Programming note: Today at 10:00 a.m. Eastern time on Washington Post Live, Leigh Ann speaks with Andy Berke, special representative for broadband, U.S. Department of Commerce and Michael Powell, president & CEO, NCTA — The Internet & Television Association about President Biden’s board and expansion goals.
In today’s edition … New book alert! Read an excerpt from Politico’s Rachael Bade and The Post’s Karoun Demirjian‘s forthcoming book about Trump’s impeachment sagas that focuses on Senate Minority Leader Mitch McConnell’s will-he-or-won’t-he moment (he didn’t) … What we’re watching: Will Democrats strike a deal on a police bill? … President Biden will address the United Nations General Assembly … but first …
How has Biden done on fighting inflation?
The Federal Reserve is expected to raise interest rates again today, as the central bank’s efforts to bring down inflation risk derailing the Biden administration’s efforts to keep unemployment low and avoid a recession.
The Fed “is expected to raise rates by three-quarters of a percentage point [today] at the end of its two-day policy meeting,” our colleague Rachel Siegel reports. “Some market analysts think the Fed could hoist rates by a full percentage point, after federal inflation data came in unexpectedly hot last week.”
President Biden has supported the Fed’s efforts to slay inflation and said he doesn’t think raising interest rates will cause a recession.
“We hope we can have what they [call] a soft landing — a transition to a place where we don’t lose the gains that I ran to make in the first place for middle-class folks,” Biden told CBS News’ Scott Pelley last week on “60 Minutes.”
- But some economists are increasingly skeptical that the Fed can pull it off — a worrying sign for Democrats ahead of the midterms.
While unemployment remains near record lows, a draft paper presented earlier this month at a Brookings Institution conference found that it was unlikely the Fed could bring down inflation without driving it significantly higher. In other words: Don’t expect a soft landing.
“I wouldn’t be flabbergasted or astounded or say that couldn’t happen, but it’s really not what we should be planning on,” Laurence Ball, a Johns Hopkins University economics professor and the paper’s lead author, told the Early.
There’s relatively little Biden can do to combat inflation, but that hasn’t stopped him from trying.
Biden outlined a three-front offensive in May in a Wall Street Journal op-ed headlined “My Plan for Fighting Inflation.” He’s delivered on the first part: Don’t interfere with Federal Reserve Chair Jerome H. Powell, no matter what.
“The White House has done spectacularly on that,” said Jason Furman, a former Council of Economic Advisers chairman in the Obama White House. “In fact, there have been few presidents who have ever been supportive of or not commented on the Fed” as it raised rates.
The second part of Biden’s plan was a grab bag of executive actions and legislation meant to bring down inflation, if only slightly.
Biden urged Congress to pass the clean energy investments included in the climate, health care and tax bill he signed in August, for instance. (Biden claimed in the op-ed that his “plan would reduce the average family’s annual utility bills by $500,” an assertion which The Post’s fact-checker later gave four Pinocchios.)
The bill also delivered on another policy Biden touted to fight inflation: cutting “the price of prescription drugs by giving Medicare the power to negotiate with pharmaceutical companies and capping the cost of insulin.”
Those provisions will only directly affect Americans on Medicare, and they don’t start to kick in until next year. But Biden hasn’t waited to start talking them up. Americans’ “prescription drug prices are gonna be a hell of a lot lower,” he told “60 Minutes” in response to a question about inflation. “Their health care costs are gonna be a lot lower.”
Michael Strain, the director of economic policy studies at the conservative American Enterprise Institute, said it was misleading to claim such provisions would lower inflation more broadly.
Even if it’s good policy, “it’s not gonna do a whole lot to lower the overall rate of inflation,” he said.
Biden has made more modest progress on another driver of inflation: soaring housing costs.
