On The Money — US projected to hit debt ceiling next week

by Sylvan Lane, Karl Evers-Hillstrom and Aris Folley - 01/13/23 6:45 PM ET

The U.S. will hit the debt ceiling next week, forcing the Treasury Department to free up cash to pay the bills. We’ll also look at Tesla’s surprising price drops, the FAA’s lack of funding, and more.

But first, see what a prominent fact-checker thinks of House Republicans’ IRS claims.

Welcome to On The Money, your guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Yellen: US is projected to hit debt ceiling on Jan. 19

Treasury Secretary Janet Yellen said the U.S. is projected to reach its roughly $31.4 trillion borrowing limit in less than a week.

Yellen shared the estimate in a letter to Speaker Kevin McCarthy (R-Calif.) on Friday. She also warned the department would soon have to begin taking “extraordinary measures” to stave off a default to buy time for Congress to find a bipartisan solution.

Those measures include temporarily suspending new investments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund, as well as suspending reinvestment of the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan.
While the secretary said it’s unlikely cash and extraordinary measures will run out before early June, she stressed the measures will only last for “a limited amount of time” and pressed for Congress to “act in a timely manner” to raise or suspend the ceiling.

The letter to McCarthy comes as a high-stakes fight over raising the debt ceiling looms over the further divided Congress after Republicans took back control of the lower chamber last week.

McCarthy has pressed for any action to address the debt ceiling to be tied to spending cuts sought by Republicans. However, proposals for significant cuts are likely to find trouble in the Senate, where Democrats still hold control.

Aris shares more here.

RARE DISCOUNT

Why Tesla is dropping prices across the US

Tesla is slashing prices amid slowing demand for cars and the introduction of new electric vehicle tax credits that come with strict price caps.

The cost of Teslas and most EVs skyrocketed throughout the pandemic as supply chain snags made it difficult for automakers to produce enough vehicles to meet demand. But consumers are slowing their spending, and most Americans can no longer afford EVs, let alone most new cars.

Tesla dropped the price of its base Model 3 car by $3,000 and slashed the price of the performance model by $9,000. The more expensive Model Y saw its price drop by roughly $13,000.
The cuts will allow Tesla’s Model Y and Model 3 Performance vehicles to qualify for the EV tax credit, which only applies to cars that cost less than $55,000.

Cars are finally becoming cheaper after multiple years of soaring prices. The price of new vehicles fell 0.1 percent in December, while used car prices slipped 2.5 percent, according to Labor Department data released Thursday.

Karl has more here.

MORE MONEY NEEDED?

Delta CEO calls for more FAA funding after system meltdown

Delta Air Lines CEO Ed Bastian on Friday urged Congress to boost funding for the Federal Aviation Administration (FAA) following this week’s computer system outage that grounded U.S. flights for hours.

Bastian said the FAA meltdown, which led to more than 10,000 delays on Wednesday, was “unacceptable” but placed blame on lawmakers for not prioritizing the agency.
The pilot alert system that failed is three decades old, and the FAA wasn’t planning on replacing it until around 2030.

“I lay this on the fact that we are not giving them the resources, the funding, the staffing, the tools, the technology they need to modernize the technology system. Hopefully this will be the call to our political leaders in Washington that we need to do better,” Bastian said in an interview with CNBC’s “Squawk Box.”

Karl has the story here.

SECOND BITE OF THE APPLE

Tim Cook to take 40 percent Apple pay cut in 2023

Apple CEO Tim Cook plans to take a 40 percent pay cut in 2023 compared to his total compensation from last year.

The company said in a filing with the Securities and Exchange Commission (SEC) on Thursday that Cook’s total target compensation for this year will be $49 million, down from the $84 million total target compensation he had in 2022.

Cook’s total compensation for 2023 is based on a $3 million base salary, a $6 million cash incentive and $40 million in equity awards, the filing states.
Apple’s compensation committee makes decisions about compensation before the start of each fiscal year and sought to balance feedback from shareholders, the company’s “exceptional” performance and Cook’s own recommendation that his pay be adjusted as a result of the feedback.

The Hill’s Jared Gans has the deets here.

Good to Know

State-level efforts to penalize companies for use of environmental, social or governance (ESG) goals in investments could cost taxpayers over $708 million, according to a study published by the nonprofit Sunrise Project.

Eighteen states have either proposed or passed legislation restricting the state from doing business with companies that practice ESG. These bills are based on model legislation written by the American Legislative Exchange Council, a conservative nonprofit.

Other items we’re keeping an eye on:

Shareholders of Southwest Airlines Co. filed a class action lawsuit against the company, alleging that the airline provided “materially false and misleading” information over a two year period regarding issues that caused a “meltdown” of the company last month.
Wisconsin and North Carolina are the latest states to ban TikTok from government devices, as concerns grow over potential cybersecurity risks posed by the Chinese-owned social media platform.

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage.

Programming note: We’ll be off Monday for MLK Day and return on Tuesday.

See you next week!