It’s Tuesday, October 5th, and this is your Morning Wire. Listen to the full podcast here.
1) Debt Ceiling Faces Gridlock
The Topline: The world’s leading credit agencies have warned that the U.S. credit rating could be downgraded if Congress fails to raise the debt ceiling in the next two weeks.
Quote Of The Day: “In the days ahead, even before the default date, people may see the value of their retirement accounts shrink. They may see interest rates go up, which will ultimately raise their mortgage payments and car payments.”
– President Joe Biden
Congress is gridlocked when it comes to raising the debt ceiling, which authorizes the federal government to borrow more money to pay for previous deficit spending and to finance interest on the national debt.
Senate Minority Leader Mitch McConnell (R-KY) has said since Democrats are content to pass large deficit spending bills on their own, no Republican will join them in voting to raise the debt ceiling this time.
Democrats have talked about eliminating the need for Republican votes by raising the debt ceiling as part of the reconciliation process for their $3.5 trillion social spending package — but they can’t agree amongst themselves about the amount, or the contents, of the bill.
Treasury Secretary Janet Yellen has said the Treasury will run out of cash-on-hand on October 18. Once that happens, the United States would not have enough money to pay all its bills, and would technically default on some of its obligations until there is enough revenue to pay them off.
Credit agencies have threatened to downgrade the U.S. credit rating, something that hasn’t happened since 2013.
The credit agencies say they won’t downgrade the U.S. credit rating until the Treasury defaults on the first payment.
The Federal Reserve Bank of Atlanta announced it’s seeing “sharp accelerations in underlying inflation,” which means the decades-high inflation this year is a systemic problem.
Key Point: Economists call inflation a hidden tax, because it reduces the value of the dollar, shrinks real wages and purchasing power, and punishes savers — especially retirees and people on a fixed income.
2) Monumental Supreme Court Term Begins
The Topline: With a 6-3 conservative majority, the high court is set to rule on the carrying of firearms outside the home, taxpayer support for private religious schools, the role of race in college admissions, and the legality of pro-life heartbeat bills.
In 2018, Mississippi passed a pro-life bill banning abortion after 15 weeks, which was quickly held up in federal court because it directly contradicted Roe v. Wade, which said women had a right to an abortion up until at least the fifth month of pregnancy.
On December 1st, the Supreme Court will decide whether the Mississippi law is constitutional. If they rule it is, the decision could allow states across the country to enact sweeping pro-life legislation of their own.
Second Amendment Case
Another case out of New York will help determine whether all Americans have a right to carry a firearm outside the home.
At the moment, New Yorkers hoping to obtain a concealed carry permit must demonstrate a special need for a firearm, meaning a desire for self defense is not enough. This case could change that, and set a precedent moving forward.
If they say all New Yorkers should have access to concealed carry permits, it would open the door for legal challenges to restrictive gun policies in other states.
The Court will also decide whether states using taxpayer funds to cover school tuition on behalf of parents are allowed to exclude religious schools.
Another major case involves the role of race in college admissions. In the past, the court has allowed schools to consider an applicant’s race when making a decision on admission, but a case out Harvard could offer them the chance to reverse those prior rulings.
3) China Gets Aggressive With Taiwan
The Topline: With the Biden administration seeking a diplomatic solution to foreign policy issues and conflicts, China becomes more aggressive in their drive to gain control of Taiwan.
Quote Of The Day: “If China is going to launch a war against Taiwan, we will fight to the end.”
– Taiwan Foreign Minister Joseph Wu
On Monday, the Chinese Air Force sent more than 50 military jets into Taiwanese air space, which is the largest incursion ever by China — at least, for now. According to Taiwan’s military, the aircraft included 34 fighter jets, anti-submarine aircraft, and early warning and control planes.
Taiwan’s Foreign Minister Joseph Wu said, “The defense of Taiwan is in our own hands,” adding they are committed to defending their country.
He said Taiwan wants to engage in security or intelligence exchanges with other like-minded partners, before touting the recent military partnership of the United States, United Kingdom and Australia as an example.
On Sunday, the State Department released a statement saying, “The United States is very concerned by the People’s Republic of China’s provocative military activity near Taiwan…We urge Beijing to cease its military, diplomatic, and economic pressure and coercion against Taiwan.”
Last week, however, on “The People’s Republic of China National Day,” Secretary of State Antony Blinken released a statement “extending congratulations to the people of China.”
Blinken wrote, “As the United States seeks to work cooperatively to solve the challenges we all face, we wish the people of the PRC peace, happiness, and prosperity over the coming year.”
Economic Point: The U.S. is planning to launch new trade talks with China, but they will also keep tariffs on Chinese imports in place.
Other Stories We’re Tracking
After a year and a half of closed borders and heavy restrictions, New Zealand is abandoning its “Covid zero” policy. On Monday, New Zealand’s Prime Minister stated, “With Delta, the return to zero is incredibly difficult, and our restrictions alone are not enough to achieve that quickly. In fact, for this outbreak, it’s clear that long periods of heavy restrictions has not got us to zero cases.”
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