March 25, 2023

On Capitol Hill, Fiscal Talks Now Turn to U.S. Borrowing Limit

According to the Treasury Department, the government is about $66 billion below its $16.4 trillion debt ceiling, a legal borrowing limit that is set and periodically raised by Congress. When the country hits the ceiling — sometime toward the end of December, analysts estimate — it would start a countdown clock that would end with Washington running out of money to pay its bills.

That event might hobble the government, ruin the country’s credit and send markets into an outright panic, analysts predict. But despite — or because of — the debt ceiling’s potential to disrupt the economy, members of Congress are refusing to raise it as a matter of course, instead using it as a potent political football to extract concessions from the other side.

“I will not raise the debt ceiling ever again until we get significant entitlement reforms, because if we don’t reform entitlements, we’re going to become Greece,” Senator Lindsey Graham, Republican of South Carolina, said on CNN this week. If President Obama “doesn’t lead, there’s going to be one hell of a fight over raising the debt ceiling.”

The White House has pushed back by warning Republicans away from the ceiling in strong terms. “We cannot play this game, because while it might be satisfying to those with highly partisan and ideological agendas, it’s not satisfying to the American people and is punishing to the American economy,” said Jay Carney, the White House spokesman, this week. “We cannot do it.”

Some Democrats have in recent weeks urged the White House to mount a legal challenge to the ceiling itself. The White House has ruled out such measures. But in its initial proposal to avert the worst of the year-end tax increases and spending cuts, the so-called fiscal cliff, the Obama administration asked Congress to grant it more authority over the ceiling.

The White House’s plan — based on a proposal initially made by Senator Mitch McConnell of Kentucky, the Republican leader — would allow it to request an increase to the debt limit. Congress could pass a resolution blocking the increase, though such a resolution could be killed with a presidential veto.

Republicans immediately rejected the proposal. But it stems from the Obama administration’s deep frustration with Capitol Hill’s use of the ceiling as a source of political leverage, both last year and this year.

Mr. Boehner and Mr. Obama tried and failed to strike a long-term debt package before raising the debt ceiling, but not before scaring the markets and leading to the first-ever downgrade of the country’s credit rating.

This time, the ceiling is complicating the renewed negotiations on a long-term debt deal. Republicans are considering a plan to preserve the tax cuts on income up to $250,000 that Mr. Obama has requested, and then in the new year refuse to raise the debt ceiling unless the Obama administration concedes to cost reductions for Social Security, Medicaid and Medicare and possibly other programs.

When the country hits the ceiling, the Treasury would stop issuing new debt and start a series of “extraordinary measures,” technical maneuvers to leave it with enough money to pay all its obligations. But such extraordinary measures would buy the government only about six to 10 weeks, analysts estimate.

Eventually, its spending obligations would overwhelm incoming receipts, and the government would not be able to pay its bills. That would leave the Treasury in the position of choosing whether to pay bondholders or soldiers, the elderly or states.

Last summer, “Treasury considered asset sales; imposing across-the-board payment reductions; various ways of attempting to prioritize payments; and various ways of delaying payments,” a department report said. “Treasury reached the same conclusion that other administrations had reached about these options — none of them could reasonably protect the full faith and credit of the U.S., the American economy, or individual citizens from very serious harm.”

Knowing exactly when the Treasury would reach that point is an exercise in guesswork. The Bipartisan Policy Center estimates the date would fall sometime in February.

If Congress failed to address any of the year-end spending cuts or tax increases, the government’s revenue would rise and spending obligations would fall. But analysts say they do not think that would delay the need to raise the debt ceiling for more than a few days.

“I’ve been here in 40 years this coming January, and I have never seen this many consequential spending and tax problems descend at the same time,” said Steve Bell, senior director of economic policy at the Bipartisan Policy Center, and a former Republican Hill staff member.

“There might be a variation of a day or two or four,” he guessed. But by sometime in March, Congress would have needed to raise the ceiling or the country might have entered another financial crisis — or even another recession.

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Bits Blog: Facebook Tops One Billion Active Users

Facebook said Thursday that it had passed one billion active users.Craig Ruttle/Associated Press Facebook said Thursday that it had passed one billion active users.

10:28 a.m. | Updated Adding information on user activity and demographics.

