The Hill’s Morning Report — Biden, Congress mull mounting economic woes
Congress returned to work this week, joining President Biden, central bankers and corporate leaders worldwide in uncertainty about how to fix what ails the U.S. and European economies. The pandemic hangover and upheaval created by Russia’s war with Ukraine are adding to already ample risks.
U.S. economic growth is slowing this quarter, but consumers are not reining in their spending. Why would they? The job market and wages are strong. Gasoline, groceries, meat and housing prices, however, are sky high, leading the Federal Reserve to loudly signal it will launch a series of interest rate hikes beginning in earnest next week in an attempt to chill inflation while striving to avoid overkill, which would be recession (MarketWatch).
“We’re going into some challenging times and there is a lot of sentiment out there that we could even be heading towards some sort of recession,” Frank Sorrentino, chairman and CEO of ConnectOne Bank, told Fox Business.“Nobody knows for sure. … The concept of cheap, easy money with no credit issues will change.”
Democrats say they want to try to lower gasoline pump prices (The Hill), but they aren’t sure what proposals can pass or would work, including the idea of a federal gas tax holiday, which has its share of detractors. “We are definitely going to act to try to address the geopolitical issues that relate to gas prices being where they are [and] act in terms of some of the supply chain challenges,” said Rep. Hakeem Jeffries (D-N.Y.), who is seen as the odds on favorite to be the top House dem in a new Congress.
The Hill’s Sylvan Lane and The New York Times report that U.S. housing prices are so gargantuan that families eager to buy are shut out by cash-wielding investors (who put what they buy up for rent). They face a scarcity of affordable homes on the market and never-ending sticker shock. Why does this trend matter? Because for Americans, homeownership historically has been a route to wealth creation and for many, a middle-class lifestyle.
The Kremlin’s move on Wednesday to bar Poland and Bulgaria from plentiful, cheap natural gas sold by Russia may be a manageable problem for now in those two countries, but analysts say Moscow’s warning is meant for Germany as Russia tries to divide the West. The United States says it will work with allies to surge liquified natural gas to expand European supply.
German Chancellor Olaf Scholz today said Russia clings to the idea of a “forced peace” in Ukraine, which he argued will not work (Reuters).
“It is in the interest of both the EU and Russia to work out a solution,” Goldman Sachs analysts told clients Tuesday, warning that a larger suspension of natural gas in Europe could lead to a “significant economic toll” (The New York Times).
Russia is gambling, too, report The Hill’s Morgan Chalfant, Laura Kelly and Zack Budryk. The Kremlin wants to pressure European countries to pay for Russian energy imports in rubles to work around international sanctions.
© Associated Press / Rogelio V. Solis | Mississippi subdivision.
Related Articles
■ The Associated Press:The United Nations says it is mobilizing an experienced team to coordinate the evacuation of civilians from Mariupol’s steel plant in Ukraine. U.N. Secretary-General António Guterres and Russian President Vladimir Putin agreed “in principle” on Tuesday to the evacuation.
■ The Associated Press: Germany has been the top buyer of Russian energy since Russia’s war began in February, according to an independent report released on Thursday.
■ The New York Times: Russia is making slower advances on the ground in eastern Ukraine.
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LEADING THE DAY
➤ CONGRESS
The House GOP conference is seemingly behind House Minority Leader Kevin McCarthy (R-Calif.) after he addressed the leaked recordings of his comments in the aftermath of the Jan. 6 attack on the Capitol, giving him a boost in his quest to become the Speaker of the House if the GOP retakes the chamber in November.
Members and sources in the room told The Hill that McCarthy received a standing ovation during the party meeting after he said that the comments on the leadership calls were simply the leaders mentioning different potential hypothetical scenarios. Those comments included him saying that he would suggest that former President Trump should resign if impeached and wondering if some GOP members should have their social media accounts revoked.
“He just said that we were going to lay out different things of what could be,” said Rep. Robert Aderholt (R-Ala.). “At this point, you know, I take his word for it.”
© Associated Press / Amanda Andrade-Rhoades | House Minority Leader Kevin McCarthy in January.
Instead, a number of lawmakers blamed the media for the leaked comments and indicated that they are looking forward to the November midterms rather than in the rearview mirror.
