A run for its money: funding crunches in Congress

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Hello and welcome to the Intelligence from the Economist. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. Like just about everywhere else, fake news in South Korea has a poisonous effect on politics.

So.

So the ruling party is trying to clamp down on it, but critics say the plan is more likely to hobble the kind of real journalism that takes the government to task. And we pay a visit to a new immersive art center in France showcasing a playful conceptual artist's latest work. It's a powerful reminder of a more confident pre pandemic past, perhaps a prelude to a more confident post pandemic future. But first.

As long as we're still alive, we got three things to do. The debt ceiling, continued resolution, and the two pieces of legislation. If we do that, the country's going to be in great shape.

Thank you.

President Joe Biden may have just used the biggest if of his presidency. Three spending related pushes in Congress are all crashing into one another.

There are several crucial deadlines that are bunched up towards the end of the week.

Idris Kahlon is our Washington correspondent.

First, Joe Biden had hoped to get the majority of his presidential agenda through Congress by the end of the week. That is now looking to be jeopardized as Democrats are riven by internal disagreements over who precisely how large a safety net package should be passed.

That safety net is the Build back better act, Mr. Biden's signature massive social spending plan. While Democrats remain divided on what precisely should be in it and how much it should cost, the House will vote on Thursday on a slightly less contentious $1.2 trillion bipartisan infrastructure plan. But this is just a busy week. Thursday is also the end of the fiscal year and a new federal budget still needs to be struck.

Congress of course, can pass big sweeping legislation at any time of the year, but it does need to fund the government in order to keep it open. And unless it is able to do that by the end of this week, the federal government will shut down on October 1st.

Trying to pass big money legislation in the current Congress is hard enough doing so while the day to day running of government remains up in the air harder still. But there's that third thing Mr. Biden mentioned, raising the debt ceiling. How far the country lets itself get in the red. Bypassing that could mean a calamitous default.

It's looking like it will be a steep test of the resolve of Democratic leaders in Congress, Nancy Pelosi in the House and Chuck Schumer in the Senate.

I cannot emphasize that this isn't just another political game. We're facing a parade of horribles that will hurt every single American in this country and it's important.

Democrats had hoped to tie together legislation raising the debt ceiling and funding the government, but last night Republicans shot that down. Senate minority leader Mitch McConnell made clear that his Republicans were all for keeping the government running, but hinted at resolve against Mr. Biden's far bigger plans around the corner.

We will not provide Republican votes for raising the debt limit. As we speak, Democrats are behind closed doors assembling a multi trillion dollar reckless taxing and spending spree. There's no chance Republicans will help lift Democrats credit limit so they can immediately steamroll through a socialist binge that will hurt families and help China.

Idris we've spoken before about Mr. Biden's grand plans both on infrastructure and widening America's social safety net and the delicate balancing act it's become as the more easily passed bits of it have been hived off. But this week is really making things complicated.

It has always looked like a delicate balancing act and it is looking like an especially precarious one right now. Democrats managed to pass a bipartisan portion of their agenda in the Senate, but the issue is that the House, which was planning to vote on it this week, might not actually manage to pass it because progressives are insisting that the more moderate bipartisan package can only be given to President Biden in tandem with the big sweeping bill that is currently being haggled over. There are various jargony terms for it, the reconciliation bill, et cetera, but this is a package with trillions of dollars of spending on, on basically the President's entire campaign agenda. Climate change, safety net legislation, huge tax increases, et cetera. In the past week or two, moderates, especially Joe Manchin in the Senate, have insisted on a much smaller and less transformative bill. And that of course, has upset the balancing act, which was this delicate tango between progressives and moderates, which is now threatening and imperiling the entire agenda.

And again, there's this threat of a government shutdown. And it feels like this has to happen every year now to get a budget through. How bad would it be this time?

You're right that the federal government shutting down is no longer an extraordinary thing in American politics. That happens fairly frequently when Congress is unable to pass a budget to keep the government open. All non essential federal employees are furloughed and they are not paid. Government is unable to process certain kinds of checks, national parks shut down. All the sort of needed drudgery of government comes to a grinding halt.

And how does the debt ceiling play into all of this?

The debt ceiling is a limit on the amount that the US Government is allowed to borrow. The debt ceiling does not apply to new spending that Congress is contemplating. It instead is a legal cap on the amount the treasury can borrow to fund the spending that Congress has already authorized. As the Treasury Department approaches that limit, they have to resort to what they call extraordinary measures. And those have been in place since August 1st. Basically, you can think about it as the government temporarily not making payments to certain kinds of investment funds for retired workers. That frees up a certain amount of cash while Congress gets a few weeks to get its act together. In every case where there's been debt ceiling brinksmanship, Congress has managed to get its act together before something potentially catastrophic like a partial default happened. Unlike past negotiations over the debt ceiling or government shutdowns, what's different this time is that Republicans are blanketly rejecting the debt ceiling. They are saying that if you are going to raise it, you have to do it yourselves.

