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Morning news brief

MICHEL MARTIN, HOST:

What happens if the government runs out of money to pay its bills?

STEVE INSKEEP, HOST:

President Biden and House Speaker Kevin McCarthy keeps saying not to worry about that. They met yesterday to negotiate over raising the federal debt limit. Congress needs to do that in order to meet its legal obligations. Biden spoke before yesterday's meeting.

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PRESIDENT JOE BIDEN: We still have some disagreements, but I think we may be able to get where we have to go. We both know we have a significant responsibility.

INSKEEP: McCarthy said after the meeting, I believe we can get it done. But hardly more than a week remains before June 1. The Treasury Department says that's the earliest date at which the U.S. may have less money than it needs.

MARTIN: NPR's Scott Horsley has been asking what that might look like. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning.

MARTIN: So let me start with Republican Congresswoman Nancy Mace of South Carolina. She was on MORNING EDITION not long ago. She suggested the U.S. can pay its existing debts. Let's listen to what she said.

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NANCY MACE: We can prioritize. The president can prioritize spending. We're not going to run out of money to pay the interest on the debt because we get 11 times the interest on the debt and tax revenues year over year.

MARTIN: So let me briefly fact-check that. Is she right?

HORSLEY: If all you're concerned about is making interest payments on the government's debt, she is right. The government almost certainly will keep making those payments. And interest isn't due until the middle of June anyway. But the government has tens of billions of dollars in other bills that it's supposed to pay before that, and Treasury Secretary Janet Yellen says it's very likely the government will not have enough money to cover all those bills unless Congress raises the debt limit soon. Keep in mind, tax revenue covers only about 75 cents of every dollar the government spends. The rest has to be borrowed. And if the government can't borrow more money, some bills are going to go unpaid.

MARTIN: Which is like the way a lot of families live, right? I mean, if you don't have enough money to pay all your bills, you prioritize some over the others. So how is the government going to decide who gets paid and who doesn't?

HORSLEY: Yeah, for the government, it's a very tough call. Who do you stiff - retirees on Social Security, members of the military, doctors who look after Medicare patients, taxpayers who are waiting for their refunds? Bondholders are paid through a separate computer system, so they can easily be given priority. But Yellen told a Senate committee this spring, trying to pay some of the government's bills and not others is both risky and untested.

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JANET YELLEN: The government, on average, makes millions of payments each day, and our systems are built to pay all of our bills on time and not to pick and choose which bills to pay.

HORSLEY: That said, the Treasury Department might be forced into that position in just about nine days. Yellen told NBC over the weekend, if the debt ceiling is not raised, there will be hard choices to make about which bills go unpaid. Now, the government has not said a lot about how it would go about that. It would be messy. There could be legal challenges. One option would be to keep paying bills in order as tax money becomes available. So perhaps someone who's expecting a Social Security payment on June 2 instead gets paid on June 3 or June 5. The longer the impasse drags on, the more those unpaid bills pile up and the later the payments might get.

MARTIN: How much lasting damage would that do?

HORSLEY: Well, when an individual is late paying bills, his credit rating takes a hit, and that makes it more expensive to borrow money in the future. The same thing could happen to the federal government. Now, if bondholders keep getting paid, this might not count as a technical default. But Yellen has said failure to pay any of the government's bills would be a default by another name. And, you know, it would likely rattle the financial markets. Bondholders might reasonably wonder, how long are they going to keep getting paid while grandmothers and service members have their checks held up? That's not a very good look politically. In past episodes when the country has come close to default, the Federal Reserve has looked at ways it might limit the damage in financial markets. But Fed Chairman Jerome Powell has been very consistent in his public messaging.

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JEROME POWELL: We shouldn't even be talking about a world in which the U.S. doesn't pay its bills. It just shouldn't be a thing. And I would just say no one should assume that the Fed can really protect the economy and the financial system and our reputation globally from the damage that such an event might inflict.

HORSLEY: The Fed doesn't even like to talk very much about its contingency planning for fear it might take some of the pressure off Congress and the White House to act.

MARTIN: That is NPR's Scott Horsley. Scott, thank you so much.

HORSLEY: You're welcome.

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MARTIN: California, Arizona and Nevada are proposing new cutbacks to their use of the drought-stricken Colorado River to keep it from running dry.

INSKEEP: The river is vital for tens of millions of people across the Southwest, and some of America's most productive farms rely on it too. Drought and population growth and climate change have all contributed to the water crisis. Now, in a proposal released on Monday, states that use the Colorado for essentials like drinking water and generating electricity at dams agreed to reduce their take of the river in exchange for more than $1 billion in federal payments.

MARTIN: Reporter Luke Runyon from member station KUNC in Colorado is with us now to explain the latest. Luke, thanks so much for being here.

LUKE RUNYON, BYLINE: Thanks for having me.

MARTIN: I understand that this new deal is a temporary fix. It's only through 2026, but I still want to know what's in it and who takes these water cuts.

RUNYON: The bulk of the cutbacks would come from Arizona and California. And those states' leaders have said that they're ready to start relying on the river less, but want federal funds to ease some of the economic burden that comes with using less water. They're prepared to conserve 3 million acre-feet over the next 3 1/2 years. And just to put that in perspective, one acre-foot generally supplies about two households in the Southwest for a year. And these cuts will be from all sectors. Farmers will use less. Tribes have said they'll conserve as well, even the greater Los Angeles area. And some of the cutbacks will be incentivized. States will split $1.2 billion in federal funds set aside in the Inflation Reduction Act. But it's unclear now exactly how that money will be split up.

MARTIN: So these new cuts come after federal officials last year threatened to intervene and force deeper water cutbacks if the states could not come to an agreement. What's been the reaction from officials in those states?

