US jobs growth & the political hit on Biden | TICKER VIEWS
By Bruce Wolpe. Senior Fellow at the United States Studies Centre and Ticker News US political contributor
The big economic news at the end of the week, as reported by the Wall Street Journal:
“Hiring in the U.S. unexpectedly slowed in April, a sign the nation’s recovery from the pandemic still faces challenges as many businesses struggle to find workers or remain cautious about the economic outlook.
U.S. employers added a modest 266,000 jobs in April, a report Friday by the Labor Department showed, far short of the one million that economists had forecast and the weakest monthly gain since January.
The deceleration came after payrolls rose a downwardly revised 770,000 in March and left total employment down by 8.2 million from its pre-pandemic level.”
The White House was expecting jobs growth of close to 1 million for April, so this news was a real hit on expectations.
For Republicans, the message was: workers are not coming back because the government support they receive is too generous.
And they know that poor economic news is bad for Biden’s standing.
Biden was having none of it.
“When we passed the American Rescue Plan, I want to remind everybody, it was designed to help us over the course of a year, not 60 days. A year. We never thought that after the first 50 or 60 days everything would be fine.Joe Biden – US PRESIDENT
Today, there’s more evidence that our economy is moving in the right direction. But it’s clear we have a long way to go.
All told, our economy has added more than 1,500,000 new jobs since I took office. That’s the most number of jobs created in the first three months of any presidency in our history,” the President said.
This places even greater urgency on Biden’s getting Congress to approve his $2 trillion infrastructure plan. It is another make-or-break moment.
If Republicans can stop it — and the Senate Republican Leader Mitch McConnell has said exactly that is what he intends to do — Biden will hit a ceiling in what he can win in Washington.
If he can succeed, Biden will have more political capital with voters across the country. So there is a lot at stake.
We should know by July 4 if this key legislation can at least pass the House of Representatives.
Read more about Biden’s contributions here.
The debt limit default doomsday clock and 14th amendment
The world already has one Doomsday Clock. In 1947, the Bulletin of Atomic Scientists established the Doomsday Clock on nuclear holocaust – how close we were to the end of days because of the existence and threat of using nuclear weapons.
In 2007, the scientists included a climate change equation in their tripwire
With nuclear weapons proliferating, the threat of a use of tactical nukes by Russia overhanging the no-end-in-sight war in Ukraine, and global warming not under control, the Doomsday Clock is now at 90 seconds before the witching hour of midnight, “The closest,” the atomic scientists say, “to global catastrophe it has ever been.”
There is now another Doomsday Clock in existence.
Last week, Treasury Secretary Janet Yellen declared that the United States would run out of money to pay its bills on June 1, triggering a first-ever default by the biggest economic power in the world. In Senate hearings last week, one of the most respected economists, Mark Zandi, declared that “June 8 is the X-date when Treasury can’t pay all the bills on time.”
The Debt Limit Default Doomsday Clock lock is now set at 30 days from today.
Every expert authority agrees that a default will cause catastrophic effects in the United States and worldwide.
In the US, millions of jobs lost, a recession and even higher interest rates. Across the globe, higher borrowing costs and depressed markets for goods and exports. We could relive the global Covid crash.
President Biden has called the four principal congressional leaders – House Speaker Kevin McCarthy, House Democratic leader Hakim Jeffries, Senate Majority Leader Chuck Schumer, and Senate Republican leader Mitch McConnell – to meet on Tuesday with the Doomsday Clock ticking.
As discussed last week, Biden wants a clean extension of the debt limit, and not have it held hostage to trillions of dollars in budget cuts that House Republicans are seeking. The House Republicans have refused a debt limit extension without the massive savaging of Biden’s spending and tax plans – effectively seeking repeal of most of what Biden enacted into law in his first two years in office.
This looks like a head-on collision that will not be averted.
When Trump was president, the Republicans voted 3 times to increase the debt limit to accommodate over $7 trillion in Trump debt increases because of his spending and tax cuts.
But today, there no Republican votes like that for Biden.
Three things to watch for in this week’s meeting:
- Can they agree on a short-term extension of the debt limit?