How catastrophic are we talking though? What could happen?

Well, it would force very difficult choices for the treasury on which obligations to not pay. And those can include benefits for Social Security, benefits for soldiers, etc. The second is particularly acute in the case of partial default on the debt that is issued. The dollar is the world's reserve currency and many assets that are traded are actually priced on the basis of Treasuries. The theory being that Treasuries are as close to a risk free asset as you can get. And if that assumption were to be questioned or appended, that could trigger a fairly significant financial crisis. So far, markets are not freaking out. They're not raising rates preemptively anticipating a potential blow up. But the last time America flirted with danger, one of the major credit rating agencies dropped the AAA status that American Treasuries had always had, and that itself was also damaging.

But neither party wants to be blamed for a US default. A solution is almost certain to be found here. But what could that solution look like?

Democrats in the House passed a bill which would allow the government to continue operating until December and raise the debt ceiling. And yesterday Republicans defeated that using the filibuster in the Senate. So Democrats will have to figure out a way. One option that they have is to try to do a government shutdown related piece of legislation alone, basically a continuing resolution that would keep the government open and leave the debt ceiling to another bill. There is a possibility that they could use a special procedure called reconciliation. But as Janet Yellen, the Treasury Secretary, has warned the day by which the American government will have to make very hard choices about which obligations it pays is coming up within the first two or three weeks of October. And the reconciliation bill, because of arcane rules of Senate procedure, et cetera, probably would require 10 to 14 days to get through and passed. I don't think that the solution is going to emanate from Republicans on this. Democrats are going to have to figure out a way to keep the government open and to avoid a partial default.

But considering Mr. Biden's far wider plans, the the Build Back Better act that could remake the American government, it grows the state, it confronts climate change. It seems like all these process and legal quirks could end up derailing his biggest plans.

Already you're seeing that the need to rectify these self imposed economic cliffs is distracting the President and Democrats in Congress from what they want to be doing, which is passing this enormous piece of legislation. If they have to deal with the escalation of these crises, that is less time that they have to iron out the severe divides within their own caucus on that bill itself. And I don't think that it's a good omen for them overall. And looking further ahead, it's almost certainly true that Republicans are going to run against the president in the midterms on his economic record, and they're going to cite the inflation spike that we've seen. They might cite the possible government shutdown, potentially even a debt default, as an example of the President's poor economic stewardship. And if he's not able to point to a sizable investment in all the things that he pledged to to counteract those threats, I think they could prove to be quite effective.

Thanks very much for your time, Idris.

Thanks for having me. Jason.

The term fake news means different things to different people. For political bad actors, it's a handy catch all phrase to denigrate and dismiss whatever doesn't suit their needs in the free press. For more democratic types, it represents a real problem. All the misinformation and disinformation muddying public discourse. Now lawmakers in South Korea say they've had enough of it and have put forward a bill that would revamp the country's media laws. Misinformation is in fact muddying matters in the country, but plenty of opponents of the legislation in South Korea and outside it think the ruling Minju Party is taking the politically handy view.

Fake News Few people disagree that the spread of incorrect or intentionally misleading reporting is a damaging phenomenon.

Lena Shipper is the Economist's sole bureau chief.

But critics are deeply concerned about plans in South Korea to crack down on fake news. They worry that if the governing party in South Korea is successful in passing amendments to the Press Arbitration act, that's not going to fight fake news but hobble actual journalism.

So what exactly is in the amendments that are being proposed here?

The original proposal would introduce new provisions allowing individuals and small businesses to go after reporters and media organisations for things like causing emotional distress by spreading false or manipulated information. The assumption would be that false information is shared intentionally or as a result of gross negligence, which would mean something like insufficient fact checking. The ruling party argues that the law would improve the quality of reporting and increase public trust in the media. But critics were worry that the vague wording of some of the clauses would give the authorities just way too much discretion to decide which reports qualify for corrections or damages, and that this would have a dampening effect on what journalists feel they can or cannot say.

And so as for those critics, how many are there? How broad is the opposition here?

So the entire domestic media are basically against this bill almost to a man and a woman, as are some international press organisations. And the UN's special repertoire for freedom of expression expressed concerns that the Law could be used to limit reporting and criticism of the government precisely because there is so much vagueness in the clauses surrounding what actually constitutes these fake reports. The conservative opposition has also blocked the bill. Perhaps not surprisingly, it argues that the government is trying to shield itself from criticism. And a coalition of domestic activist groups and Human Rights Watch have called on legislators from all parties to reject the bill when it comes up for a vote.

And what about the government itself that's backing this bill? How does it defend its intentions here?

So the ruling party have argued that the rights of individual citizens in some cases supersede that of the press, and that it's the government's job to protect people from misinformation. Those concerns are not entirely unfounded. Like people everywhere, South Koreans exposed huge amounts of sensationalists and misleading news, often pushed by a small minority of people. There's a pretty well established vocal minority on the far right which is very fond of wild accusations that President Moon is, you know, in cahoots with the devil. The ccp, North Korea. They spread things like vaccine misinformation and that kind of things.

