Congress and the White House

Tomorrow, outside of Pittsburgh, House Republicans will unveil their “Commitment to America”.  Ever since House Republicans unexpectedly picked up 14 seats in the 2020 elections, they have confidently been planning to win back the majority in 2022, where they need a net gain of five seats to win the majority. The party in power historically loses an average of 27 seats in a new president’s first midterm election and redistricting after the 2020 census has tilted a few more seats in the Republican direction.  Republican confidence is understandable, although nothing is guaranteed in the closely divided American electorate.

House Republican Leader Kevin McCarthy has argued for two years that House Republicans would need a closing argument to make to the voters.  Over 18 months ago, he began a process of developing that closing argument by appointing 7 Task Forces, made up of current members, to develop a detailed agenda in case Republicans take back the House majority.  The Task Forces are:

American Security

Big Tech Censorship and Data

China Accountability

Energy, Climate and Conservation

Future of American Freedoms

Healthy Future

Jobs and the Economy

The “Commitment to America” to be released in Pittsburgh is a condensed messaging version of the Task Forces’ work.  If House Republicans win the majority, they are making a “commitment” to create:

  • An Economy that’s Strong
  • A Nation that’s Safe
  • A Future that’s built on Freedom
  • A Government that’s Accountable

While there will not be bill text behind these themes, the “Commitment to America” provides a roadmap of policy priorities in the House under a Republican majority.

China: First, House Republicans are putting China policy front and center, including by explicitly making a commitment to move supply chains out of China; elevating support for Taiwan; ensuring proper resources for the military and diplomats; and vowing to create a Select Committee on China. Republicans are no longer the party of economic globalism, but rather have embraced the belief that the rise of China threatens future U.S. security and prosperity.  U.S. multinationals with a large presence in China could get caught in the fallout from the transformation – whether it be through oversight hearings, specific legislation, or sanctions directed at China.

Energy: The Commitment to America presents a clearer contrast on energy policy, stating, “Americans don’t need leaders pointing fingers. We need leadership that can provide a coherent energy strategy that lowers costs, and provides cleaner, more secure energy to Americans and our allies around the world.” House Republicans see the war in Ukraine, the energy crisis in Europe, the political fallout from rising gas prices – and the economic competition with China – as clear and convincing evidence that America should double down on energy independence. Consequently, they want to “maximize production of reliable, cleaner American made energy and cut the permitting process time in half.”  The Energy Climate and Conservation Task Force focused on the following areas:

Border security and crime: Not surprisingly, the Commitment to America stresses the need for stronger border security and greater funding for police departments to reduce violent crime.  A Republican majority in the House would “focus on solutions to secure our borders, support our brave men and women in law enforcement, and protect the nation against cyber-attacks. The American people deserve safety and security and a Republican majority that delivers common sense solutions, not dangerous policies that weaken law enforcement and open our borders.” 

Big Tech: The Commitment to America promises to take on Big Tech, with a particular emphasis on privacy, parental control on online activities and censorship.  The Task Force focused on three pillars: Big Tech Responsibility, including Section 230 reforms; Big Tech Power, with focus on competition issues; and Big Tech Data, with focus on data privacy and security matters. Lawmakers in both parties have pushed legislative proposals in the 117th Congress that address various aspects of “Big Tech” but it does not appear the major proposals will get over the finish line this year, creating potential for bipartisan compromise in the 118th Congress.   

Healthcare: The Healthy Future Task Force moves away from repeal and replace of Obamacare, instead focusing on “personalized care to provide affordable options and better quality.” Republicans pledge to lower costs thorough price transparency, competition, choice, and expanded telemedicine options. The Republican commitment also pledges to “to improve our nation’s fiscal health by cracking down on taxpayer dollars wasted on improper payments in government health care programs.”

Oversight: Finally, House Republicans are committed to “hold Washington Accountable.”  In a divided government, when a party controls one or both chambers of Congress, but not the White House, oversight becomes more important and highlighted. House Republicans intend to pursue an aggressive oversight plan, with topics ranging from the origins of COVID to perceived political bias at the FBI to corporate wokeness to Big Tech’s alleged censorship of conservatives. 

Make no mistake, the “Commitment to America” is a high-level campaign document, and the audience is potential voters in the November midterm elections. Nevertheless, it provides a clear roadmap of where House Republicans are headed if they win a majority in November: Confronting China, bringing the supply chain closer to home, energy independence, and aggressive oversight of corporate America and the Biden Administration.

