Debt Limit Deal, Interest Rate Pause, & Artificial Intelligence
Economic News/Policy:
May 30: CBO finds Biden-McCarthy debt limit deal could reduce spending by $1.5T over a decade
The Congressional Budget Office on Tuesday said the debt ceiling deal negotiated by the White House and House GOP leaders could reduce projected deficits by about $1.5 trillion over the next decade.
GOP leaders in the House had demanded spending restrictions in exchange for raising the debt ceiling.
“Reductions in projected discretionary outlays would amount to $1.3 trillion over the 2024–2033 period,” Congressional Budget Office Director Phillip Swagel said in the letter. "Mandatory spending would, on the net, decrease by $10 billion, and revenues would, on the net, decrease by $2 billion over the 2023-2033 period."
In the letter Tuesday, Swagel said the CBO "Anticipates that rescinding those funds would result in fewer enforcement actions over the next decade and in a reduction in revenue collections."
A closer look at proposed changes to work requirements for SNAP and TANF estimated the modifications would increase federal spending by about $2.1 billion over the next 10 years - largely driven by changes to the former program.
"The new exclusions would not only apply to some beneficiaries under age 50 who otherwise would be subject to the work requirement under current law but also would apply to some beneficiaries ages 50 to 54 who otherwise would be subject to work requirements under the bill. As a result, CBO estimates, direct spending would increase by an additional $1.8 billion," it added.
By contrast, the letter also estimated that changes to TANF could lead to a reduction in block grants and reduce federal spending by $5 million over the next decade.
May 24: Fed Officials Were Divided Over June Rate Pause
Federal Reserve officials agreed unanimously to lift rates at their meeting this month but split on whether they would need to raise them in June, with some ready to pause.
“Several participants noted that if the economy evolved along the lines of their current outlooks, then further policy firming after this meeting may not be necessary,” said the minutes of their May 2-3 meeting released Wednesday.
The Fed raised its benchmark federal funds rate by a quarter percentage point to a range between 5% and 5.25% at the meeting, marking its 10th consecutive increase since March 2022 to combat high inflation.
Over the past two weeks, some officials have said inflation and economic activity aren’t slowing enough to justify an end to rate increases. But others, including Powell, have hinted that they might prefer skipping a rate rise in June to assess the effects of their past increases and the banking sector strains.
Fed officials revised their postmeeting statement this month to suggest much less conviction about the need for further rate increases. Some of them said they didn't want market participants to interpret those changes as signaling that the Fed was considering rate cuts or that further increases had been ruled out, according to the minutes.
Traders in interest-rate futures markets saw a 30% chance officials would raise rates by a quarter point at their June meeting and a nearly 55% chance they would do so by the end of July, according to CME Group, after the minutes were released.
Fed governor Christopher Waller said Wednesday he would favor raising rates again at either the central bank's June or July meetings because of slow progress on lowering inflation.
ICYMI:
May 30: Scientists, experts saying mitigating the ‘extinction’ risk of AI should be a global priority
A group of artificial intelligence experts and industry leaders are warning that AI could pose an existential threat to humanity and that mitigating its risks should be a "Global priority."
"Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war," the one-sentence statement read. The open letter was released Tuesday by a nonprofit organization, the Center for AI Safety, and was signed by more than 350 AI leaders, experts, and engineers - including chief executives from leading AI companies: Sam Altman of OpenAI, Demis Hassabis of Google DeepMind, and Dario Amodei of Anthropic.
The latest warning comes as worry about the potential harms posed by the rapidly developing technology has spread through the industry and beyond.
Earlier this month, Altman testified before a Senate subcommittee about the potential harms of AI and implored lawmakers to pose regulations for the industry.
NHTSA planning to require automatic emergency braking on new vehicles Democrats put potential headache of passing debt ceiling rule on McCarthy.
In an interview with The New York Times, Center for AI Safety Executive Director Dan Hendrycks described the letter as a "Coming out" for some in the industry who have stayed mum publicly as others have issued warnings about the harm AI could pose.
Earlier this year, more than 1,000 industry members signed a letter calling for a six-month pause on AI development, arguing it poses "Profound risks to society and humanity."
May 30: House conservatives threaten to push to oust McCarthy over debt deal
Conservative angst over the debt deal is threatening to trigger Kevin McCarthy’s biggest fear — a push to oust him from the speakership.
Rep. Dan Bishop (R-N.C.) on Tuesday became the first House conservative to explicitly state he is considering a push to strip McCarthy of the gavel over his recent deal with President Joe Biden.
The procedure Bishop is considering would essentially trigger a vote of no confidence against McCarthy - a tool that's been weaponized by the conservative House Freedom Caucus against the past two speakers in attempts to keep party leaders from leaning too much towards the center.
Bishop isn’t alone: Other conservatives have indicated they’re considering drastic measures over a debt-and-budget deal that they despise.
That includes Rep. Ken Buck, who raised the issue on a private call with House Freedom Caucus members on Tuesday. Buck asked the group’s chair, Rep. Scott Perry (R-Pa.), whether any of his fellow members were planning to trigger what’s known as a motion to vacate, the Colorado Republican recalled in an interview Tuesday.
On the call, Buck claimed that McCarthy's deal violated his promise to conservatives during the January speaker fight, when he promised to return Congress to pre-pandemic spending levels.
During a press conference hosted mainly by members of the House Freedom Caucus on Tuesday, members were asked who believed ousting McCarthy was on the table.
Conservatives for months have lined up behind McCarthy, explicitly saying they are not looking to push him out, though his allies have been concerned about such an effort since January.
McCarthy has vociferously defended the agreement he reached with the White House.
Rep. Ralph Norman - another vocal opponent of the deal - told reporters on Tuesday it would be "Unfair" to McCarthy for conservatives to jump to that option.
House Freedom Caucus Chair Scott Perry declined to get into whether members would try to oust McCarthy, but he did tease that the roughly dozen members standing with him at the press conference would do "everything in their power" to stop the deal.
For Fun:
May 30: Software offers new way to listen for signals from the stars
The Breakthrough Listen Investigation for Periodic Spectral Signals, led by Akshay Suresh, Cornell doctoral candidate in astronomy, is pioneering a search for periodic signals emanating from the core of our galaxy, the Milky Way.
The researchers developed software based on a Fast Folding Algorithm (FFA), an efficient search method offering enhanced sensitivity to periodic sequences of narrow pulses. Their paper, "A 4–8 GHz Galactic Center Search for Periodic Technosignatures," was published May 30 in The Astronomical Journal.
Pulsars-rapidly rotating neutron stars that sweep beams of radio energy across the Earth-are natural astrophysical objects that generate periodic signals but humans also use directed periodic transmissions for a variety of applications, including radar. Such signals would be a good way to get someone's attention across interstellar space, standing out from the background of non-periodic signals, as well as using much less energy than a transmitter that is broadcasting continuously.
"BLIPSS is an example of cutting-edge software as a science multiplier for SETI," said Suresh. "Our study introduces to SETI, for the first time, the Fast Folding Algorithm; our open-source software utilizes an FFA to crunch over 1.5 million time series for periodic signals in roughly 30 minutes."
The team tested their algorithm on known pulsars and were able to detect periodic emission as expected. They then turned to a larger dataset of scans of the Galactic Center undertaken using the Breakthrough Listen instrument on the 100-meter Green Bank Telescope (GBT) in West Virginia. In contrast to pulsars, which emit across a wide swath of radio frequencies, BLIPSS looked for repeating signals in a narrower range of frequencies, covering less than one-tenth of the width of an average FM radio station.