A million users isn’t cool. You know what’s cool? A billion users.

Facebook on Thursday announced that it had topped one billion active users, meaning users who visited the site within a month. Although a few companies can claim to have had more than a billion customers, Facebook is the first social network to hit that number.

Mark Zuckerberg, Facebook’s chief executive and founder, made the announcement in a blog post on the company’s Web site.

“If you’re reading this: thank you for giving me and my little team the honor of serving you,” Mr. Zuckerberg wrote. “Helping a billion people connect is amazing, humbling and by far the thing I am most proud of in my life.”

In an interview with Bloomberg Businessweek, Mr. Zuckerberg said the company celebrated the milestone by watching a countdown clock in its offices.

“Well, just everyone came together and counted down,” he told the magazine. “Then we all went back to work. We have this ethos where we want to be a culture of builders, right?”

Facebook shared some information on what its billion users have been doing on the site. People have used the “Like” button more than 1.1 trillion times since it was added in February 2009. There have been more than 140 billion friend connections. And since the fall of 2005, nearly 220 billion photos have been uploaded to the site. Facebook also said it has 600 million mobile users.

For advertisers, those numbers might seem less important than the median age of Facebook’s one billion users who joined in the past week: 22. That is a prime market for advertisers and marketers. And those users are getting younger. Facebook said in 2008 that the median age was 26.

The Facebook story has been one for the ages: A Harvard University dropout who started a multibillion-dollar company in his dorm room that eventually became the largest social network on the planet. But the story has also had its share of troubles too.

Mr. Zuckerberg has been dragged through legal suits over the ownership and idea of Facebook. The company has also dealt with dozens of privacy issues and run-ins with the Federal Trade Commission.

One billion users might be more than just a nice badge to stick on the fridge. After Facebook’s lackluster initial public offering, showing that the company is still growing might help to lift Wall Street’s confidence in the company.

Mr. Zuckerberg concluded his announcement by saying, “I am committed to working every day to make Facebook better for you, and hopefully together one day we will be able to connect the rest of the world too.”

That leaves only six billion to go.

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A Book for Sale on Tax Day, but Online Now

Except that’s not really when it went on sale.

Amazon and Barnes Noble were selling the book on their Web sites on Wednesday, long before many bookstores would receive copies. Nicole Dewey, a spokeswoman for Little, Brown, part of Hachette, said the official on-sale date for the book was March 22, but the publication date — when the book is available everywhere — remained April 15. (A countdown clock on the Hachette Web site ticks away the days, hours and minutes until April 15.)

“I don’t really understand the confusion,” Ms. Dewey said. “This happens all the time. There’s nothing unusual about it.”

It was a distinction lost on many bookstores, who erupted in protest on Wednesday when they heard that Amazon was already selling the hotly anticipated book.

“Outrageous,” said Zack Zook, the general manager and events coordinator at BookCourt, an independent store in Brooklyn. “If stuff like this keeps happening, booksellers are going to start suing publishers.”

Kelly von Plonski, the owner of Subterranean Books in St. Louis, said she was “irate” after hearing on Wednesday that the book was already on sale. She had planned a midnight release party for April 14, the night before she thought the book was being released.

“I’m really, really angry about it,” she said. “Add it to the list of advantages that Amazon has been given.”

Countless stores were left flat-footed.

While Barnes Noble was selling the book on its Web site, several of its outlets in Manhattan and Brooklyn said they had not yet received copies and were not allowed to sell them until April 15.

At Vroman’s Bookstore in Pasadena, Calif., not far from Pomona College, where Mr. Wallace was a professor in the English department when he died, the store had ordered 55 copies but was waiting to put them on display.

Paul Yamazaki, the head buyer at City Lights bookstore in San Francisco, said he had been told “The Pale King” had a strict on-sale date of April 15.

Several distributors told booksellers this week that they would not ship them copies because it was too far away from the publication date in April.

Publishers try to get books in stores by the time media coverage begins, usually before the official publication date. Time magazine is expected to run a lengthy article about “The Pale King” in its next issue.

Mr. Wallace, whose best-known book was “Infinite Jest,” committed suicide in 2008 at the age of 46.

He has since become somewhat of a cult figure, and fan sites devoted to him were abuzz on Wednesday with news that the book had started shipping from Amazon.

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