Biden pledged in his op-ed to “make housing more affordable by building more than a million more units;” the Treasury Department plans to unveil new regulations to make the low-income housing tax credit easier to use to build mixed-income housing by the end of the month, according to a White House official. But Diane Yentel, the National Low Income Housing Coalition‘s president and chief executive, said the administration “can and should do more to protect renters from eviction and homelessness.”
“President Biden’s team is working to increase housing supply in the limited ways possible through regulatory actions, but the administration can’t solve the housing affordability and homelessness crisis without transformative housing investments from Congress” as well as “states and localities addressing restrictive local zoning,” Yentel said in a statement to the Early.
The third part of Biden’s plan to fight inflation: bringing down the federal deficit, which the climate bill will cut by $238 billion over a decade, according to the Congressional Budget Office.
Cutting the deficit is disinflationary because it takes money out of the economy, either by raising taxes or reducing government spending.
But Furman and others argue that Biden undermined the effectiveness of the bill’s deficit reduction provisions by moving to cancel up to $10,000 in student loan debt per borrower weeks after he signed the climate bill, injecting more money into the economy. (The White House has argued that restarting student loan payments next year — which have been paused since 2020 due to the pandemic — would more than offset the impact of the debt cancellation.)
“The White House has said all the right things” about reducing the deficit to combat inflation, said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. “But then they’ve turned around and signed legislation and executive orders that will make deficit spending much, much worse and put pressure on inflation in the wrong direction.”
‘Unchecked’ book excerpt: Inside McConnell’s decision not to convict Trump
📚: In their newest book, “UNCHECKED: The Untold Story Behind Congress’s Botched Impeachments of Donald Trump,” Rachael Bade and Karoun Demirjian take us inside McConnell’s decision to vote against impeaching former president Donald Trump. Below is an excerpt:
“Mitch McConnell sat in his office on Tuesday, Jan. 26, 2021, agonizing over how to cast what he knew would be one of the most pivotal votes of his career. Since the harrowing events of the Jan. 6 attack on the U.S. Capitol, the Senate GOP leader — recently demoted to the minority — had been all but certain that his party was finally going to shun Trump, a development he’d welcomed with a sense of relief. The former president, he was sure, had committed impeachable acts and posed a toxic danger to democracy.”
- “But while McConnell was ready to be done with Trump, his party, it seemed, was not. To his chagrin, a large chunk of his members were once again coalescing around the former president. And they were about to put him in a bind.”
- “McConnell knew many of his rank-and-file were torn over how to handle the situation — and that in their uncertainty, they would look to him for guidance. If he declared the trial to be constitutional, breaking with Trump in the process, he could set the stage for a party mutiny, helping the GOP turn the page on Trump for good. It was an appealing prospect: conviction could enable the Senate to bar Trump from holding office again — and McConnell didn’t ever want Trump in office again.”
- “But in all his years as GOP leader, McConnell had never led such a rebellion. And that day, he wasn’t sure he was up to the task.”
In the final few days of legislating before the midterms, Democrats are rushing to finish their work. Here’s what we’re watching today:
Police bills: Frontline House Democrats worked late into the evening Tuesday to reach an agreement with progressives on a package of police and safety bills, hoping to pass it before the midterms. Of the handful of bills in the package, one by Rep. Abigail Spanberger (D-Va.), which would increase funding to hire more police officers, has been dropped from consideration, two sources granted anonymity to discuss private deliberations told The Early. Negotiations continue on Rep. Josh Gottheimer’s (D-N.J.) bill to increase police funding.
Front-line Democrats have been demanding the bills to address public safety concerns and to counter attacks by Republicans on the campaign trail that claim Democrats’ policies are leading to an increase in crime. Members of the Congressional Progressive Caucus and the Congressional Black Caucus are demanding accountability measures added to bills that increase police funding and hiring. Will they reach a deal?
Manchin’s text: Sen. Joe Manchin III (D-W.Va.) announced at a news conference Tuesday that he will release the text of his energy permitting reform bill today. Senate Majority Leader Chuck Schumer (D-N.Y.) said he’ll add the permitting bill to the short-term government funding extension. We’ll be watching for that text and how Republicans, who support the principle of permitting reform, respond.