“This is a distraction, folks. Come on. This is simply a distraction by the left trying to drive a wedge in a very unified Republican Party and a very unified conference,” said Rep. Barry Loudermilk (R-Ga.).
■ The Associated Press: McCarthy defends Jan. 6 audio, House GOP backs “next Speaker.”
■ The Washington Post: How McCarthy sought to contain the damage from leaked Jan. 6 audio.
■ Politico: House Minority Whip Steve Scalise (R-La.), Rep. Matt Gaetz (R-Fla.) meet privately after tension over leaked audio.
■ Mychael Schnell, The Hill: Here are the GOP lawmakers targeted by McCarthy in new audio recordings.
Elsewhere on Capitol Hill, Homeland Security Secretary Alejandro Mayorkas shifted his game plan from offense to defense during hearings on Wednesday, saying the Department of Homeland Security is ready to handle rising migration levels and warned of tougher consequences for illegal border crossers who do so repeatedly.
“We expect migration levels to increase as smugglers seek to take advantage of and profit from vulnerable migrants,” Mayorkas said in his testimony to the House appropriations subcommittee.
Mayorkas incurred heavy criticism from GOP members on the panels — especially the House Homeland Security Committee — over the administration’s decision to end the Title 42 policy, a Trump-era COVID-19 restriction that blocks migrants from being granted asylum at the U.S.-Mexico border. Republicans, with many at the hearing only days following a caucus trip to the border, argued that ending the policy would encourage more migration.
“If that tool goes away, it has the potential to profoundly impact border security operations,” Rep. Chuck Fleischmann (R-Tenn.) said. “We cannot manage our way out of this crisis with more processing capability or increase the ability of nongovernmental organizations to address the near-term humanitarian needs.”
During his appearance before the House Homeland Security Committee, a number of Republicans wanted Mayorkas to say the administration was doing a poor job at the border. Some called him a liar (The Hill). Should Republicans win the House in November, they have promised to continue grilling Biden officials with responsibility for the border and immigration.
■ The Associated Press and The Wall Street Journal: A federal judge on Wednesday ordered a two-week halt in preparations for an end of the U.S. asylum limit.
■ Alexander Bolton, The Hill: Democrats split over how hard to push Biden agenda.
IN FOCUS/SHARP TAKES
➤ POLITICS
Trump on Wednesday appealed a New York state judge’s ruling that holds him in contempt and fined him $10,000 for every day he doesn’t comply with a state attorney general subpoena.
A Trump attorney filed the appeal with the New York Supreme Court two days after Judge Arthur Engoron found the former president in contempt, having said that it was unacceptable for Trump to keep up the challenge to the subpoena weeks after the judge had rejected Trump’s legal challenge against it.
“[Office of Attorney General] has satisfied its burden of demonstrating that Mr. Trump willfully disobeyed a lawful court order of which he had knowledge prejudicing OAG” Engoron wrote (The Hill).
Daily Beast: Grand jury with Trump Organization’s fate in its hands will disband this week.
On the political side, the Ohio Senate race has created trouble between Trump and David McIntosh, the head of the Club for Growth, over the latter’s continued support for former Ohio Treasurer Josh Mandel in the state’s GOP Senate primary. According to CNN’s Gabby Orr, Trump became incensed over the Club’s decision to redouble its efforts to support Mandel after the former president endorsed J.D. Vance. Included in those is a new ad targeting the “Hillbilly Elegy” author for his past criticism of Trump and highlighting the former president’s 2018 endorsement of Sen. Mitt Romney’s (R-Utah) campaign.
Among the top criticisms of the Club for Growth is that it isn’t for the key tenets of the America First platform. The Club has long supported fiscal conservatives. McIntosh is a longtime friend of former Vice President Mike Pence, a fellow Hoosier. But Trump and the Club have had a complicated relationship for years.
The New York Times: Shunned by the right, Sen. Lisa Murkowski (R-Alaska) bets big on the center in Alaska.
■ The Philadelphia Inquirer: Pennsylvania GOP Senate primary up for grabs even after Trump backed Mehmet Oz, Monmouth University poll says.
■ The Hill: Democratic Senate primary tightening in Wisconsin: poll.
■ The New York Times: Democrats lose control of New York election maps, as top court rejects appeal.
