Congress and the White House
"The Pandemic is over."
-President Biden, 60 Minutes
The House and Senate are in session this week. Discussions/negotiations over a continuing resolution (CR) to keep the government open past September 30th continued over the weekend, but progress remains slow. The momentum appears to be to drop items rather than add items to ride along with the CR. Senate Majority Leader Schumer said he supports adding $12 billion for Ukraine to the CR. Ukraine has significant bipartisan support and will likely be included. If the number does settle in at $12 billion and not the $13.7 the administration requested it would mark the first time since the start of the war that Congress has not added to the President’s request. Not hugely significant -- $12 billion is not much less than $13.7, but still an interesting trend to watch for the next round of funding for Ukraine. The process of moving the CR is expected to begin in the Senate as they need to try to process several unrelated matters on the CR, primarily the permitting reform legislation being championed by Senator Manchin. A number of progressive Democrats oppose the bill, and it is also difficult to see Republicans wanting to help Democrats advance this language following the reconciliation play. The White House request for $22 billion for COVID was always a long shot given Republican opposition. The President’s declaration on 60 minutes that “the Pandemic is over” will make it even harder to convince Republicans to include additional COVID funding. Negotiators still need to decide how much disaster funding to include in the CR. The FDA user fees, which expire on September 30 appear increasingly likely to get a short-term extension to run the length of the CR.
Congress is working on additional items. The House may vote this week on a new election law bill by Rep. Zoe Lofgren (D-CA) and Rep. Liz Cheney (R-WY). A bipartisan group of senators who have worked on an Electoral Count Act that would clarify the process for counting electoral votes and the Vice President’s role. The group is not happy that the House may go its own route on election law – making it more difficult to resolve bicameral differences and make law. The Respect for Marriage Act (H.R.8404/S.4556): This legislation, which is being led in the Senate by Sens. Tammy Baldwin and Susan Collins, will be bucked until after the midterm elections.
With 50 days until the midterms, the contours of the race are becoming clearer. Republicans will run on the economy, crime, and border security – issues they currently hold historically large advantages over Democrats. But Democrats hold large leads on abortion and protecting democracy and see the reemergence of Donald Trump as an advantage for Democrats in the midterms. A new NBC News poll shows the generic ballot even and President Biden’s approval rating at 45% -- his best showing in over a year. In the closing weeks, the economy continues to present the biggest challenge for the White House. The Federal Reserve meets this week and is poised to raise interest rates by at least another 75 basis points. Inflation is persistent, but the economy is slowing. The Housing market is in a recession. Food prices are rising and electricity rates are ticking up. The President is determined to argue his policies are working and continues to champion the economy’s performance. But with voters holding a decidedly pessimistic view of the economy, the White House and Democratic messaging in general on the economy is also reinforcing the Republican messaging on the economy – that the White House is out of touch with the concerns of working Americans.
Polls are tightening in both directions. 50 days to go …
He also called former President Donald Trump “totally irresponsible“ in his handling of classified documents, and hedged on whether he was fully committed to seeking reelection. President Joe Biden said “the pandemic is over” in discussing Covid during an interview that aired on Sunday evening on CBS’ “60 Minutes.” “The pandemic is over,” the president told Scott Pelley as they talked last week at the Detroit Auto Show. “We still have a problem with Covid. We’re still doing a lot of work on it ... but the pandemic is over. if you notice, no one’s wearing masks. Everybody seems to be in pretty good shape. And so I think it’s changing.”
Republicans maintain significant advantages on the economy, crime, and immigration in the latest NBC News national poll. Democrats have pulled even with Republicans ahead of November’s midterm elections, fueled by six in 10 voters who disapprove of the Supreme Court decision to overturn Roe v. Wade; President Joe Biden’s approval rating improving to its highest mark since October, and by Donald Trump’s favorability rating dropping to its lowest point in more than a year. Still, Republicans maintain key advantages that could catapult them to win control of Congress and governors' mansions across the country, including 63% of voters who believe that their income is falling behind the cost of living, as well as 58% who disapprove of Biden’s handling of the economy. These are the results of a new national NBC News poll, which finds the parties tied on congressional preference among registered voters, 46%-46%, with Democrats narrowly trailing Republicans in election interest.