Countdown to government shutdown: Since both the permitting bill and the short-term funding bill are linked, Republican opposition could spell a government shutdown when the fiscal year ends on Sept. 30 … on the eve of the midterms.
Electoral reforms: The House is scheduled to vote on the electoral reform bill by Reps. Liz Cheney (R-Wyo.) and Zoe Lofgren (D-Calif.) today. It’s expected to pass but we’ll be watching how many Republicans vote for it. (We don’t expect many.)
Biden to focus on Russia’s war on Ukraine, rising food and energy costs at U.N. General Assembly
🌎: Biden will make an appeal to world leaders during the 77th session of the United Nations General Assembly today as he tries to reassert U.S. global leadership on democracy, war, climate change, nuclear negotiations, food security and global health.
Biden will deliver his wide-ranging address under the shadow of the largest geopolitical event of the year: the Russian invasion of Ukraine. But the speech also comes amid rising food and energy costs from the conflict, a bevy of climate disasters – from Hurricane Fiona’s destruction in Puerto Rico to severe flooding in Pakistan, and the funeral for the United Kingdom’s longest reigning monarch – an event most of the audience flew in from.
Here’s what to watch:
- On Russia and Ukraine: Biden is expected to rally world leaders – particularly those of African countries – to condemn Russia “for the violence and destruction that have taken place in Ukraine since Moscow’s forces invaded on Feb. 24,” per our colleagues John Hudson, Missy Ryan and Yasmeen Abutaleb. “Many developing countries in Africa and Latin America, meanwhile, resent the global push to condemn Moscow while they bear the brunt of rising food and energy prices stemming from the war.”
- On food security: “Washington is trying to cater to those concerns by prioritizing lowering global food costs and gesturing toward reforming the U.N. Security Council,” our colleagues write. “Biden will announce a series of ‘robust’ humanitarian aid packages the United States will provide other countries aimed at shoring up food security amid complications from the covid-19 pandemic and the war in Ukraine,” per the Washington Examiner’s Christian Datoc. The sum total will be “significantly greater than $100 million,” per national security adviser Jake Sullivan.
- On China and Iran: Biden “is also expected to push for world leaders to continue diplomatic efforts to prevent Iran from developing nuclear weapons, and to work together to counter the economic and military rise of China,” per the New York Times’s Jim Tankersley.
- Did we say Russia? “Human rights analysts will be watching whether Biden raises the issue of mass atrocities in his speech Wednesday or unveils new measures — perhaps offering more support for U.N.-led anti-atrocity efforts — to punish the perpetrators,” Politico’s Nahal Toosi writes. “Ukrainian and European Union leaders are increasingly calling for Russia to be held to account, such as by an international tribunal, for war crimes in Ukraine.” And Attorney General Merrick Garland met with his Ukrainian counterpart, Andriy Kostin, yesterday to bolster war crimes prosecutions.
- What about climate? “Biden is set to miss a United Nations roundtable on climate action Wednesday afternoon in New York, stoking concern that other G-7 leaders will also forgo the session meant to help pave the way for international global warming negotiations later this year,” per Bloomberg’s Jennifer A Dlouhy, Zahra Hirji, and Erin X. Wong. U.S. special presidential envoy for climate John Kerry will attend the roundtable in Biden’s place, while he hosts a Global Fund to Fight AIDS, Tuberculosis and Malaria.
Biden will also hold his first bilateral meeting with newly minted British Prime Minister Liz Truss. The dispute over the Northern Ireland Protocol will color their sit-down. “Biden, a proud Irish American who strongly supports the protocol, has warned that any changes to it must be negotiated between London and Brussels,” our colleague Olivier Knox writes. But “Truss’s new government sees the protocol as economically disruptive and a blow to sovereignty.”
Hakeem thee Representative