April 20, 2021

Off the Charts: Dire Warnings About Fed Strategy Did Not Come to Pass

While the first such program had started at the height of the credit crisis in 2008, the new program came when the economy was growing, and it was subjected to immediate and withering criticism, particularly from conservatives fearful it would set off inflation and unimpressed by the Fed’s belief that action was needed to spur job growth.

A group of 43 economists, including former aides to Republican presidents and presidential candidates, published an open letter to the Fed’s chairman, Ben Bernanke, saying the program should be “reconsidered and discontinued.” The planned bond purchases “risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment,” the economists wrote.

The Fed did not back down, and Republican efforts to pass legislation removing the Fed’s mandate to seek full employment were not successful. The next year, the Fed moved on to what became known as QE3, also known as Operation Twist, an effort to bring down long-term interest rates by purchasing longer-term Treasuries. That move was criticized by Republican leaders even before it was announced. “We have serious concerns that further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy,” the Congressional leadership said in a letter sent to Mr. Bernanke while the Fed was meeting.

Now, the Fed is again under attack, as officials discuss the possibility of slowing the pace of bond purchases later this year, and of possibly ending the program as early as 2014. That talk has caused interest rates to rise and led to warnings of large losses for bond investors, amid complaints that it is still too early to proclaim that the recovery has gathered strength.

Losses for bond holders are sure to happen at some point, assuming interest rates return to more normal levels, and this week’s downward revision of first-quarter economic growth may provide a warning that the Fed’s growth expectations, which are more robust than those of many economists, may be too rosy. Navigating an end to quantitative easing, whenever that becomes necessary, may yet prove to be tricky.

But as the accompanying charts indicate, the Fed’s critics of 2010 and 2011 have not proved to be prescient. Far from bringing disaster, QE2 appears to have helped the economy.

It is remarkable how close many markets are now to where they were when the Fed announced the new program on Nov. 3, 2010. The recent rise in 10-year Treasury bond rates has left the yield just a little lower than it was as the program began. The price of gold spiked to record highs in 2011, but is now down about 10 percent from its pre-QE2 level.

In 2010, there were complaints from developing countries that the Fed was trying to drive down the value of the dollar, something Fed officials denied even while conceding the program could temporarily have that effect. Now the dollar index — based on the value of the American currency against six major foreign currencies — has recovered all the lost ground.

Inflation has been quiet, and perhaps more important from a central bank perspective, inflationary expectations remain subdued. Such expectations can be inferred by comparing yields of inflation-protected Treasury securities to ordinary Treasuries of the same maturity. The chart shows what the markets expect inflation will be in five years.

For a time last year, the markets were expecting deflation — a far cry from the runaway inflation that was feared by Fed critics in 2010. Now, the expectation is for inflation of a little over 1 percent — or less than the expectation when the QE2 program was begun.

The decline in unemployment since the Fed began QE2 has been steady but hardly inspiring, and there are still fewer people working than there were before the credit crisis began in 2008. But consumer confidence has been rising recently and the stock market, despite some recent Fed-induced jitters, remains more than 30 percent above its level when the program began.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

Article source: http://www.nytimes.com/2013/06/29/business/economy/dire-warnings-about-fed-strategy-did-not-come-to-pass.html?partner=rss&emc=rss

Shaky Agreements Over Fixing the Corporate Tax System

Republicans and Democrats in Washington rarely agree on anything these days. But in recent months almost everyone seems to have coalesced around the notion that the corporate tax system is broken and needs to be fixed.

President Obama is for it. So are the two leaders of the tax-writing committees in Congress: the House Ways and Means chairman, Dave Camp, a Republican, and Max Baucus, the Democratic chairman of the Senate Finance Committee, who plans to retire next year and may be seeking a capstone for his career. The country’s biggest companies have declared loudly that they are in favor of revising the nation’s business tax system, too.

Despite the widespread support, the campaign for an overhaul is exposing deep fault lines within the business world that suggest it may fall apart. The problem is how to pay for everything lawmakers and businesses want without adding to the deficit.

The main goal of the advocates on both sides of the aisle is to lower the official corporate top rate from 35 percent, the highest among industrialized nations. Republican leaders and a large number of giant companies also want to end what they regard as the noxious practice of taxing the profits that multinational corporations earn abroad. The United States is one of the few countries to do so.