With Congress in session for only 8 more days during the next month, and with Biden due in Australia on May 24 for the Quad meeting, can they at least agree on a simple short-term debt limit extension to allow the parties to work together to find a solution? A breather in the range of 60 days. That would show goodwill and an intent to work this out.
- Second, watch Mitch McConnell.
Often when Congress and the White House are stuck on budget issues, the answer lies in procedural fixes – not radical legislation. In the last great debt limit crisis in 2011, McConnell crafted a complicated procedural mechanism to raise the debt limit. It allowed President Obama to raise the debt limit, then allowed Congress to vote to disapprove of Obama’s raising the debt limit, and then Obama could exercise his constitutional authority to veto any such congressional disapproval of the debt limit increase. The Republicans got their vote against raising the debt limit and Obama could ensure the maintenance of the full faith and credit of the United States.
But that was then. Right now, McConnell is in lock step with McCarthy, and is saying that the Senate Republicans are behind the Speaker. A deal will be closer if we see McConnell visibly working to bring McCarthy and Biden together.
- Third, watch for growing signs that Biden will move to end this crisis by invoking the 14th Amendment to the US Constitution.
A growing number of experts believe the President has the authority, under the 14th amendment, to act unilaterally and ensure there is no default. The 14th Amendment, enacted after the Civil War, states:
Proponents of using this authority say that Biden can do this on his own and permanently retire the debt limit.
This was seriously considered in the 2011 crisis. My book with Bryan Marshall, The Committee, recounts a discussion in the House Democratic Caucus on this issue:
Biden’s going to the 14th Amendment would mean that he does not believe he can work with McCarthy, who himself is held hostage by the scorched-earth Trump Republicans in his caucus, and that no deal is possible.
The downside risk of invoking the 14th Amendment is that it has never been used before. There are no previous controlling precedents on this issue.
Such an action by the President would immediately be challenged and would be on a fast track to the Supreme Court – a court, dominated by conservatives, that has been against him on abortion, guns, voting rights, and many other issues.
In addition, some House Republicans would immediately move to impeach Biden for abuse of power for invoking the 14th Amendment.
America could be in a new crisis with both the Legislative and Judicial branches of the government moving against the Executive. Indeed, Secretary Yellen said on Sunday:
Biden was directly asked about using the 14th Amendment in an interview on MSNBC on Friday night.
Biden said: “I have not gotten there yet.”
Biden did not say no.
What his words do say is that Biden is working to get there, and that he could get there if the choice is between a doomsday calamity of untold consequence for all Americans, and that with every other door slammed shut in his face by the Republicans in Congress, he is exercising his constitutional authority under the 14th amendment to avert an unprecedented catastrophe of their making.
That would be one hell of a presidential address to the nation and the world from the Resolute Desk in the Oval Office.
We will see all these cards played in the days ahead.
Debt limit fight in Washington: will the U.S. default on June 1?
It’s déjà vu all over again. Today Treasury Secretary Janet Yellen warned the United States will be unable to pay its bills on June 1 – unless the debt limit is raised. Now.
It feels like the Washington summer of 2011. Debt limit politics were hurtling Congress and the White House towards a default for the first time in its history. On August 5 of that summer, Standard & Poor’s, surveying a battlefield of stalemate and brinkmanship, lowered the credit rating of the United States. It cost US taxpayers tens of billions of dollars in higher interest rate payments. S&P said:
That was then.
American policymaking and political institutions are significantly weaker today.
The debt limit – the number of dollars the overall national debt can reach – is set by Congress by statute.
The amount of debt reflects the money Congress has voted to spend and the tax revenues that are collected.
In Washington, when Congress refuses to increase the debt limit, it means Congress is refusing to pay for the expenditures it has required the government to spend. Raising the debt limit means authorising a higher level of national debt to cover spending that has already happened.
The debt limit is like your credit card: each month, you have to pay back the money you have spent – or you go into default.
The politics of the debt limit are invidious. For three decades, Republicans have played “gotcha”: with the debt limit – especially when Democratic presidents are in the White House.
Why play “gotcha”? To go after those wild-spending, reckless radical Democrats with their out-of-control programs that add to the deficit and bankrupts the country. To get an edge in the next election for control of the House and the Senate.
