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WASHINGTON, Jan 20 (Reuters) - The White House is refusing to negotiate with hardline Republicans on raising the debt ceiling because it believes enough of them will eventually back off their demands, as a growing chorus of investors, business groups and moderate conservatives warn of the dangers of edging towards a default.

The high-stakes deadlock is widely expected to last for months, and could come down to the last minute as each side tests the other ahead of June when the U.S. government might be forced to default on paying its debt.

As the White House calls for House of Representatives Republicans to lift the debt ceiling to avoid economic chaos, it plans to highlight their threats to spending programs and the global economy, aides and allies of President Joe Biden say.

"Leading congressional Republicans have themselves admitted in the past that default would trigger an economic collapse, killing millions of jobs and decimating 401k plans," White House spokesperson Andrew Bates told Reuters. "But hardline MAGA Republicans are now advocating for this outcome."

The U.S. government hit its $31.4 trillion borrowing limit on Thursday, a figure that reflects money already spent by the government. House Republicans want cuts to government programs

before they will approve a higher ceiling; a similar demand sparked a 2011 credit rating downgrade and chaos in financial markets.

But the White House's strategy has its risks, given the unpredictable nature of the hardline Republicans in the House, some Democrats say.

Certainly there are segments of the House Republican caucus, and in the broader sort of conservative atmosphere, that are fairly explicitly making the case that it wouldnt be the worst thing to not come to a deal with Democrats, said Tobin Marcus, who served as an economic adviser to then Vice President Biden during a 2011 debt ceiling fight.

Republicans call the idea of a default alarmist.

"We're not going to default on the debt. We have the ability to manage servicing and paying our interest. But we similarly should not blindly increase the debt ceiling," Representative Chip Roy, a leading conservative, told Reuters.

The game of chicken comes as the White House prepares Biden's expected re-election campaign. Biden, 80, is expected to announce in February that he plans to run for a second term, and aides plan to focus on the rock-solid labor market, falling costs and threats from "extreme" Republicans.

The debt ceiling fight could help Biden here, some strategists say.

Some aides think he has plenty to gain from being seen as "the adult in the room" facing an opposition willing to tank the economy. Democrats are planning to deploy that theme in the 2024 election even if an agreement is reached quickly on the debt ceiling.

The White House is also flagging Republicans' vague plans to prioritize some federal spending over others as the debt limit nears, and suggestions from others that spending on Social Security be targeted.

Biden on Monday dismissed some lawmakers as "fiscally demented."

Meanwhile, the economic picture remains mixed.

Biden and top U.S. officials have repeatedly said they believe the economy's growth can slow to more sustainable levels, without putting people out of work. The so-called "soft landing" is what the Federal Reserve is aiming for as well, though they have conceded that goal may be elusive.

Retail sales fell the most in a year in December, suggesting growth is ebbing in the consumption-driven U.S. economy. Factory output, a barometer on the president's goal to revive U.S. manufacturing, also recorded its biggest drop in nearly two years last month.

Biden didn't mention these figures when they were released, but praised a different economic report also released on Wednesday on producer prices that showed progress in taming inflation, the administration's top economic concern.

"We've got the most vibrant economy in the world right now - in the world," Biden said in a political speech on Monday. "We're doing better than any other major nation in the world today."

Trillions in spending authorized in the first two years of Biden's presidency is expected to be distributed over the coming years, which the White House says will help U.S. growth and stave off recession.

A failure to raise the debt ceiling could have the opposite effect.

"From both an economic and a financial perspective, a failure to raise the debt ceiling would be an unmitigated disaster," said David Kelly, chief global strategist for JPMorgan Chase & Co (JPM.N) funds.

"While a failure to increase the debt ceiling is the most immediate fiscal threat to the economy and markets in 2023, damage could also be done either by continuing to neglect deficits altogether or by inflicting very sharp fiscal tightening on an economy which is now thoroughly hooked on the drugs of monetary and fiscal stimulus."

Reporting by Trevor HunnicuttEditing by Heather Timmons and Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

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Analysis: On debt ceiling, White House bets Republicans will blink ...

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Republican lawmakers could torpedo the economy if they don't act soon.

Drama has been infiltrating the halls of Congress over the past few weeks. Due to squabbling among the GOP, it took some late nights and 15 ballots to elect Kevin McCarthy as Speaker of the House. But it appears that was the easy part, as Republicans are now contending with a bigger, and much riskier challenge: raising the debt ceiling and keeping America on top of paying its bills.

Treasury Secretary Janet Yellen has warned that the debt limit is looming, with the US projected to officially reach the statutory limit for borrowing on January 19. That's when the Treasury will step in with "extraordinary measures" shuffling around some spending related to federal employee pension plans until it's either funded again orruns out of options and becomes unable to pay its bills.