RUNYON: Right. Last summer, the situation on the Colorado River was much more dire. Its biggest reservoirs were threatening to dip low enough that they would lose the ability to generate hydroelectric power. Then came this very wet winter that we just went through here in the Rocky Mountains, and that eased up the pressure that everyone was feeling. What the states are agreeing to now is significantly less than what federal officials said was needed last year. What state leaders are saying right now is that these are the cuts that they can live with for the next few years while we negotiate a much more robust agreement to go into place after 2026. Here's Brenda Burman. She runs the Central Arizona Project. That's a canal system that delivers water to the Phoenix and Tucson areas.

BRENDA BURMAN: I would say this is a short-term deal, right? This is a short-term deal to build stability and to prepare us for 2026. We know we are going to have to learn to live with a smaller river.

RUNYON: Because these reductions aren't the top-down mandatory cuts that people were really worried about, they're a bit more palatable to farmers and city leaders. And because they come with a lot of federal money attached, that makes the news go down a little bit easier too. What I'm hearing from people is that this is one more step in the right direction, but that the region still has a long way to go before it balances its water demands to match the shrinking river.

MARTIN: So, Luke, is this the kind of thing that tells us what is coming? Like, is it indicative of the kinds of future arguments among the states that we can expect as natural resources become scarce in this era of climate change?

RUNYON: Well, the Colorado River is kind of its own complicated problem, but I do think its story fits into a broader discussion about what it's going to take to adapt to climate change. It's likely going to be very expensive and potentially very painful to learn to live with less water in the Southwest, same as it will be to learn to live with rising seas, more destructive natural disasters. But this gives us a glimpse at what the coming challenges are going to look like in real time.

MARTIN: That's Luke Runyon of member station KUNC. He's the host of the podcast "Thirst Gap" about the Colorado River Basin. Luke, thanks so much for sharing this reporting with us.

RUNYON: Thank you.

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MARTIN: TikTok is fighting back against Montana's planned ban on the popular social media app.

INSKEEP: The operators of the social media site filed the lawsuit. They object to Montana's new law, which bans a site where you can find people dancing, cats, point-of-view videos, and quite often somebody's take on the news. A group of five content creators also filed suit against the state.

MARTIN: NPR tech reporter Bobby Allyn is with us now to talk about how the future of TikTok could be tied to how this case shakes out. Bobby, hello. Thanks for joining us.

BOBBY ALLYN, BYLINE: Hello.

MARTIN: So before we get to the lawsuit, if you could just walk us back a minute and remind us about why Montana is trying to ban TikTok.

ALLYN: Yeah, the short answer is China. TikTok is owned by Beijing-based internet company ByteDance, and Montana officials worry that the Chinese government could use TikTok to spy on Americans or try to use the app to influence the views of Americans. Washington, of course, is also concerned about this. Now, dozens of states have banned TikTok on government devices, but making it illegal to download an app within a state's borders is really something the U.S. has never seen before. And skeptics of the law say it amounts to theater - right? - that it's really a way to score political points for being seen as being tough on China. But, you know, Montana officials say they are genuinely concerned about the privacy and safety of its state's TikTok users. Now, the law doesn't fully kick in until January 2024.

MARTIN: Unless, of course, it's struck down, which is what TikTok is hoping for with the lawsuit. So tell us a bit more about TikTok's arguments.

ALLYN: Yeah, lawyers for TikTok are leaning really heavily here on the First Amendment, which is a very strong legal shield in the courts. Anytime the government tries to restrict free speech, it's basically presumed it's not allowed unless some very specific requirements are met, like protecting national security. And that's something Montana is citing here, right? But TikTok's legal team says the law points to no solid evidence that TikTok is a national security threat, saying they are relying on, quote, "unfounded speculation." Another argument TikTok makes is that even if there was a national security concern, that would be up to the federal government and not an individual state to address. And all the legal experts I've talked to say TikTok has a very strong case, but ultimately, it will be up to a federal judge to decide.

MARTIN: There seems to be a lot riding on this one lawsuit. Is that so? And why is that?

ALLYN: Yeah, it really is. And that's because TikTok is in limbo right now. The White House is weighing what to do about TikTok. Top Biden officials are keeping an eye on how this shakes out in the courts because federal officials themselves have threatened to ban TikTok nationwide but haven't, in part because of concerns that it would be thrown out in court. Also, if the Montana law is upheld by a judge, it could create something of a snowball effect, right? I mean, more states could pass copycat laws banning TikTok, which - just imagine - would be a real nightmare, right? Imagine crossing a state line and pulling up your TikTok app and not being able to access it. That would just be wild.

MARTIN: Which leads me to the last question here, which is if - let's just say, for the sake of argument, this law does take effect. How would it be enforced?

ALLYN: Yeah, cybersecurity experts are really skeptical that it's going to be easy to enforce. Right now, the law intends to punish companies like Apple and Google for making TikTok available, not the people using TikTok. Still, it's not even clear that Apple and Google can completely prevent an app from being downloaded in a single state. There are some blunt-force ways to block an app in a state, but there would be so many ways around it, so many loopholes. So - you know, not to mention the unintended consequences like accidentally banning the app in neighboring states, which would create a whole new set of legal problems. Really, a nationwide ban would be much easier to implement. But I think we all can recall that former President Trump tried to do that, and it was struck down in court.

MARTIN: That's NPR tech reporter Bobby Allyn. Bobby, thank you.

ALLYN: Thank you. Transcript provided by NPR, Copyright NPR.

Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
Michel Martin is the weekend host of All Things Considered, where she draws on her deep reporting and interviewing experience to dig in to the week's news. Outside the studio, she has also hosted "Michel Martin: Going There," an ambitious live event series in collaboration with Member Stations.