FirstFT: Yellen warns of debt ceiling ‘constitutional crisis’

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US Treasury Secretary Janet Yellen warned of a “constitutional crisis” unless Congress raises the federal debt limit as the government continues to face a cash squeeze due to a lack of new lending opportunities.

The White House and Republican lawmakers are deadlocked by raising the debt ceiling, which Yellen said could be breached as early as June 1st.

The Biden administration considered whether they could invoke the 14th Amendment to the US Constitution to continue issuing new debt to pay Social Security recipients, bondholders, government employees and others without legislative approval.

A clause in the amendment states that “the validity of the public debt of the United States as permitted by law, including debts incurred for the payment of pensions and awards for services in the suppression of an insurrection or insurrection, shall not be questioned.”

However, economists and constitutional experts disagree as to whether such circumvention of Congress would be legal.

Asked if Biden would invoke the 14th Amendment, Yellen said she didn’t want to consider emergency options just yet, but using the clause would be “one of the bad options.”

She added that raising the debt ceiling was the work of Congress.

Here’s what I’m still watching:

  • Visit Japan-Korea: Japanese Prime Minister Fumio Kishida will meet South Korean President Yoon Suk-yeol today at the first summit of the two countries in a decade.

  • FTX Scandal: Lawyers for FTX founder Sam Bankman-Fried will have until today to file motions in a New York court to formally respond to allegations of fraud brought against him by federal prosecutors.

  • Coronation: Financial markets in the UK are closed today for a public holiday following the coronation of King Charles III.

Five more main stories

1. US States Accelerate Arms Race of Tax Relief and Deal Sweeteners how are they aggressively woo foreign investors Drawn to America by Joe Biden’s Clean Energy and Chip Subsidies

2. Berkshire Hathaway Warren Buffett sold billions of US stocks, a signal that a well-known investor did not find attractive in a volatile market.

3. Russia begins partial evacuation from southern Ukrainegrowing fresh concerns for your safety.

4. Western companies warn of hit from China’s slow recoveryafter the sudden opening of the country due to pandemic restrictions caused by overly optimistic growth forecasts.

5. China in security and trade talks with Talibanas Beijing counts increase investment in a crisis country.

Big Read

FBI headquarters in Washington DC

FBI headquarters in Washington DC. On one of the Telegram channels monitored by the FT, a user posted what he claimed was a directory of bureau employees. © Al Drago/Bloomberg

Following the lead of cybersecurity researchers who make a living studying hacker forums, the Financial Times over the course of two weeks monitored several chat groups hosting tens of thousands of pages of documents, sometimes newly compiled from recent security breaches, sometimes consisting of repackaged nuggets of previous hacks. . Look inside the online marketplace to find US secrets.

We also read and listen. . .

  • AI regulation: Artificial intelligence systems can bring enormous benefits to society. But superintelligent technology needs superintelligent regulation – and quickly, – writes the editors of the FT.

  • India’s economic miracle: In the southern state of Karnataka, a new economic miracle is happening in a vibrant local democracy, writes Ruchir Sharma, chairman of Rockefeller International.

  • FT Weekend Podcast 🎧: This week host Laila Raptopoulos talks to a nurse who works in a palliative care unit. what we owe to the people who help us die.

Schedule of the day

Progressives win immigration debate in Western countries, with some suggestion that the success of anti-immigration populism has shocked formerly smug moderates into coming out in support of diversity, writes chief data reporter John Burn-Murdoch.

Chart showing that media attention to racism in the US, UK, and Canada has skyrocketed over the past few years.

Listen to Hillary Clinton talk live with US FT National Editor Edward Luce on May 20 at our FTWeekend festival. Sign up now and get $20 off as a newsletter subscriber with promo code at NewslettersxFestival. ft.com/festival-us.

Take a break from the news

Pete Bets, one of the world’s most accomplished environmental negotiators, has only a few months to live. Still hoping for the planet, he tells Sawley Clark 13 lessons he wants to leave behind.

Additional contributions by Ti Zhuo and Emily Goldberg

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