House passes plan to head off future Trumpian election challenges

The legislation won't pass the Senate in its current form, but Democrats see protecting the transition of presidential power as a potentially winning issue in November.  The House on Wednesday passed a proposal aimed at preventing another Jan. 6, mostly along party lines, setting up some wrangling with senators as they consider their own bipartisan version across the Capitol.  The proposal to modernize the Electoral Count Act, which backers of Donald Trump tried to manipulate on Jan. 6, 2021 to keep the former president in the White House, cleared the House in a 229-203 vote. Only nine Republicans — including Reps. Liz Cheney of Wyoming, Adam Kinzinger of Illinois and Peter Meijer of Michigan, who aren’t returning to Congress next year — joined all Democrats in voting for the legislation.  It’s a sign that Democrats view the MAGA moniker, and the fallout from Trump supporters’ violent attack on the Capitol, as a potent path to persuade voters of the former president’s connection to this November’s crop of Republican candidates. While Democrats have struggled to counter GOP economic attacks, they’re hoping democracy protection can join abortion rights as a way to pump turnout in the fall.

Schumer 2.0: How a surprise same-sex marriage decision explains the Senate leader.

Republicans were surprised the majority leader would delay a vote that could hurt them in November. The New Yorker said he only brings the partisan pain when he has no other options.  huck Schumer concedes that forcing the GOP to vote on same-sex marriage protections before the election would have been the “easy thing.” Instead he took the path that defied his reputation as the Senate’s campaigner-in-chief.  By punting what loomed as a difficult vote for Republicans until after the election, the Senate majority leader surprised both his critics and his allies. Inside Schumer’s caucus, some Democrats counseled a more confrontational approach in the hopes of pinning down Republicans.


The Economy

Fed Raises Interest Rates by 0.75 Percentage Point for Third Straight Meeting.  

Officials project short-term rates will rise above 4.25% by year’s end, signal further large increases at coming meetings.  The Federal Reserve approved its third consecutive interest-rate rise of 0.75 percentage point and signaled additional large increases were likely even though they are raising the risk of recession.  Fed officials voted unanimously to lift their benchmark federal-funds rate to a range between 3% and 3.25%, a level last seen in early 2008. Nearly all of them expect to raise rates to between 4% and 4.5% by the end of this year, according to new projections released Wednesday, which would call for sizable rate increases at policy meetings in November and December.

Interest-Rate Hikes Come Thick and Fast on 'Super Thursday'.

Here's a rundown of how monetary authorities acted:

  • Japan: An outlier, the Bank of Japan kept its benchmark rate at minus 0.1%. Tokyo later intervened to shore up the yen.
  • Switzerland: Raised rates by 0.75 point to 0.5%, making it one of the last central banks to exit negative territory.
  • U.K.: The Bank of England raised its key rate by 0.5 point to 2.25%, and will start selling some of its bond holdings.
  • Turkey: Cut its main rate by 1 percentage point to 12%, continuing its contrarian easing campaign.
  • Norway: Increased rates by 0.5 point to 2.25%.
  • Indonesia: Raised its benchmark rate by 0.5 percentage point to 4.25%.
  • The Philippines: Upped its benchmark overnight borrowing rate by half a point to 4.25%.

The World Bank recently said global central banks were "raising interest rates this year with a degree of synchronicity not seen over the past five decades" and warned tighter policy could spark a global recession next year.

U.S. Home Sales and Prices Fell in August as Mortgage Rates Rose.  The housing market has slowed from a red-hot pace as the Federal Reserve aggressively raises interest rates. The U.S. housing market slowed for a seventh straight month in August, the longest stretch of declining sales since 2007, as higher mortgage rates continued to undercut buyer demand.  Home sales look poised to decline further in the coming months, economists say, as mortgage rates recently topped 6% for the first time since 2008, when the U.S. was in a recession. Many first-time buyers have been priced out of the market, and existing homeowners are opting to stay put rather than give up their current low rates.  “As long as mortgage rates remain elevated, sales will remain depressed,” said Daryl Fairweather, chief economist at real-estate brokerage Redfin Corp.

After Years of Low Mortgage Rates, Home Sellers Are Scarce

Homeowners wearing the ‘golden handcuffs’ of low mortgage costs are reluctant to sell their homes now that rates are much higher.  Homeowners with low mortgage rates are balking at the prospect of selling their homes to borrow at much higher rates for their next homes, a development that could limit the supply of houses for sale for years to come.  Housing inventory has risen from record lows earlier this year as more homes sit on the market longer. But the number of newly listed homes in the four weeks ended Sept. 11 fell 19% year-over-year, according to real-estate brokerage Redfin Corp. That is an indication that sellers who don’t need to sell are staying on the sidelines, economists say.

The War in Ukraine

Putin drafts up to 300,000 reservists, backs annexation amid war losses

Russian President Vladimir Putin declared a partial military mobilization Wednesday to call up as many as 300,000 reservists in a dramatic bid to reverse setbacks in his war on Ukraine, including the recent humiliating retreat from the northeastern Kharkiv region.  n a national address broadcast Wednesday morning, Putin lashed out at the West, voiced his support for staged referendums that are being planned as a precursor to annexation of occupied areas of Ukraine, and hinted ominously that he was ready to use nuclear weapons to defend Russian territory — as he defines it.