The only way to tackle such goals without losing revenue, however, is to close specific corporate tax preferences intended to promote various activities considered worthwhile by their supporters. There is plenty of money to be found: a Government Accountability Office study in March estimated the 80 or so business tax exemptions added up to about $181 billion in 2011, roughly the same size as total corporate tax revenue.

Yet each of these corporate tax breaks is worth a fortune to the industries they benefit — and fierce campaigning is under way, employing teams of lobbyists in Washington, to keep them in place.

“It is going to be practically impossible to get the rate down,” said Howard Gleckman, a fellow at the nonpartisan Tax Policy Center. “No one wants to cut their preferences.”

Since the last reduction in United States corporate tax rates, in 1986, other nations have reduced their own business rates; corporations complain this is putting them at a sharp competitive disadvantage. In reality, though, few companies pay the official rate.

Many pay at a much lower effective rate, taking advantage of numerous tax breaks and loopholes and using aggressive tax strategies to shift profits to more generous tax territories abroad. Among the companies benefiting from lower effective rates is General Electric, which has paid total corporate taxes — federal, state, local and foreign — equal to 17.9 percent of its cumulative $81 billion in earnings over the last five years, according to an analysis by SP Capital IQ.

FedEx paid 20.1 percent, Amazon.com 6.6 percent and Ford Motor 4.2 percent. G.E. said its tax rate was unusually low over this period because it had big losses during the financial crisis. FedEx said it took advantage of temporary incentives to make new investments.

Congress, under relentless pressure from business interests, has allowed corporate taxes to dwindle as a source of revenue. In 2012, they amounted to about 1.6 percent of gross domestic product, half the level collected in 1970. By comparison, the individual income tax generated 7.3 percent of G.D.P. last year.

Many industrialized countries collect more than that percentage, although they, too, have to contend with a competitive globalized world where multinational companies can shift profits beyond the reach of local tax authorities.

“Income is increasingly difficult to nail down,” said Aswath Damodaran, a finance professor at New York University. “It is like nailing jelly to the wall. And the problem is only going to get worse rather than better.”

The two biggest corporate tax breaks are for accelerated depreciation of machinery and equipment, which saved corporations an estimated $76 billion in 2011, and deferral of foreign source income.

Deferral allows big multinational corporations to postpone paying United States taxes on foreign earnings until they bring those profits home. It saved them $41 billion in 2011. American corporations had amassed about $1.7 trillion in offshore profits by last year, analysts at JPMorgan Chase estimated, a figure that is now believed to be almost $2 trillion.

Mr. Obama wants to claw some of this back by imposing a minimum tax on foreign earnings.

Article source: http://www.nytimes.com/2013/05/03/business/shaky-agreements-over-fixing-the-corporate-tax-system.html?partner=rss&emc=rss

Business Chiefs Step Gingerly Into the Federal Budget Fight

As Democratic and Republican leaders stake out their positions in the coming fiscal showdown in Washington, corporate executives are starting a political campaign of their own.

The chief executives taking part in two separate advertising blitzes that are set to begin on Monday and Tuesday are walking a delicate balance. They plan to press Congress to act quickly, even as they publicly steer clear of the political firefight surrounding the details of any far-reaching deal to cut the federal budget deficit.

Behind the scenes, however, the effort by business leaders could play a crucial role in shaping decisions on tax policy, including whether corporate tax rates go down even as individuals pay more.

By framing the issue as an attempt to balance the federal budget, the plan also offers some political cover to Congressional Republicans wary that voting for a tax increase could make them targets of the party’s powerful fiscal conservatives.

But a question remains over just how far the business groups will go. In the past, corporations have joined the call for fiscal responsibility, only to resist giving up specific perks and programs that benefit their businesses or offering other specific suggestions for deficit reduction.

The Campaign to Fix the Debt, a new group with a $40 million budget whose backers include Jeffrey R. Immelt of General Electric and David M. Cote of Honeywell, will run more than a million dollars’ worth of advertisements. The spots take their cue from well-known ads by the likes of Nike and Dunkin’ Donuts and feature slogans like “Just Fix It” and “Time to Fix the Debt.”

Mr. Immelt and Mr. Cote also feature prominently in a more traditional campaign by the Business Roundtable, which represents Fortune 500 companies and is one of Washington’s most powerful lobbying groups.

