Politics heat up over the debt ceiling
Speaker Kevin McCarthy (R-Calif.) pledged to pass legislation to raise the debt ceiling at the New York Stock Exchange on Monday — but all of this comes as budget politics are heating up on Capitol Hill. What will it take to reach a consensus?
- Plus, AI-generated tax scams.
- And, what the Bud Light controversy says about America today.
Guests: Axios' Matt Phillips, Peter Allen Clark and Eleanor Hawkins.
Credits: Axios Today is produced by Niala Boodhoo, Lydia McMullen-Laird, Fonda Mwangi and Alex Sugiura. Music is composed by Evan Viola. You can reach us at [email protected] You can text questions, comments and story ideas to Niala as a text or voice memo to 202-918-4893.
NIALA: Good morning! Welcome to Axios Today!
It’s Tuesday, April 18th - Tax Day.
I’m Niala Boodhoo.
Today: AI-generated tax scams. Plus, what the Bud Light controversy says about America today. But first, our One Big Thing: politics over the debt ceiling heats up.
Politics over the debt ceiling heats up
KEVIN MCCARTHY: Let me be clear, defaulting on our debt is not an option. But neither is a future of higher taxes, higher interest rates, more dependency on China, an economy that doesn't work for working Americans.
NIALA: That's Speaker of the House Kevin McCarthy at the New York Stock Exchange yesterday. McCarthy pledged to pass legislation to raise the debt ceiling. All of this comes as budget politics are heating up on Capitol Hill.
Axios’ Matt Phillips is here to help us understand what's going on here. Hey Matt.
MATT PHILLIPS: Hey there.
NIALA: Matt, first remind us what's at stake here?
MATT: So the debt ceiling has to be raised, at some point, over the next few months. We don't know exactly when we've already passed the statutory debt limit, meaning the Treasury Department is now doing all sorts of, what they call extraordinary measures to continue paying the bills. But, the government at some point will run out of that capacity and the Congress, they're going to have to raise the debt ceiling or risk us defaulting on the debt. Which would be a really remarkable situation and no one quite knows what that would do to the economy or financial markets. So it's a big gamble.
NIALA: What's the status of negotiations between Democrats and Republicans, right now?
MATT: Well, they're playing out in public. As we saw yesterday, the House Speaker Kevin McCarthy came to Wall Street and delivered this speech where he pledged to raise the debt ceiling, but he said, we would have to cap spending growth at about 1% a year and rollback some spending to 2022 levels. The Democrats came out and said, these are not real plans. The House hasn't even produced a budget text that we could use to begin negotiations. So, this is all atmospherics kind of scene setting, this is the negotiation ahead of the negotiations. Which really should get started pretty soon if we're not gonna, risk this kind of specter of default.
NIALA: Matt, why do you think Speaker McCarthy went to the New York Stock Exchange to deliver this message?
MATT: It was primarily a political speech aimed at trying to shift the responsibility for who's to blame for the fact that we really haven't gotten to negotiations yet. The White House and the Democrats on the Hill have had a pretty effective messaging and saying, listen Republicans haven't really come up with a proposed budget yet, so what are we gonna negotiate on? And I think, this was the Speaker's attempt to say, no, no, no, we're ready to do stuff, it's the Democrats who are the problem.
NIALA: How have the markets reacted to all of this?
MATT: The markets tend to discount this or shrug concerns about the debt ceiling off until it becomes really, really acute. The markets expect brinkmanship. And there's this kind of feedback loop between the markets and D.C. where it's almost as if sometimes the politicians need a scary day on Wall Street to give them the cover to actually do something. But if people on Wall Street know that they might continue to shrug it off for longer than they might have otherwise. So then, it sets us up for potentially a volatile peak moment of terror before we can actually get this resolved.
NIALA: Matt, I don't wanna say that's the inevitable conclusion, but is that what you're watching for next, a little bit of chaos in the markets?
MATT: I'm thinking that, around August when this sort of quasi mystical X date, that is apparently the day when the Treasury Department really won't be able to pay the bills. And that's the day of the drop dead day when we either default or we don't. I think that if history's any guide, Congress is gonna push this right up to the brink and then there will be some volatility on the street. And then hopefully we will get a resolution to this issue.
NIALA: So we've gotta hang on until then?
MATT: Yep. I guess that's when we'll find out.
