Business & Economy

On The Money — Lawmakers fear debt ceiling crisis

House Republicans are pledging to play hardball with the debt ceiling to secure spending cuts, raising fears about a national default. We’ll also look at the messaging battle over Medicare and Social Security cuts, Jamie Dimon’s take on the interest rate hikes, and more. 

But first, see how many House members voted for a bipartisan China select committee. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter?

McCarthy concessions spur default, shutdown fears

The concessions Speaker Kevin McCarthy (R-Calif.) agreed to in a bid to appease conservative rebels set up showdowns this year with Senate Democrats and President Biden on the debt limit and the annual spending bills — heightening the danger of a national default or a government shutdown, political strategists say. 

McCarthy’s promises all but guarantee a standoff with Senate Democrats and Biden later this year, particularly those to attach spending cuts to legislation to raise the debt limit and to cap discretionary spending at fiscal 2022 levels.   


“With the debt-ceiling issue, you’re talking about defaulting on the government’s full faith and credit. I don’t know how you can do any greater harm to this country than doing that,” said Jim Dyer, a senior adviser at Baker Donelson with 30 years of experience working on the House Appropriations Committee.  

Alexander Bolton has the story here


Read more reactions from Capitol Hill:
 

CUTS PLANNED?

White House turns talk of Medicare, Social Security cuts against GOP 

The White House is turning the tables on House Republican lawmakers when it comes to conservative-led spending proposals that Democrats warn could mean cuts to crucial programs like Medicare and Social Security.  

“They are going to try to cut Social Security and Medicare. It could not be clearer,” White House chief of staff Ron Klain tweeted Monday, sharing a clip of Rep. Michael Waltz (R-Fla.) saying on Fox Business Network that major spending cuts would likely require changes to entitlement programs. 

Alex Gangitano and Brett Samuels have more here

MORE HIKES?

JP Morgan Chase CEO says Fed rate hikes might need to exceed expectations

JP Morgan Chase CEO Jamie Dimon said the Federal Reserve may need to raise interest rates this year beyond what it is expected to get inflation under control.  

Dimon told Maria Bartiromo in an interview on her Fox Business show, “Mornings with Maria,” on Monday that he supports the Fed slowing down its pace of rate hikes at this point and believes the hikes should be paused once interest rates reach 5 percent, as the world expects. He noted that the increases throughout 2022 were “the fastest we’ve ever seen.” 

The Hill’s Jared Gans has more here.

CRYPTO CONTAGION

Coinbase laying off nearly 1,000 employees amid crypto downturn 

Coinbase is laying off 950 workers — roughly one-fifth of its workforce — as the crypto industry struggles to keep its footing.  

Coinbase CEO Brian Armstrong told employees Tuesday that the company is suffering from a downturn in crypto values and the fallout from the collapse of crypto trading platform FTX, which had been backing numerous crypto companies. 

Karl digs into this here

Good to Know

A new survey found that U.S. small business confidence has dropped to a six-month low and that inflation and difficulty in filling positions were the top issues cited. 

Other items we’re keeping an eye on: 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.