"Failure to meet the government's obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability," Yellen wrote in a letter to McCarthy.

Those "extraordinary measures" are expected to run out sometime this summer, at which point the US could find itself in a dire economic situation. The country and world could plunge into a financial crisis, destabilizing global markets and leaving millions of Americans jobless.

This isn't a new dilemma for lawmakers. Raising the debt ceiling means increasing the legal amount of debt the federal government is able to allocate to keep paying for programs already mandated by Congress, and it's something Republicans managed to do three times under former President Donald Trump.

But with a Democratic White House, this time around is different because Republicans are planning to use the debt ceiling as leverage to accomplish their own policy priorities largely significant spending cuts on things like Medicare and Social Security. The White House, and Democratic lawmakers, have blasted the GOP using the debt limit as a bargaining chip.

"Failure to raise the debt limit will not reduce our debt, but it would wreck the economy if it led to a default. Unfortunately many Republicans seem determined to find out how catastrophic a default would be through experience," Rep. Don Beyer, a Democrat from Virginia, said in a statement to Insider.

He added: "Republicans accorded President Trump clean, bipartisan debt limit increases to cover the costs of debts which many of them voted to incur, and there is no reason for them to refuse to do the same under President Biden other than pure partisan politics."

"In exchange for not crashing the United States economy, you get nothing," Hawaii Sen. Brian Schatz previously told The Daily Beast. "You don't get a cookie. You don't get to be treated like you're the second coming of LBJ. You're just a person doing the bare minimum of not intentionally screwing over your constituents for insane reasons."

Michael Strain, the director of economic policy studies at the American Enterprise Institute, a center-right think tank, wrote that the Biden administration and Democrats have to accept the reality that "House firebrands" are not bluffing about not reaching a deal.

"All responsible politicians must get to work immediately, with the goal of raising the ceiling this winter," Strain wrote. "The closer we get to the as-yet-unknown day this summer when the government will run out of borrowing power, the worse the market reaction will be."

If the challenge to raise the debt ceiling sounds familiar, that's because Congress was in a very similar situation two years ago.

Senate Minority Leader Mitch McConnell initially refused to help Democrats raise the limit in 2021, leading the US dangerously close to defaulting on its debt before agreeing to a short-term agreement that raised the debt ceiling to its current level.

That obstruction harkened back to 2011, when delays in raising the ceiling amidst negotiations between the Obama administration and Republicans resulted in $1.3 billion more in borrowing costs and the US's S&P credit rating getting downgraded. In 1995, a standoff between President Bill Clinton and Republicans over spending cuts led to a government shutdown and Moody's saying it would potentially downgrade Treasury bonds leading Republicans to acquiesce.

This time could be different, however, as the new GOP House majority appears particularly insistent on playing hardball. "I think in the past, the assumption or the strategy was we want the Republicans to yield," Rohan Grey, an assistant professor at Willamette University College of Law, said. "We want to play a game of chicken with them because we think they don't actually want to be responsible for blowing up the whole economy."

But, Grey said, while Mitch McConnell did ultimately blink, this group of Republicans is a "fundamentally different group of people."

Goldman Sachs' Alec Phillips wrote in a January 9 analysis that the debt limit is now "a greater risk than at any time since 1995 or 2011," when the government shut down, or came close to shutting down, to avoid missing payments.

Phillips explained that passing a bill to raise the debt limit, along with spending cuts McCarthy conceded to, would be difficult to implement because the cuts "would primarily impact seniors, a Republican-leaning demographic."

"This could be the most economically irresponsible backroom deal in Republican history (even conservative economists are warning that the consequences could include a stock-market spiral and significant job losses)," Robert Reich, the Secretary of Labor during the 1995 debt ceiling crisis, wrote in a piece on the current situation.

Zachary D. Carter, the author of "The Price of Peace: Money, Democracy and the Life of John Maynard Keynes," told Insider a default on the national debt would throw the country back to some of the worst days after the Great Recession in 2008, he said, but with even more severe risks.

The US Treasury bond "is the basic unit of global finance," Carter said. "We are talking about every single financial institution in the world having to suddenly revalue the price of a basic asset that is used to settle balances every day."

"We'd just be setting off a global financial crisis. What happens after that? No one knows," he added.

If Biden ultimately decides he wants to avoid the risky debate in Congress, another solution is waiting for him in the form of a $1 trillion platinum coin. Through a process known as "minting the coin," Biden could sidestep Congress by depositing a $1 trillion platinum coin in the Federal Reserve, keeping the US afloat without having to formally issue any new debt.

The coin concept comes from a loophole in the type of coins the Treasury Department can mint. The Department has the jurisdiction to mint"platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time." Under that wording, the platinum coin could be any value so, theoretically, Treasury Secretary Janet Yellen could mint a platinum coin, say it's worth a trillion dollars, and use that to resolve the issue.