And what's your view on those contrasting arguments? Whether this would unfairly crimp fair criticism and the like versus the chance it would reverse these trends of misinformation and mistrust?

The problem with this law is that most fake news and conspiracy mongering originates on social media. But this law would only apply to newspapers and broadcasters and registered online news services, which would leave the main source of falsehoods untouched. And it's an unusual bill to propose in a liberal democracy because of the leeway it would grant authorities over adjudicating what's right and what's wrong and what's true and what's false. And it's particularly surprising because after the current administration took power in 2017, press freedom in South Korea, at least according to outside observers, has improved significantly. South Korea has gone up in the ranking of reporters with their Borders Press Freedom Index, which is one of the ways of measuring press freedom around the world. So. So it's very surprising that they would propose something like this.

And given all that opposition and the lack of certainty, it would do what it is evidently intended to do. Do you think that the bill will actually pass?

The many complaints have not fallen on deaf ears. After the opposition hobbled the first attempt to pass the bill in August, Minji legislators have come back and made some revisions to it. And on Monday, when it was supposed to pass, they postponed the legislative session again because they clearly still hold out some hope that they can find some sort of consensus vers that will allay the worries of critics and the opposition. The Minju Party has a commanding majority, so even if those concerns aren't resolved, they could still pass it against the votes of the opposition. And if it does pass, South Korea will surely drop a few places in next year's press freedom ranking. And the current administration's reputation as a beacon of free speech and liberal democracy may be slightly tarnished in the eyes of the international community.

Lena, thank you very much for joining us.

Thank you very much for having me. Jason.

In the art world, the opening of l' Hou Ma huge immersive art center in the south of France was a really big date in the calendar this summer.

Fiametta Rocco is a senior editor and a culture correspondent at the Economist.

One of the galleries was completely given over to a French conceptual artist, Philippe Pareno, somebody who is as exciting as he is unpredictable. When visitors arrived at Luma Al the night before the opening, they started to notice a triangular pool in the corner had begun to overflow. Visitors were more amused than disturbed as the water sort of seeped inexorably across the parquet floor. And even when a circular blue carpet in the center of the room became absolutely sodden and dark, Omnicus just suspected it was part of the show. The reality in the end was that the water turned out to be the result of a tap that had been been accidentally left on by a workman. But such is Parino's wizardry that you'd be forgiven for believing it was all part of the story.

And you say wizardry. I mean, tell me about the wizardry.

Par is a very interesting man. He's the son of Spanish immigrants to Algeria, born in Oran, moved to France when he was very young, never thought that he would become an artist, but he was inexorably drawn to it. And he first came to the notice of the art world in the early 1990s in one of his earliest works that he did was a room in a gallery in New York that he filled with helium balloons shaped like fish that were sort of let loose and just could be arranged and rearranged by visitors. The excitement, especially among children, contrasted so much with the sombre reverence that's generally considered normal in art galleries. He really pushed the idea that to audiences his work was an experience, and that was very new then.

And how have audiences responded to that push for experience?

Over the decades, his work has grown more and more Complex. In 2016, he he was invited to create an installation for the huge Turbine hall at Tate Modern in London. By this stage, he was interested in tech, in energy. He assembled an array of data about the building, including the temperature of the galleries at different times of the day, recordings of the sounds made through the industrial piping, and he fed that data through fiber optic cabling into a vast tub of live yeast that was placed behind glass at one end of the hall. He insists that the sounds and the screens in the Turbine hall were controlled by this energy that came out of the yeast. Well, one critic called it alien intelligence. He loved that.

So as for his latest work, that wasn't about seeping water, what is it about?

His latest exhibition at Luma, Al has two parts. It's an 80 minute film and then a projection based on how the audience reacts to it. So visitors sit on benches in a circle in the middle of the room where the wet carpet was. And from time to time the circle turns clockwise and then it turns anti clockwise. There are neon colored windows where the stark white lines move up and down depending on the level of sunshine outside. Meanwhile, the film is made of several of his earlier pieces. He had a famous sequence on the biology of the cuttlefish, for example, or on the journey taken by the train came carrying Robert Kennedy's body from Los Angeles to the east coast after he was assassinated. And Perrinord has used these seemingly completely disparate stories to present a completely new narrative that appears to be nothing less than the story of life. Luma opened only this summer, but it really harks back to another time. It's a huge grandiose tower that looms and visually harking back to a confident, striding, muscular pre pandemic world. By contrast, Perrino's installation really captures the fragility of humanity which feels so suited to this moment.

Fiammetta, thank you very much for joining us.

Thank you Jason.

That's all for this episode of the Intelligence. If you like us, leave us a rating and a review and you can subscribe to the economist@examiner.com intelligenceoffer the link is in the show notes. See you back here tomorrow.