It does not matter that the currency of debt-limit-gotcha politics is counterfeit – nothing to lose in making the attack.
In 2011, the Republicans demanded, with the debt limit approaching $14.3 trillion, President Obama accept $2 trillion in spending cuts – cuts that would reach deep into Medicare and a host of other domestic programs – in exchange for $800 billion in new revenues.
It was a searing confrontation. On August 1, Vice President Joe Biden met with the House Democrats to discuss what was an unholy mess. (I was in the room, and this is recounted in my book with Bryan Marshall, The Committee). That day, Biden said:
Those “far out guy” numbers among the Republicans in this Congress have doubled.
Last week, with Joe Biden as president, House Republicans voted to raise the debt limit – provided Biden accept their cuts of $4.8 trillion in everything from health care to education to child nutrition to clean energy, and much more.
Joe Biden remembers all the lessons from the closest of calls with default 12 years ago. Those “far out guys” are now the Trump MAGA Republicans with their slash-and-burn agenda and priorities. Biden hated being muscled by them then and he has no intention of surrendering to them now and allowing them to “decimate the social structure” of the United States.
Biden also knows what the Republicans did when Trump was president. Those same Republicans increased the debt limit 3 times, by $7.8 trillion – with no government spending cuts and huge tax cuts that primarily benefited the wealthiest Americans.
Biden is asking the Republicans simply to do what they did for Trump 3 times. They have refused. They were not shocked by the Trump deficits, but the Biden deficits are a catastrophe.
Biden is done playing this game.
This is why he says he is happy to discuss government taxes and spending until the cows come home – but that raising the debt limit is “not negotiable.”
The current debt limit impasse is more dangerous than the 2011 crisis, for three reasons:
- Republican Speaker McCarthy has told colleagues that the spending cuts passed by the House – by a 1-vote margin – was not a “ceiling” but a “floor” on spending cuts. In other words, he has no intention of retreating from those cuts. He cannot give them up. As Senate Majority Leader Chuck Schumer has said:
“He’s (McCarthy) stuck. How is he going to negotiate when he’s promised everyone he’s not going to change the bill? … His passing a bill was a step backward and brought us closer to default.”
- A default by the United States is likely to plunge the economy into a recession that will last well into next year. While Republicans will get the blame for starting it, President Biden will get the blame for not ending it – just as he faces the voters for re-election in 2024.
- There are no guardrails on how radical the Republican mood is. As Norman Ornstein, a leading US political scientist, advised last week:
“Far more than in 2011, a hard core of hard-core extremists in the House would be fine with a default. For many, blowing up government would make the price of economic chaos worth it; for others, the likelihood that a default would be blamed more on the president makes it a tempting ploy.”
President Biden is not going to dismantle his legislative achievements to capitulate to Republican demands to cut spending and cripple his presidency when they rewarded Donald Trump’s uncontrolled fiscal binges.
This crisis is much harder. Democrats will not give in to the Republicans taking the debt limit hostage and using it to harm the livelihoods of tens of millions of Americans. In the House, McCarthy dare not cut a deal with Biden that fails to get a majority of his caucus to support it. And even if he does reach a deal with Biden, the Republicans in his caucus may well move to oust him. In the Senate, any deal with Biden has to get the support of no less than 10 Republican votes. Those votes do not exist today.
The alchemy to solve this problem – substantively or procedurally – has not been invented yet.
This calculus means that default is more likely now than at any time in American history. More likely now than when Biden faced this crisis and spoke to the Democrats 12 years ago.
Why Tim Scott is the wildcard in the Republican presidential race
At a private dinner in Sydney last year with Mick Mulvaney, one of Donald Trump’s four chiefs of staff during his presidency, the discussion turned to Trump’s prospects for 2024.
Who do you think would be his vice president? “Tim Scott,” I said.
Black conservative Republican Senator from South Carolina. Perfect complement to Trump. Mulvaney had served in the House from South Carolina and knows Scott well. Not vice president, Mulvaney said. He’s running for president.
Mulvaney was right. Last week, Scott announced his exploratory committee for the campaign. It was powerful. The video opened at Ft Sumter, the first battle of the Confederacy at the outset of the Civil War. Nice place to be if you want to appeal to today’s Republicans who are not happy with the state of the union.