"When you talk about the trillion dollar platinum coin, it sounds very silly and it is really silly!" Carter said. "But a silly thing is much better than a catastrophic thing."

Obama even considered the idea, saying in 2017 that there "were all kinds of wacky ideas about how potentially you could have this massive coin." (The coin does not have to be physically large, just worth a trillion dollars).

While it may seem like a radical solution, "the really radical thing about this is the Treasury Secretary and others saying, we are going to ignore our constitutional responsibilities to spend the amount that Congress has told us to spend because we don't like the tools that they've given us to do it," Grey said, referring to the contradiction between Congressionally-mandated appropriations and the debt ceiling.

But at this point, Biden has rejected going that route and his administration maintains that Congress must act to ensure the US continues paying its bills, and doing so should not be a matter of negotiation.

"This is just another attempt by congressional Republicans to force unpopular cuts on programs critical to seniors, the middle class and working families," White House Press Secretary Karine Jean-Pierre said on Tuesday. "Congress needs to act and do so quickly. There is no excuse for political brinkmanship."

Additionally, The Washington Post reported last week that McCarthy and House Republicans are preparing a "payment prioritization" plan that would tell the Treasury what to do should Congress fail to raise the debt ceiling. Jean-Pierre called the plan "a recipe for economic catastrophe."

Widespread job losses, coupled with a roiled global economy, could take place if Congress doesn't act.

"We would see a financial crisis and massive job losses without aid from the federal government to deal with it," Carter said. "You would see very serious material hardship, very widespread, very quickly."

Continued here:
GOP Debt Ceiling Battle Could Lead to Historic Financial Crisis in 2023

The 2024 presidential election may still be three years away, but Republicans have already begun to jockey for their places in the primary.

Former President Trumps repeated hints that he could mount another bid for the White House remains perhaps the biggest obstacle for other would-be contenders.

While none have spoken definitively about their plans for 2024, many potential candidates have already started networking with GOP leaders and donors in key states while testing out campaign messages in public appearances.

Here are the 10 Republicans most likely to run for president in 2024:

Donald TrumpTrump has been teasing the possibility of a 2024 comeback almost from the moment he left the Oval Office, and his hints have gotten more brazen in recent months.

Hes avoided offering specifics about his thought process, though hes repeatedly said that his supporters will be very happy with his decision.

A campaign announcement likely isnt imminent. In an interview with Fox News published in early November, Trump said that he will probably wait until after the 2022 midterm elections to announce whether or not hell make another run for the White House.

If he does jump into the race, hed start off as the instant favorite to win the nomination at least for now.A Politico-Morning Consult pollreleased in mid-December found that 69 percent of Republican voters want Trump to mount a 2024 comeback bid.

Ron DeSantisFlorida Gov. Ron DeSantis has said that hes focused only on his 2022 reelection campaign, but that hasnt shut down speculation that a presidential run may be in the cards.

DeSantis became a conservative darling last year for his laissez-faire approach to the coronavirus pandemic and often indignant response to the advice of public health officials. Hes also crisscrossed the country for fundraisers and other events, leading many political observers to wonder whether hes looking beyond 2022.

Theres little doubt in DeSantiss fundraising abilities if he were to mount a presidential bid. His political committee has nearly $67 million in the bank, and hes already received contributions from donors in all 50 states.

Whats unclear is whether DeSantis would still run for president if Trump jumped into the race. Unlike many possible 2024 contenders, DeSantis hasnt said publicly that he wont run if Trump does.

Mike PenceFormer Vice President Mike Pence would appear to be an obvious choice for Republicans in 2024, given the four years he spent as Trumps No. 2.

Hes visited New Hampshire and other early primary and caucus states, fueling speculation about his political ambitions. And notably, he hasnt ruled out a run.

I can honestly tell you in 2023, my family and I will do what we have always done. Well reflect, well pray and determine where we might best serve, and well go where were called, he told CNN during a stop in New Hampshire earlier this month.

Still, there are questions about just how viable Pence would be in a GOP primary. Trump and his supporters have expressed frustration with Pence for overseeing the certification of electoral votes on Jan. 6, and the former president said at an event in Florida this month that Pence had been mortally wounded within the GOP for his role in the election certification process.

Chris ChristieFormer New Jersey Gov. Chris Christie, a onetime ally of Trump, has taken an increasingly confrontational approach to the former president over his false claims of fraud in the 2020 election.

Those jabs, as well as an increasingly aggressive public schedule, have sparked chatter that the former New Jersey governor may be eyeing another presidential run after his unsuccessful bid for the GOP nomination in 2016.

In public appearances, Christie has sought to outline a new direction for the post-Trump GOP, urging Republicans to focus on the future and move on from Trumps desire to relitigate the last presidential race.

