Congress and the White House
The final phase of the pre midterm election session of the 117th Congress is rapidly drawing to a close. There will be a lame duck session post-election, but the agenda for the lame duck will not become clear until after the November elections. In the meantime, Congress has a few weeks to finish some must do work and potentially pass a few additional “want-to-do” items.
Most importantly, government funding runs out on September 30th. The House and Senate must pass a Continuing Resolution (CR) and the President must sign the bill before midnight on the 30th to avert a shutdown. Both parties want to get out of town to campaign and neither side wants to inject a shutdown into the campaign season. But a few hurdles remain, nevertheless. The issue is what additional items get attached to the CR – a bill that requires bipartisan support to pass. The Biden Administration has requested $47.5 billion in supplemental funding for Ukraine, COVID and Monkeypox. The $13 billion for Ukraine has significant bipartisan support. Some Republicans have expressed opposition to the Ukraine aid package, but none of those Members are expected to support the CR in any form, so their opposition will not factor into whether the Ukraine aid is attached. But the remainder of the Administration’s request gets problematic.
The Administration has requested $22.5 billion for COVID. This has been the request since March. Republicans have blocked the package over opposition to the Administration’s border security policies. Nothing has changed on that front since March. Additionally, the administration has urged Congress to pass the COVID funding because they have run out of money for testing. But only $2 billion of the $22.5 billion request is for testing. There is twice that amount for international efforts. The COVID package is going to be a difficult sell and at best will be dramatically scaled back. It is not clear that Congress would include funding for Monkey Pox and not COVID. The decisions will need to be made quickly next week when both the House and Senate are in session.
But the White House and Congress can take some comfort in the fact that they are not dealing with what Great Britain and the European Union are facing this month. A full blown energy crisis, inflation not yet moderating and weakening currencies. Tough circumstances for Liz Truss to begin her tenure as Prime Minister. For now, the situation is not as troublesome as I is in Europe – but many of these issues and problems could be facing the United States in a few months.
Ukraine aid is seen as likely to be included in must-pass bill, but Covid-19 funding faces resistance from Republicans. Democratic leaders faced time pressure to slim down their ambitions for a bill that keeps the government funded beyond September, with Ukraine aid likely to survive but measures related to Covid-19 aid, energy permitting and same-sex marriage seen as less certain by lawmakers. Congress needs to pass a short-term spending bill, called a continuing resolution or CR, by the end of this month in order to avoid a partial government shutdown, ahead of the home stretch of midterm campaigning. The Biden administration has asked Congress to include in the new spending bill some $47.1 billion in emergency spending, including money to fight the Covid-19 pandemic and the monkeypox outbreak, as well as to aid Ukraine.
The House GOP complains of a terrible relationship with a president who touts his bipartisan dealmaking laurels, spelling trouble if Republicans take the chamber next year. If House Minority Leader Kevin McCarthy and his party wrest back control of the House this fall, they’d take power with one of the worst relationships with a sitting president in recent memory. President Joe Biden and his party have spent much of this year vilifying McCarthy and his GOP counterparts as a threat that would unravel democracy — an attack that is now at the centerpiece of Democratic efforts to hold onto their threadbare congressional majorities. Many of those Republicans, meanwhile, have echoed and amplified unfounded doubts about Biden’s election all while pledging to use their newfound power to investigate the president’s son and, potentially, impeach members of his Cabinet.
Fed officials face questions over how high to lift rates by year’s end and how fast to get there. The Federal Reserve appears to be on a path to raise interest rates by another 0.75 percentage point this month in the wake of Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment. Fed officials have done little to push back against market expectations of a third consecutive 0.75-point rate rise in recent public statements and interviews ahead of their Sept. 20-21 policy meeting. In a speech Aug. 26 in Jackson Hole, Wyo., Mr. Powell underscored the central bank’s commitment to boosting interest rates enough to lower inflation from 40-year highs. “We will keep at it until we are confident the job is done,” he said.
Imports slowed amid weak U.S. consumer demand. The U.S. trade deficit narrowed in July for the fourth month in a row as global demand for U.S. goods and tourism strengthened, while U.S. shoppers’ appetite for imports weakened. The trade gap in goods and services shrank by 12.6% in July from the prior month to a seasonally adjusted $70.65 billion, the Commerce Department said Wednesday. Exports grew 0.2% to $259.29 billion, helped largely by higher shipments of capital goods like computers and industrial machinery. Spending by foreign visitors, which is counted as a services export, also picked up as Covid-19 travel restrictions eased and more vacationers came to the U.S. Imports fell 2.9% to $329.94 billion, reflecting declines in American purchases of consumer goods and industrial supplies.