Our country is being threatened … our divisions are real … I threaten their control …. Democratic grievance versus our greatness … our children are taught to believe we are an evil country … the radical left Democrats weaponize race to divide us .. but I disrupt their narrative.
Scott is very compelling. He recounted how he was raised by a single mother living in poverty. Scott is fond of saying “Our family went from Cotton to Congress in one lifetime.” He affirms that America is a land of opportunity – not a land of oppression. He policies: anti-China, choice in education, defend America’s borders and its streets, and protect the right to life. Scott pledges to “defend the Judeo-Christian foundation our nation is built on and protect our religious liberty.”
It is a message of achievement, optimism and conservatism.
It is meant to appeal to mainstream Republican voters who want the values Trump and Republicans have championed for the past seven years, but held and conveyed by a compassionate, appealing, messenger.
As Politico reported in assessing Scott’s announcement, “Donors float him as a potential alternative to Donald Trump, should Florida Gov. Ron DeSantis stumble. And Scott’s genteel personality and lack of past Trump entanglements could give him unique appeal to independents and a newer swath of GOP voters. A foregone conclusion, though, is that evangelicals — with all their subsets and denominations — will be his top constituency.” Conservatives, Scott told the AP, are “starved for hope.”
Trump and Florida governor Ron DeSantis (who has not yet entered the race but is doing everything he needs to formally announce) are the two behemoths in the arena.
They suck all the oxygen out of the room.
Trump is all rage, fury, and retribution.
DeSantis is Trump distilled, with little of the emotive power but significant Trumpist policy capital that he has refined and weaponized, especially by attacking all things woke.
How can Tim Scott, not well known nationally, a Senator without a record of landmark legislative achievement, a black man in a party organically hostile to people of colour: how can Tim Scott take on Godzilla v King Kong – and win?
The early Republican primaries are the key to Scott’s strategy:
- The Iowa caucuses are January 22. Small, rural state. Very conservative. The Scott family knows farms and crops. Scott will want to do what Barack Obama did in 2008: connect up close and personal with Iowans and defeat the frontrunner. That year, it was Hillary Clinton – and Obama showed that a black man can win in a white state. If Scott can replicate Obama and win in Iowa, why not elsewhere?
- New Hampshire is a week later, January 30. New Hampshire, proud of its flinty individualism, loves to play a contrarian role in the primaries. In 2000, John McCain stunned George W Bush – and for a moment came close to taking Bush down. In 2016, it was Trump who upended Jeb Bush, John Kasich and Ted Cruz. If Tim Scott wins in Iowa and uses that momentum to prevail in New Hampshire, he becomes fully competitive.
- The South Carolina primary is February 24. South Carolina is home to Nikki Haley, former governor and UN Ambassador under Trump, who is also in the race. In 2012, Haley appointed Scott to a vacant Senate seat, and Scott won the seat outright in 2022. Scott ended his campaign with over $20 million in the bank. Trump wants to eviscerate Haley because of her disloyalty by running against him and for saying that it is time for the party to move on beyond Trump. For Scott – and Hayley – how close they come to the front runners will be crucial.
Tim Scott has the opportunity to surprise in the early primaries. And then capitalize on that in Florida, Texas, Ohio, Pennsylvania and California, and really demonstrate national appeal.
The Trump-DeSantis dogfight is already taking on brutal proportions
DeSantis is waiting for his moment to go full frontal on his fellow Floridian. Trump is denigrating DeSantis at every opportunity. His latest ad plays on the gossip – brace yourselves, dear readers – that DeSantis eats pudding with his fingers – and what that portends for Trump’s views on Social Security and Medicare. Honest! Worse is to come.
If Scott cannot take the crown himself, but acquits himself admirably through the early primaries, he would be a contender for vice president. His ascension to the ticket with his fresh face and positive appeal could help smooth out some the rough edges of Trump or DeSantis, bringing into play independent voters and making the Republican ticket more electable.
Scott is aiming high. He wants to be president. He knows history. Since FDR, six of the 13 men who served as vice president have ultimately become president. Not bad odds for the black Republican Senator from South Carolina.
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