The Business Roundtable’s effort, set to begin on Tuesday, has a budget of close to half a million dollars, and is focused on news media in the Washington area, including outlets like Politico as well as conservative talk radio shows.

“America’s C.E.O.’s have a message for Washington: don’t take our country over the fiscal cliff,” warns a Business Roundtable commercial, referring to the package of tax increases and automatic spending cuts set to go into effect in January if Congress and President Obama cannot agree on deficit reduction plan.

Experts say that combination would equal a half-trillion-dollar blow to the economy that could cause a recession in the first half of 2013 — a threat the Business Roundtable has made the centerpiece of its campaign. “If Congress does not act, growth will stall, jobs will be lost and our nation’s credit will be harmed,” the radio ad says.

The debut of the ads in Washington coincides with the return of Congress on Tuesday for a lame-duck session that will take up the fiscal issue.

John Engler, the Business Roundtable’s president and a former Republican governor from Michigan, said that whatever solution emerges, “the tax code changes have to be permanent and the budget cuts have to be real.”

“Even the president has said the corporate tax rate is too high and needs to come down,” Mr. Engler said. “We’re in the position of saying everything is on the table.”

The new campaign ups the ante in the fight over fiscal policy, which is set to dominate the agenda in Washington through the end of the year, and comes during an increase in lobbying by chief executives on Capitol Hill.

“My sense is that their primary motivation is avoiding recession,” said Jared Bernstein, a senior fellow at the liberal-leaning Center on Budget and Policy Priorities and a former economic adviser to Vice President Joseph R. Biden Jr. “But I think the key to whether they are serious or just posturing is the question of taxes, and if they’re truly willing to support raising more revenues.”

Still, big business has plenty to gain if some elements of what the groups are pushing for were to become law.

The Fix the Debt campaign was created by Erskine B. Bowles and Alan K. Simpson, who were chairmen of a presidential commission charged with developing a blueprint for fiscal change and deficit reduction in 2010, and the group backs many of their recommendations.

This article has been revised to reflect the following correction:

Correction: November 12, 2012

An earlier version of this article misstated the company of which Mr. Brown is chief executive. It is Motorola Solutions, not Motorola.

Article source: http://www.nytimes.com/2012/11/12/business/business-chiefs-step-gingerly-into-the-federal-budget-fight.html?partner=rss&emc=rss

Senate Approves Bill Aimed at China’s Currency Policy

WASHINGTON — A bipartisan cross-section of Congress seems to agree that China manipulates its currency in ways that make it harder for many American manufacturers to compete. Where they cannot find alignment is on how best to address that problem, while maintaining America’s relationship with its biggest lender and a major trading partner.

On Tuesday, the Senate passed a bill that would require the Treasury Department to order the Commerce Department to impose tough tariffs on certain Chinese goods in the event of a finding by the Treasury that China was improperly valuing its currency to gain an economic advantage.

The measure passed 63 to 35, with 16 Republican votes, an unusual dynamic in the Democrat-controlled Senate. It enjoyed rare support from members of both parties despite the strong disapproval of Senator Mitch McConnell of Kentucky, the Republican leader, who pressed his party colleagues to vote against it.

At the same time, House Republicans have made it clear they have no intention of bringing the currency measure to the floor, and the White House has given it a chilly reception, fearing it too blunt an instrument against China, which has slowly moved to increase its currency value.

This is a reverse of last year when a similar, though less stringent, measure passed the House and the Senate neglected to take it up, preferring its own bill. Democrats are now trying, against political headwinds, to force a vote on that same measure against the desires of Republican leaders.

The tennis ball volleying of the trade legislation underscores the vexing problem that China presents to Congress: Many members, especially those from manufacturing states, want to be seen as doing something about that nation’s trade advantages, yet the White House and some leaders in both parties think it is far too risky to actually pull the trigger on a solution.