Truss’s speech focused on three core pillars for the early days of her Government, underpinned by her libertarian desire to back freedom and enterprise. The pillars were: action to ‘get Britain working again’ by growing the economy, pursuing tax cuts and reform; action to deal with the energy crisis with a pledge for a major intervention to help businesses and households this week; and making sure people can get doctor’s appointments by safeguarding the future of the NHS.
Faced with an “astronomic” rise in energy prices, European Union ministers will meet on Friday to discuss emergency measures to get their nations through the cold months ahead without additional social and economic upheavals. The European Commission has asked countries to consider five immediate moves including a plan to redistribute some energy producers’ windfall revenue to businesses and households, a price cap on Russian pipeline gas and mandatory targets for reducing electricity use during peak hours, among other possible steps. The potential plan underscores the widespread sense of alarm across Europe as the fallout from the war continues to weigh on European economies. It comes just days after energy giant Gazprom suspended the flow of gas through a key pipeline — a move initially blamed on technical issues until the Kremlin stepped in to say it was in fact about Western sanctions.
Economists fear price caps and handouts will inflate public debt and discourage some households from cutting energy consumption. European governments are increasing spending to shield households from surging energy prices driven by Russia’s economic war, but that comes amid rising borrowing costs and mounting investor unease about swelling sovereign debt in some countries. To date, the European Union’s five largest economies have announced support for households, and less costly help for businesses, totaling €203 billion, around $201 billion. The measures might keep millions of people from sliding into poverty—and thousands of businesses from going bust—as energy bills soar, cushioning the crisis’s impact on the economy and, governments hope, backstopping political support for Ukraine. Some measures, such as price caps for power and natural gas, could also help central banks to fight inflation.
Russian leader suggests Moscow could pull out of a U.N.-brokered agreement that has allowed for the large-scale export of Ukrainian grain. Russian President Vladimir Putin threatened to curtail the export of grain from Ukraine and said Moscow was ready to extend its rationing of natural-gas exports and cut off oil and refined products if the West went ahead with a price-cap plan for Russian crude. The comments, made at an economic conference, represented some of the Russian leader’s starkest and broadest threats over his country’s prodigious commodities exports. He also characterized those threats more directly than in the past as an economic weapon he is willing to wield in response to Western sanctions levied after his invasion of Ukraine. Mr. Putin suggested Russia could pull out of a United Nations-brokered deal that has allowed for the large-scale export of Ukrainian grain, sending global wheat prices up 4% in early Wednesday trading. The deal had helped ease soaring food prices by allowing Ukrainian farmers an outlet for their harvests.
Upper-middle-class families, dissatisfied with K-12 schools, are signing up for the instruction as well. During the height of the Covid-19 pandemic, more wealthy families hired personal tutors instead of enrolling their children in school, largely to avoid the worst of remote learning. Now, as the pandemic disruptions wane, many of these families aren’t going back, opting instead to stick with personalized curricula and private instruction. The model, once limited to the very wealthy, is being adopted by families in the upper middle class, according to private-tutor placement companies and their clients. Many children have endured months of stalled academic progress as a result of the disruptions caused by the pandemic. Last week national fourth-grade reading and math scores revealed the worst decline in decades, one that some educators said could hobble a generation of children.That stalled progress, combined with teacher shortages, school-board political divisions and classroom disruptions, has for many fueled a flight out of K-12 schools to home schooling and private schools.
The Biden administration said Tuesday that it is rolling out the newest Covid-19 booster and anticipates that going forward, Americans can expect to get annual updates to the shot just like they do for the flu vaccine. “This week, we begin a new phase in our COVID-19 response. We are launching a new vaccine – our first in almost two years – with a new approach. For most Americans, that means one COVID-19 shot, once a year, each fall,” President Joe Biden said in a statement. At a White House press briefing earlier Tuesday Anthony Fauci, Biden’s chief medical adviser, had suggested that the policy change was coming soon. “It is becoming increasingly clear that, looking forward with the Covid-19 pandemic, in the absence of a dramatically different variant, we likely are moving toward a path with a vaccination cadence similar to that of the annual influenza vaccine, with annual updated Covid-19 shots matched to the currently circulating strains for most of the population,” said Fauci, who heads the National Institute of Allergy and Infectious Diseases.