■ NBC News: Metropolitan Police Department cop testifies he struggled to breathe as former New York Police Department officer attacked him on Jan. 6.
➤ ADMINISTRATION
In an unusual prisoner swap announced by the president on Wednesday, the U.S. exchanged former U.S. Marine Trevor Reed, 30, in custody in Russia since 2019, for Konstantin Yaroshenko, once a Russian pilot who was sentenced to a lengthy prison term in the U.S. on cocaine trafficking charges. The swap took place in Turkey (The New York Times). Reed, who used hunger strikes to protest his treatment, was accused of attacking a Moscow police officer. John Sullivan, the U.S. ambassador to Russia, has said the alleged crime “obviously did not occur” and called his trial “a theater of the absurd” (WUNC).
Biden plans to travel to deep-red Alabama on Tuesday to tout made-in-America anti-tank weaponry at a Lockheed Martin facility that makes Javelin missile systems being shipped to Ukraine (The Hill). Biden has spoken about the effectiveness of the weapons against Russian forces. “Speak softly and carry a large Javelin,” he said last week.
On Wednesday, Biden joined former President Clinton, former President Obama, and other current and former U.S. and global luminaries at the Washington funeral for America’s first female secretary of State, Madeleine Albright, who died last month of cancer at age 84. Biden said Albright’s name was synonymous with the idea that America is “a force for good in the world.” Former Secretary of State Hillary Clinton remembered Albright as a fearless diplomat who broke barriers and then counseled, cajoled and inspired women to follow in her footsteps (The Associated Press).
© Associated Press / Paul Sakuma | Newport menthol cigarettes, 2009.
The Food and Drug Administration wants to ban menthol in cigarettes and cigars, an action that could have a significant impact on the tobacco industry, promote healthier lifestyle goals — but also invite opposition from some of the 15 percent of African American adults who smoke cigarettes and often prefer menthol brands, report The Hill’s Julia Manchester and Alex Gangitano. The Centers for Disease Control and Prevention says tobacco use is a major contributor to the three leading causes of death among African Americans (heart disease, cancer and stroke). Smoking also increases the risk of developing diabetes, which is the fourth leading cause of death in that population. “Menthol cigarette smokers, particularly Black or African American smokers, are less likely to successfully quit smoking than non-menthol smokers,” the FDA notes.
Politico: Boeing CEO Dave Calhoun hinted there was some artlessness to a 2018 deal his company negotiated with the Trump administration and the former 45th president for two new Air Force One aircraft. Calhoun, whose predecessor agreed to a fixed-price contract, told investors on Wednesday that Boeing shouldn’t have agreed to a $3.9 billion price tag, which has experienced at least $660 million in cost overruns this year.
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OPINION
■ How badly will the Democrats lose the midterm elections? by Karl Rove, columnist, The Wall Street Journal. https://on.wsj.com/3KoRYLp
■ Elon Musk got Twitter because he gets Twitter, by Ezra Klein, columnist, The New York Times. https://nyti.ms/3ETuJYx
■ Amend the Constitution to bar senators from the presidency, by George F. Will, columnist, The Washington Post. https://wapo.st/3vkJpNm
WHERE AND WHEN
The House meets at 10 a.m.
The Senate convenes at 10 a.m. and resumes consideration of the America COMPETES Act.
The president receives the President’s Daily Brief at 9:30 a.m. Biden at 10:45 a.m. will ask Congress for “massive” supplemental funding to help Ukraine, NBC News reports. The president will meet with small business owners at 2 p.m. in the Eisenhower Executive Office Building auditorium. Biden and first lady Jill Biden will use the Jacqueline Kennedy Garden as the location to gather guests for a 5 p.m. screening of HBO’s “The Survivor” in honor of Yom HaShoah and Holocaust Remembrance Week.
Vice President Harris is in isolation at her official Naval Observatory residence in Washington after testing positive for COVID-19 on Tuesday.
Secretary of State Antony Blinken testifies at 10 a.m before the House Appropriations Subcommittee on State and Foreign Operations regarding his department’s proposed budget for the fiscal year that begins in October. He will also testify at 1 p.m. about the department’s budget request at a hearing of the House Committee on Foreign Affairs.
The first lady at noon will deliver pre-recorded remarks at a virtual Global Child Care Infrastructure event sponsored by the U.S. Agency for International Development.