But that strategy also risks isolating a Republican base that remains loyal to Trump and his vision for the GOP, and its not clear whether it will be a winning message in a 2024 primary.

Nikki HaleyFormer U.S. Ambassador to the United Nations Nikki Haley is doing what most prospective presidential contenders would do as they weigh a run for the White House.

Shes formed a political action committee to boost Republican candidates ahead of the 2022 midterm elections and has made stops in early primary and caucus states, all the while trying to navigate the tricky political dynamics of the post-Trump GOP.

But Haley also finds herself in a precarious position. She infuriated Trump earlier this year for criticizing his refusal to accept the results of the 2020 election and subsequent role in the Jan. 6 riot at the U.S. Capitol.

Since then, however, shes taken a more deferential approach to the former president. In April, Haley said that she would not run for president in 2024 if Trump does.

Ted CruzTexas Sen. Ted Cruz sought the Republican presidential nomination in 2016 only to lose out to Trump in a particularly bitter primary. He became one of Trumps most vocal boosters on Capitol Hill during the former presidents tenure in the White House, but that hasnt stopped him from eyeing another presidential bid of his own.

He told the conservative news outlet Newsmax earlier this year that hes certainly looking at another presidential run, and he hasnt yet committed to foregoing a White House bid if Trump decides to take another stab at the presidency.

Asked on CBSs Face the Nation last month if he would challenge Trump in 2024, Cruz said that the former president would be very, very formidable before noting that he came close to beating Trump in the 2016 primary.

I came in second, Cruz said. Theres a long history of runner-ups becoming the next nominee.

Mike PompeoLike Haley, former Secretary of State Mike Pompeo has launched a PAC ostensibly to boost GOP candidates in the 2022 midterms while also making the rounds in early primary and caucus states.

Pompeo has said that his focus for now is on helping Republicans recapture control of the House and Senate next year, dodging the question of just how seriously hes eyeing a potential presidential run. But he has yet to say whether Trump will have an effect on his overall decision.

Asked by Fox News host Sean Hannity earlier this year whether he would run if Trump decides to take a pass on another presidential campaign, Pompeo said that he is always up for a good fight.

Kristi NoemSouth Dakota Gov. Kristi Noem has repeatedly insisted that shes focused only on her 2022 reelection campaign and isnt planning a run for the White House in 2024. Shes also said that she wants to see Trump as the GOPs next presidential nominee, seemingly taking herself out of the running.

But that hasnt stopped speculation that she may have ambitions beyond the governors mansion. Noem is seen as a rising star among Republicans and has cultivated a national fundraising network that has observers wondering about her future ambitions.

Earlier this year, her campaign launched a federal PAC that can distribute funds into elections outside South Dakota and create a pot of money that could be used for a future federal campaign.

Tom CottonArkansas Sen. Tom Cotton has positioned himself as one of the Biden administrations most vocal opponents in the Senate, making frequent appearances on Fox News to criticize the president and his policies.

Hes also met with GOP leaders in states like Iowa and New Hampshire the first presidential caucus state and primary state, respectively. Asked during an event in Londonderry, N.H., in October about a potential 2024 bid, Cotton didnt shy away from the idea.

I expect Ill be back to New Hampshire again in the future,he told Insider.

Larry HoganAs a GOP governor of a blue state, Maryland Gov. Larry Hogan has sought to build a national reputation as a traditional Republican in the vein of former President Reagan. Hes also been a vocal critic of Trump, which could give him a unique lane to run in should he mount a bid for the White House in 2024.

Hogan has insisted that hes focused on completing his term as governor while trying to steer the country toward a more civil political debate. But he hasnt dodged conversations about a potential 2024 run entirely, acknowledging during an interview on CBSs This Morning earlier this year that he hasnt ruled it out.

Hogan is also one of the few prospective GOP contenders that wouldnt be deterred from running if Trump launches another campaign.

Continued here:
The 10 Republicans most likely to run for president

1. Trump to GOP: Don't touch Medicare or Social Security in debt ceiling fight  POLITICO
2. One initiative by Republicans has Biden and Trump on the same side  CNN
3. Trump Demands Republicans Spare Entitlements in Debt Fight  Bloomberg

See more here:
Trump to GOP: Don't touch Medicare or Social Security in debt ceiling fight - POLITICO

1. How Republicans Lost Despite Winning the Popular Vote  The New York Times
2. The Republicans Need a Reckoning  The Atlantic
3. Five challenges Republicans face in taking back the Senate in 2024  The Hill
4. Quality control: How House Republicans are trying to avoid another disaster in 2024  Washington Examiner
5. Guest Opinion: Republicans must start winning again  Idaho Press
6. View Full Coverage on Google News

Continue reading here:
How Republicans Lost Despite Winning the Popular Vote - The New York Times