As a result, even as some Senate Republicans and many House Democrats pressure House Republicans to get on board, the Obama administration is counting on House Republicans to do what they want, which is to leave any bill to punish the Chinese government over its currency policies in a file cabinet. “Shifting political dynamics and changes in rhetoric about free trade tend to play out in unpredictable ways against the background of a bipartisan desire to get tough with China,” said Eswar S. Prasad, a professor of trade policy at Cornell University. “A lurking concern is that this bill won’t help the U.S. economy significantly and could instead hurt job growth if China retaliates aggressively and trade tensions compound economic uncertainty, setting back an already fragile recovery. I suspect both parties are a little concerned about supporting such legislation if it backfires. “

Regional politics, White House pressures and jurisdictional disputes have impeded a deal. Large multinational companies, especially those that have large investments in China, vehemently oppose the bill, while smaller manufacturing companies, which face far more import competition, tend to favor it.

 The Senate bill would require the Treasury Department to determine whether China was manipulating its currency, and then order the Commerce Department to impose retaliatory tariffs on certain Chinese goods.

   Early Wednesday morning in Beijing, Chinese officials had no immediate reaction to the Senate vote. State-run media reused instead a comment provided to them on Monday by Cui Tiankai, China’s vice foreign minister, who denounced the bill.

The House version of the China measure has 225 co-sponsors, and passed that chamber 348 to 79 while it was under Democratic control last year, with support from 99 Republicans.

House Democrats have been circulating what is known as a discharge petition, a measure used by the minority party to force the party controlling the chamber to bring the bill back to the floor. Such a petition would require 218 signatures; currently only 176 members have signed. Representative Hal Rogers of Kentucky, the chairman of the Appropriations Committee, was the only Republican to sign it but he withdrew his name. Getting further Republican support is unlikely since it essentially puts the lawmaker in opposition with party leadership.

Republican House leaders, who openly criticize many Chinese policies, largely voted against the bill when it came to the floor last year. They oppose the measure because they are concerned that it would start a trade war with China, increase prices of American goods and pull at the threads of the gossamerlike relationship between the two countries. It is a view expressed by Senate opponents, too.

“In many ways we have become dependent on one another,” Senator Joe Lieberman, independent of Connecticut, said on the Senate floor. He added, “During times of economic recession such as the one we are in now, over history nations have repeatedly become protectionists. But history also shows that protectionist policy makes the economic problems worse, not better.”

However, lawmakers from manufacturing-heavy states have pushed hard for it, and will pressure House Republicans to get on board. “I don’t believe you have a middle class in America without a vibrant manufacturing base,” said Senator Jeff Sessions, Republican of Alabama, who urged fellow Republicans to support the bill against the wishes of Mr. McConnell. “We’ll stand up and take our lumps and take our gains in a fair competition.”

Keith Bradsher contributed reporting from Hong Kong.

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Boehner and Obama Close to Deal, Leaders Are Told

With the government staring at a potential default in less than two weeks, the officials said the administration on Wednesday night notified top members of Congress that an agreement between the president and Mr. Boehner could be imminent. The Congressional leaders, whose help Mr. Obama would need to bring a compromise forward, were told that the new revenue tied to the looming agreement to increase the debt limit by Aug. 2 would be produced in 2012 through a tax code rewrite that would lower individual and corporate rates, close loopholes, end tax breaks and make other adjustments to produce revenue gains.

Officials knowledgeable about the conversations between the administration and Congressional leaders said the details of the potential package remained unknown but they presumed it would include cuts and adjustments in most federal programs, including Medicare.

However, officials on all sides of the tense negotiations warned that no firm deal was in hand yet, and tried to play down the progress — if only to stave off attempts to block it or influence its shape by hardliners on both sides of the debate on taxes and spending.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” said Kevin Smith, a spokesman for Mr. Boehner.

The White House denied that any deal is imminent. Jay Carney, the White House press secretary, said that “there is no deal. We are not close to a deal.”

The same fiscal and political issues that stymied earlier negotiations between Mr. Obama and Mr. Boehner remain, including how much a deal would raise in new revenues over all. Democratic and Republican leaders in both chambers were resistant to an Obama-Boehner deal for separate political reasons — the Republicans because of party opposition to new taxes and Democrats because many want to campaign in 2012 against Republicans’ proposed deep cuts in Medicare and Medicaid and a compromise, they believe, would make that harder.

An agreement along the lines of the one being discussed would likely rile Democrats, who could view it as more tilted toward Republican priorities than a bipartisan plan issued by the so-called Gang of Six senators this week; its prospects with conservative House Republicans were uncertain as well. Though it would initially appear to meet Republican demands for less reliance on new revenues as part of what Democrats have called a “balanced” approach, Republicans could be uneasy about accepting a plan tied to a higher future revenues through tax changes.