Finding China-made alloys in F-35 jets has put U.S. officials on alert as they seek to limit vulnerabilities. The Pentagon is intensifying efforts to decouple U.S. defense companies’ sprawling global supply chain from China, executives and department officials said. The Defense Department said it has started using artificial intelligence to improve the way it analyzes whether aircraft parts, electronics and raw materials used by U.S. military contractors originate in China and other potential adversaries. Defense contractors, encouraged by the Pentagon and lawmakers, have said they are weaning themselves off microelectronics and specialized metals from China, one of the biggest global suppliers. In the U.S., new facilities are under development to process rare-earth minerals, most of which remain widely sourced from China.
Winds have gusted over 100 mph while the National Hurricane Center warns of ‘catastrophic’ flooding. Hurricane Fiona battered Puerto Rico on Sunday, cutting power to the entire island while bringing destructive winds and life-threatening flash flooding. Conditions rapidly deteriorated even before the Category 1 storm made landfall Sunday afternoon, and the situation was not expected to improve much going into Monday.
The danger of a hard landing in the United States adds to concerns around the world. Stubbornly high inflation has Wall Street worried that the Federal Reserve will respond by raising interest rates until the United States tumbles into recession, taking the weakening global economy with it.
While analysts say the U.S. economy grew in the third quarter, signs of trouble are multiplying, here and abroad. Higher mortgage rates are chilling the U.S. housing market; energy shortages are hurting German factory output; and recurring coronavirus lockdowns are hobbling Chinese businesses. The Fed and other central banks are tightening credit to fight historically high inflation even as three of the world’s main economic engines — the United States, Europe and China — are sputtering. With the United States and other governments also reducing spending on pandemic relief measures, the global economy is getting less support from policymakers than at almost any time in 50 years, the World Bank said on Thursday in a new report that warned of rising global recession risks.
Manufacturers are furloughing workers and shutting down lines because they can’t pay the gas and electric charges. High energy prices are lashing European industry, forcing factories to cut production quickly and put tens of thousands of employees on furlough. The cutbacks, though expected to be temporary, are raising the risks of a painful recession in Europe. Industrial production in the euro area fell 2.3 percent in July from a year ago, the biggest drop in more than two years.
The surge threatens to exacerbate a slowdown in global growth and amplify inflation headaches for global central banks. The U.S. dollar is experiencing a once-in-a-generation rally, a surge that threatens to exacerbate a slowdown in growth and amplify inflation headaches for global central banks. The dollar’s role as the primary currency used in global trade and finance means its fluctuations have widespread impacts. The currency’s strength is being felt in the fuel and food shortages in Sri Lanka, in Europe’s record inflation and in Japan’s exploding trade deficit. In a worrying sign, attempts from policy makers in China, Japan and Europe to defend their currencies are largely failing in the face of the dollar’s unrelenting rise. Last week, the dollar steamrolled through a key level against the Chinese yuan, with one dollar buying more than 7 yuan for the first time since 2020. Japanese officials, who had previously stood aside as the yen lost one-fifth of its value this year, began to fret publicly that markets were going too far.
Surveys of households and business leaders point to lukewarm U.S. economy. U.S. consumer sentiment ticked up in early September from historically low levels as Americans felt slightly better about the economy while expressing uncertainty about the future. The consumer sentiment index, a reflection of consumer attitudes on the state of the economy, rose slightly in early September but is well down from a year earlier, the University of Michigan said Friday. Sentiment has gradually improved after hitting a record low in June. While consumers were more optimistic about the near-term economic outlook than earlier in this summer, when inflation touched a four-decade high, they expressed more pessimism about long-run economic prospects.
Office use on average was 47.5% of early 2020 levels for five business days recently in 10 major metro areas. Workers are returning to U.S. offices at the highest rate since the pandemic forced most workplaces to temporarily close in 2020, as infection rates continue to fall and more companies intensify efforts to bring employees back. Office use on average was 47.5% of early 2020 levels for workers in the office over the five business days from Sept. 8 to Sept. 14 in the 10 major metro areas monitored by Kastle Systems. The company, which tracks security swipes into buildings, said that was the highest percentage since late-March 2020. Midweek days were especially strong, with office use for Tuesday and Wednesday last week at about 55% of the prepandemic workforce, also a high during the pandemic for those days, Kastle said. The data through last Wednesday were the most recent weekly figures available.