered no evidence of the veracity of the accusations or any details about what they contend are “highly credible unclassified whistleblower disclosures.”

Comer and Grassley said those “disclosures” demand further investigation, and they want to know whether the FBI investigated and, if so, what agents found.

To the White House, the subpoena is further evidence of how congressional Republicans long “have been lobbing unfounded, unproven, politically motivated attacks” against the Bidens “without offering evidence for their claims or evidence of decisions influenced by anything other than U.S. interests.”

A White House spokesperson, Ian Sams, said Biden “has offered an unprecedented level of transparency” about his personal finances with the public release of a total of 25 years of tax returns.

The FBI and Justice Department confirmed receiving the subpoena but declined to comment further. The president’s personal lawyers had no comment.

Republicans claim they have amassed evidence in recent years that raise questions about whether Biden and his family have used their public positions for private gain.

House Republicans have used the power of their new majority to aggressively investigate Joe Biden and Hunter Biden’s business dealings, including examining foreign payments and other aspects of the family’s finances. Comer has obtained thousands of pages of the Biden family’s financial records through subpoenas to the Treasury Department and various financial institutions since January.

Comer has not revealed much about the findings of his investigation so far. Most recently, Comer claimed one deal involving the Biden family resulted in a profit of over $1 million in more than 15 incremental payments from a Chinese company through a third party.

Both Comer and Grassley have accused both the FBI and Justice Department of stonewalling their investigations and politicizing the agency’s years-long investigation into Hunter Biden’s taxes.

Last month, an IRS special agent sought whistleblower protections from Congress to disclose a “failure to mitigate clear conflicts of interest in the ultimate disposition” of a criminal investigation related to the younger Biden’s taxes and whether he made a false statement in connection with a gun purchase.
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Biden to Meet with Congressional Leaders in Effort to Avoid Default

President Joe Biden next week will meet with the Democratic and Republican leaders of the House and Senate in an effort to avoid a catastrophic default on the nation’s debts, which could occur in as little as one month.

The United States government’s ability to borrow money is constrained by a limit on the amount of debt the U.S. Treasury Department can incur, known as the debt ceiling. The debt ceiling is currently set at $31.4 trillion, which the government hit in January, forcing the Treasury to use what it refers to as “extraordinary measures” to continue paying the nation’s bills without going into default.

On Monday, Treasury Secretary Janet Yellen warned that the extraordinary measures will soon be exhausted, possibly as soon as June 1, and that unless Congress authorizes more borrowing, the country will soon be unable to pay all of its obligations on time.

In a letter to lawmakers on Monday, Yellen said it was urgent that Congress acts quickly “to preserve the full faith and credit” of the U.S., reminding them that waiting until the last minute can result in damage to the country, even if technical default is averted.

“We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” Yellen wrote.

Also on Monday, the nonpartisan Congressional Budget Office issued a statement essentially agreeing with Yellen.

“Because tax receipts through April have been less than the Congressional Budget Office anticipated in February, we now estimate that there is a significantly greater risk that the Treasury will run out of funds in early June,” it said.

Same goal, different path

Leaders of both parties have expressed their desire to avoid a federal default, but they advocate different methods of doing so.

House Republicans, led by Speaker Kevin McCarthy, say they intend to raise the debt ceiling, but only after Democrats agree to a slate of broad spending cuts that would eviscerate Biden’s domestic agenda and institute a number of policies popular with conservatives, including new work requirements on individuals receiving public assistance.

Last week on a party-line vote, the House passed the Limit, Save, Grow Act, which would raise the debt ceiling by up to $1.5 trillion through March 31, 2024. The bill would cut government spending by $4.8 trillion over the next decade. Much of the savings would come from unspecified spending cuts spread across much of the government.

Specific programs targeted for major cuts include recent increases to the budget of the Internal Revenue Service, a controversial student debt relief measure taken by the White House, and spending on renewable energy that the president has championed.

‘Hostage-taking’

The threat implicit in the Republican position is that if Democrats fail to accept the cuts, the country will advance closer and closer to default until lawmakers strike a deal, or the government finds itself unable to pay its bills.

Biden and Democratic leaders in the House and Senate argue that Republicans’ strategy, which they criticize as “hostage-taking,” is irresponsible. They have called for Congress to pass a “clean” debt ceiling extension, meaning a bill with no additional provisions attached. They frequently point out that Congress passed three clean debt limit bills during former President Donald Trump’s term, all with Democratic support.

Any debt limit increase would have to pass both the House and the Senate, and with the latter under slim Democratic control, the House bill gutting Biden’s agenda is a non-starter.

House Democrats on Tuesday said they would attempt to force a vote on a clean debt limit increase through an arcane mechanism known as a “discharge petition,” which allows a majority of members of the House to demand a vote on a bill without the cooperation of leadership. Discharge petitions are rarely successful, and because Republicans have the majority in the House, this one would require at least five Republicans to join the Democrats — an unlikely prospect.

Impact of default could be global

Experts warn that if Congress and the White House are unable to strike a deal, and the U.S. finds itself unable to pay its bills on time, the impact on the economy — for the United States and the broader world — could be devastating.

“The result would be a self-inflicted severe recession that is totally unnecessary and obviously counterproductive,” Mark Hamrick, Washington bureau chief for Bankrate, told VOA. “It’s been demonstrated time and time again that the debt ceiling is not a useful tool in restraining federal spending. Therefore, we’re talking about adding potential downside to the U.S. and global economies for no reason, and at a time when there’s already heightened concern about the risk of recession.”

Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, told VOA that the disruption caused by a default by the U.S. Treasury would reverberate far beyond the U.S. itself.

He pointed out that the Great Recession of 2008-2009 was a global financial crisis partially triggered by the collapse of two major U.S. firms — the investment bank Lehman Brothers, which failed, and the insurance and financial services conglomerate American International Group, which was bailed out.

“That really caused a huge panic around the world, not just in the U.S.,” Gagnon said. “And realize that the U.S. Treasury is far, far bigger and has far, far more financial [obligations] being held by other people.”
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