“The trick on this has always been the tax issue,” one Republican said.

While no meetings at the White House were scheduled, aides expected the president and the speaker to begin to inform other lawmakers of the framework they were discussing as they continued to try to strike a major deficit reduction agreement and avoid a federal default.

Other alternative solutions in Congress appeared to be faltering as the Senate on Thursday took up and prepared to defeat a conservative House Republican plan to cut spending and a backup plan being prepared in the Senate was meeting stiff resistance from the House.

The Senate majority leader, Harry Reid, began the morning on the Senate floor Thursday by ridiculing the House for taking the weekend off, as the Senate prepares for a weekend of work, including a vote on the deficit-reduction plan passed this week across the Rotunda. House members had been told earlier in the week to plan for a potential weekend stay in the capital, but their majority Leader, Eric Cantor, said Wednesday night that was not happening.

The return of House members to their home states is “just untoward,” Mr. Reid said, “and that’s the kindest words I can say. For the House of Representatives to be out this weekend, what a bad picture that shows the country.”

 As President Obama and Congressional leaders continued to scramble to put together some form of broad deficit-reduction plan that would allow the nation’s debt ceiling to be lifted next month, the Senate began to debate the House bill, known as Cut Cap and Balance, in preparation for a vote on Saturday.

Over the weekend, that chamber is also expected to move toward a vote on a plan proposed by Senator Mitch McConnell of Kentucky that would allow the president to lift the debt ceiling without the members of Congress officially concurring with the move. That measure could be voted on early next week.

 “The House has passed the Cut, Cap and Balance plan with bipartisan support,” Mr. Smith said. “We’re waiting for the Senate, which is run by Senator Reid, to act on it.” (It is a sign of the times on the Hill these days that five Democrats joining 229 Republicans to pass legislation, counts as “bipartisan support.”)

That House bill, which, among other measures, would require a balanced-budget amendment to the Constitution be sent to the states before the debt limit can go up, “doesn’t have one chance in a million of passing the Senate,” Mr. Reid, of Nevada, said.

Senator Kent Conrad, a Democrat from North Dakota, who served on Mr. Obama’s fiscal commission, was first out of the box, calling the bill on the floor “some of the most ill considered legislation that I’ve ever seen come over from the other body,” and “super partisan,” and “truly radical.”

Senator Kay Bailey Hutchison, a Republican of Texas, came second, countering that the House legislation was a “good start.”

As the capital markets continued to assess the possibility of American default on its debt, R. Bruce Josten, the executive vice president for government affairs the United States Chamber of Commerce, wrote a blog post warning that such a potential default “has real, immediate, and potentially catastrophic consequences.”

Warning of the possibility of heightened interest rates, and blaming no party, Mr. Josten wrote, “Now, makes no mistake; too much spending and the need for real entitlement reform has led to the debt crisis we’re in today. But jeopardizing our country’s credit rating and fiscal security by refusing to compromise isn’t the answer.”

At a news conference Thursday morning, Mr. Boehner said that the ball was now in Mr. Obama’s court, “”and has been there for some time.”

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In Deficit Plan, Taxes Must Rise, President Warns

Declaring that an agreement is not possible without painful steps on both sides, Mr. Obama said that his party had already accepted the need for substantial spending cuts in programs it had long championed, and that Republicans must agree to end tax breaks for oil and gas companies, hedge funds and other corporate interests.

In a 67-minute news conference, Mr. Obama cast the budget battle as a tug of war between the interests of the rich — like owners of corporate jets, who he said get generous tax breaks — and those of the middle class, the elderly and children.

Directly challenging Republican leaders, Mr. Obama said, “Everybody else has been willing to move off their maximalist position — they need to do the same.”

At the same time, Mr. Obama, under assault from Republicans on the campaign trail for an unemployment rate that remains above 9 percent, asked voters to understand that the economic recovery would take time but said that Washington, even in its current financial straits, could still do more to help. He expressed support for extending a reduction in payroll taxes for an extra year, providing loans for road and bridge-building and approving trade pacts that could help spur exports.