NIALA: Matt Phillips is Axios’ markets correspondent. Thanks Matt.
MATT: Thanks Niala.
NIALA: After the break, how generative AI may be creating a whole new level of tax scams.
AI-generated tax scams
NIALA: Welcome back to Axios Today! I’m Niala Boodhoo.
It's Tax Day. I hope you got your returns in on time. It's also a good time to be on alert for scams. And Axios’ Peter Allen Clark has some bad news here about how much scammers may be using ChatGPT or generative AI.
PETER ALLEN CLARK: Hey, Niala, thank you for having me.
NIALA: Peter, we've heard so many positive things about generative AI programs like ChatGPT. How are AI chatbots involved in tax scams?
PETER: Well, it's kind of a lot of the more positive things that people say about generative AI are some of the things that lend to it being used in tax scams. For instance, a lot of people have praised how creative and how nuanced some of the responses that chatbots can give you. Well, the same can be said for if people are trying to create a believable email phishing scam, chatbots can be used as that as well. There's the same sort of human language element that can trick people as well as delight people.
NIALA: So it's kind of horrifying to think that scams like that the technology for scams is improving in this way. Right? How can people protect themselves against this?
PETER: I think it's important to say that one of the researchers that I found in my reporting, highlighted the fact that a lot of scammers were pitching their emails as if they were coming straight from the IRS specifically, to try to trick people. You should always just be all the more cautious around, what does the email address look like that you're coming from? What does the language look like? Does it sound like a human may have written it, you know, what are the information they're asking for? Does that sound right to you? That this email or this message would be asking for confidential personal information, when you've not come across that before? There are all of these questions that you can safeguard yourself against.
NIALA: From your reporting, how did you learn about how law enforcement or the IRS are trying to work against this?
PETER: So that's still developing largely because the generative AI technology is so new, there's still not a lot of data around how to protect against it and how to fight against it, but also about how widely spread it is used in, right? I mean, cybersecurity researchers have only just begun to sort of make sure that they are understanding how successful chatbots can be in use of phishing scams.
So law enforcement, as with a lot of everyday people like myself, are still behind the curve in terms of understanding what this technology is, how it's going to be used, what the trajectory of people using it is going to be? And so it's going to take all of us, as a society, as a culture, as law enforcement, to kind of catch up to, to where it is.
NIALA: Peter, there has been so much about ChatGPT and how much it's going to change our world. And I suppose this technology being involved in crime might just be the latest evolution of all of this. How are you thinking about this?
PETER: It's one possibility I think there are so many more question marks than there are answers around what generative AI will end up being. It's really neat and it's some good technology and it can do some pretty impressive things, but the actual scope of how it will impact jobs, the economy, our everyday life there's still a lot of answers that will have to unfold over a very long time. So who knows?
NIALA: Peter Allen Clark is a technology editor for Axios. Thanks, Peter.
PETER: Thank you so much. Appreciate it.
What the Bud Light controversy says about America today
NIALA: There’s been a huge controversy the past few days over Bud Light. That’s because of the beer company’s marketing partnership with a transgender influencer, Dylan Mulvaney. Her instagram video sparked a boycott from the right. And, all of that is affecting the company’s bottom line.
Axios’ Eleanor Hawkins writes our Communicators newsletter. Eleanor, what does this Bud Light controversy say about American culture and politics right now?
ELEANOR HAWKINS: Well, Niala, this event really captures the cultural, political, and societal toxicity that we're seeing here in 2023. You had far right pundits calling out the brand and waging a war on wokeism. And then you also had support from the left who was happy to see this brand partnership. The social media chatter spiraled out of control. There were over 6 million social interactions, conservative outlets were really taking this and running with it. Which led to a boycott. And in response to that boycott, Anheuser-Busch saw their shares drop about 4%.
Over the course of those few weeks, this entire saga is more than just a marketing campaign gone awry. The business implications are there, but there are also some political issues at play. The fact of the matter is that for trans people this is a huge life or death issue and across the country bills are being debated and their access to healthcare is in question. This is only going to become more polarizing, and there's only gonna become more of a spotlight on these issues as we gear up to 2024, and there are real world implications for that.
NIALA: Eleanor Hawkins writes the Axios Communicators newsletter.
And that’s it for us today. I’m Niala Boodhoo - thanks for listening - stay safe and we’ll see you back here tomorrow morning.