The White House daily press briefing is scheduled at 3 p.m.
🖥 Hill.TV’s “Rising” program features news and interviews at http://thehill.com/hilltv, on YouTube and on Facebook at 10:30 a.m. ET. Also, check out the “Rising” podcast here.
ELSEWHERE
➤ CORONAVIRUS
The Department of Health and Human Services this morning announced that more than 257 million Americans have received at least one dose of a COVID-19 vaccine, 100 million received a booster dose and of those, two-thirds are over the age of 65.
“We’ve also closed the glaring gap in vaccine rates we usually see for communities often left behind. It has paid dividends to surge resources, including tests and treatments, to our hardest-hit and highest-risk communities,” HHS Secretary Xavier Becerra said in a statement accompanying a new department video.
Total U.S. coronavirus deaths reported as of this morning, according to Johns Hopkins University: 992,740. Current average U.S. COVID-19 daily deaths are 299, according to the Centers for Disease Control and Prevention.
Anthony Fauci, Biden’s chief medical adviser from the National Institute of Allergy and Infectious Diseases, sought to clarify on Wednesday his comments from a night earlier that the U.S. was out of the “pandemic phase,” telling The Associated Press that the U.S. is in a “different moment” with the virus but that the pandemic is not over. “We’ve now decelerated and transitioned into more of a controlled phase,” Fauci said. “By no means does that mean the pandemic is over.”
As The Hill’s Peter Sullivan writes, Fauci’s remarks have contributed to the mixed messages being directed at Americans. The administration’s handling of this weekend’s White House Correspondents’ Dinner and the decision to appeal the striking down of the federal mask mandate for transportation have also played into the messaging issues.
Rep. Maxine Waters (D-Calif.) announced on Wednesday that she has tested positive for COVID-19. In a statement, she said she is experiencing no symptoms, adding that she is fully vaccinated and has received two booster shots.
Shanghai could finally be on the verge of easing its citywide lockdown after COVID-19 cases fell to the lowest level in three weeks in the Chinese city. However, cases are rising in Beijing, although the number of new cases is below 50 (Bloomberg News).
➤ SUPREME COURT
Justice Stephen Breyer on Wednesday took part in his last scheduled oral argument of his nearly 28-year tenure on the Supreme Court. The retiring Breyer, 83, posed sharp questions as part of a clash between Oklahoma and tribal authorities over the ability to prosecute crimes between non-Native American defendants and Native American victims. Chief Justice John Roberts paid tribute to Breyer’s time on the court following arguments, saying that justices have a “deep appreciation for the privilege of sharing this bench with him.” He will retire this summer (The Hill).
➤ HEALTH
Chinese officials on Tuesday reported the first human infected with the H3N8 bird flu strain, which has been detected in horses, dogs and even seals. China’s National Health Commission said the flu variant was found in a 4-year-old child located in Henan province, adding that the child started to develop fever and other symptoms on April 5 and was admitted to a local medical facility five days later. Experts say the risk of large-scale transmission is low (The Hill).
THE CLOSER
Take our Morning Report Quiz
And finally … It’s Thursday, which means it’s time for this week’s Quiz! We’re always curious about billionaire influencers, so send us your best trivia guesses about headline-maker Elon Musk.
Email your responses to asimendinger@thehill.com and/or aweaver@thehill.com, and please add “Quiz” to subject lines. Winners who submit correct answers will enjoy some richly deserved newsletter fame on Friday.
Musk on Twitter in 2021 tangled with Sen. Elizabeth Warren (D-Mass.) over billionaire tax benefits. What name did he use for her?
Lefty Liz
The Scold
Warrior Warren
Senator Karen
At age 12, Musk created which of these and sold it for $500?
Computer game “Blastar”
Powered skateboard (the deck said “Rocket Man”)
Radio wave tracking device worn by his dog Einstein
Recipe for glow-in-the-dark cereal
Musk’s auto company is named after ____ ?
His father
His brother
An electrical engineer born in 1856
A South African town
In Musk’s world, Ad Astra is ______? (Bonus point: What does Ad Astra mean?)
His children’s school
His home in California
A tattoo on his forearm
Insignia on the SpaceX Dragon capsule
© Associated Press / Britta Pedersen |Elon Musk in 2020.
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