While the president expressed hope for a budget deal before the government’s borrowing authority expires in early August, he scolded Republican lawmakers for putting off hard decisions until the 11th hour, saying that his daughters did not procrastinate that way with their schoolwork.

“Malia and Sasha generally finish their homework a day ahead of time,” the president said, in a tone of rising exasperation. “They don’t wait until the night before. They’re not pulling all-nighters.”

The House speaker, John A. Boehner, flatly rejected Mr. Obama’s call for new tax revenues, saying the “president’s remarks ignore legislative and economic reality.”

In a toughly worded statement, Mr. Boehner said the House would vote to raise the debt limit, as the White House has demanded, only if the administration agreed to a deal that contained deep spending cuts and no tax increases.

“The American people know tax hikes destroy jobs,” Mr. Boehner said. “They also know Washington has been on a spending binge for many years, and they will only tolerate a debt-limit increase if we stop it.”

Mr. Obama’s news conference, his first extended exchange with reporters since March, also touched on Libya, on which he offered a brisk defense of his decision not to seek Congressional authorization for the NATO-led air campaign, and on same-sex marriage, which he stopped just short of endorsing as a legal right.

But the president’s combative remarks on the budget commanded most of the attention, signaling that he had fully entered the fray. On Monday, he took over stalled talks led by Vice President Joseph R. Biden Jr., meeting with Senate Republicans and Democrats, and on Wednesday he met with the Democrats.

So far, the president’s involvement seems mainly to have dramatized the gulf between the White House and the Republicans on fiscal priorities.

By all accounts, the round of negotiations steered by Mr. Biden made significant progress in identifying spending cuts and revenue-generating items. But with the Aug. 2 deadline looming for the expiration of the government’s borrowing authority, the partisan maneuvering on both sides has increased.

Senate Republicans have talked about a short-term increase in the debt ceiling, betting that the White House will accept spending cuts, with no tax increases, rather than face two votes on the issue before the 2012 election. Mr. Obama is taking aim at tax policies that benefit the rich as a way to pressure Republicans. Asserting that chief executives and hedge fund managers are paying the lowest tax rates since the 1950s, before he was born, the president, casting the issue in populist terms that some conservatives said veered into class warfare, said they could afford to pay more.

“You’ll still be able to ride on your corporate jet,” Mr. Obama said. “You’ll just have to pay a little more.”

Under Democratic proposals, owners of corporate jets would have to write off the aircrafts’ cost in fewer years, which would generate an estimated $3 billion for the Treasury over a decade. Hedge funds and private equity investors would pay higher capital gains tax on their earnings. Phasing out tax deductions and credits for oil and gas companies could raise nearly $40 billion, economists said.

Even if all these changes to the tax code were accepted, they would still amount to only a sliver of the $4 trillion in savings that Mr. Obama has said he wants to achieve. But refusing to increase revenues, he asserted, would necessitate cuts in programs that award college scholarships, finance the National Weather Service and medical research, and improve food safety.

“I’ve said to some of the Republican leaders: you go talk to your constituents, the Republican constituents, and ask them, are they willing to compromise their kids’ safety so that some corporate-jet owner continues to get a tax break?” Mr. Obama said. “I’m pretty sure what the answer would be.”

Citing the hours of meetings he and Mr. Biden had held with leaders from both parties, Mr. Obama seemed particularly piqued by Republican criticism that he had failed to show leadership. Noting that the House is in recess this week, and the Senate is scheduled to be gone next week, he said he had been hunkered down in the White House, “doing Afghanistan and Bin Laden and Greek crisis.” If Congress was serious about a deal, he said, it should cancel its breaks.

There were signs on Capitol Hill that his words had struck a nerve. Nine Republican senators announced that they would object to a recess during the Fourth of July week. Late Wednesday it appeared that Democratic leaders would go along and keep the Senate in session next week.

Wary of spooking financial markets, Mr. Obama stopped short of saying that Aug. 2 was a drop-dead date for a deal. But he dismissed those who argue that the government can ignore the debt limit by paying some bills and not others.

“This is the equivalent of me saying, ‘You know what, I will choose to pay my mortgage, but I’m not going to pay my car note,’ ” Mr. Obama said. “Or, ‘I’m going to pay my car note, but not my student loan.’ ”

Jennifer Steinhauer and Carl Hulse contributed reporting.

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