Situational Awareness
The House and Senate are in session this week. The Senate will continue consideration of the National Defense AThe House and Senate are in session this week. The Senate will try to wrap up work on the National Defense Authorization Act. The House will take up the Senate-passed increase in the national debt and consider whether former President Trump’s chief of staff, Mark Meadows, should be held in contempt of Congress for not cooperating with the panel investigating the overrun of the Capitol on January 6.
Biden Regulatory Agenda Released
On Friday, the biannual unified regulatory agenda was released by the Biden Administration. The document outlines the status of the administration’s work on regulations or deregulatory work the agencies expect to take in the coming months. The Department of Labor alone highlighted 80 regulations it anticipates action. Of particular note for private clubs, the Department indicates they expect a notice of proposed rulemaking (NPRM) updating the overtime rule in April 2022. Also last week, the National Labor Relations Board announced that it plans on revising its legal standard for when employers are jointly responsible for fair labor practices and collective bargaining.
Weekend Storms Rip Through Middle of U.S.
President Biden will be briefed Monday on the damage caused by massive storms and multiple tornadoes that ripped through the country over the weekend. The Federal Emergency Management Agency (FEMA) will take the lead in briefing the president on the damage and its response planning to assist thousands of Americans affected by the storms. Hundreds of Americans are thought to have died as result of more than 30 reported tornados in Arkansas, Illinois, Kentucky, Missouri, Mississippi and Tennessee.
Build Back Better Plan Cost Scrutinized
Throughout the consideration of President Biden’s Build Back Better plan in the House of Representatives the cost of the plan was said to be roughly $1.8 trillion that was offset by tax increases, yet the nonpartisan Congressional Budget Office (CBO) indicated in its score that it would add roughly $370 billion to the national debt over 10 years. Republicans argued that the offsets would not materialize, and the spending portions of the bill were constructed in a way that misrepresents the true cost of the bill. One of the principal ways Democrats structured the spending is to front-load the programs in the early years and sunset them after a period of time, thereby creating the illusion of a lower cost. For example, the child tax credit and earned income tax credit provision expires in 2022 and child care and universal prekindergarten program expires in 2027. These expirations limit the cost, but then create benefit cliffs Congress will be hard-pressed to deny extending in future years. Government benefits, once enacted, are notoriously hard to take away.
House and Senate Budget Committee Ranking Members Rep. Jason Smith (R-Mo.) and Sen. Lindsey Graham (R-S.C.) requested the CBO to score the bill in a way that assumes the programs in the legislation are extended prior to sunsetting as some Democrats indicated was their intention. On Friday, the CBO provided their analysis, and it showed the “true cost” of the legislation if the programs were extended would be $4.9 trillion and add another $3 trillion to the national debt over 10 years. In addition to concerns over the inflationary effect of dramatically increased federal spending due to COVID-19, this new information may give Senator Joe Manchin (D-W.Va.) more reason to hold out on support of the package in the Upper Chamber. The Senate Finance Committee released a revised, though incomplete, version of the Build Back Better package on Sunday.
Crisis Averted on Debt Ceiling
After months of negotiations, Senate Leaders Chuck Schumer (D-N.Y.) and Mitch McConnell (R-Ky.) reached an agreement that will allow Democrats to increase the federal debt limit with a simple majority vote. The agreement creates a one-time exception to the rules of the Senate allowing a measure to be considered without the customary 60 votes to proceed to end debate on a bill. The agreement gave both parties at least an appearance of victory with Democrats keeping the trains moving on time and Republicans forcing Democrats to increase the debt limit without Republican votes. The amount of the increase in the debt has not been set, but it is expected to be large enough to avoid having to go through this process again until sometime after the 2022 mid-term elections. We anticipate a vote on the debt limit will occur this week as Congress is looking to wrap up business for the holiday break.
Inflation Persists
With the House having passed its version of the Build Back Better plan the week before the Thanksgiving break, eyes Former Senate Majority Leader and three-time presidential candidate, Bob Dole, passed away on Sunday morning The Bureau of Labor Statistics (BLS) released inflation figures on Friday, and it showed a year-over-year increase in consumer prices of 6.8% for the month of November. This rate of inflation has not been seen since 1982 when President Ronald Reagan was in office, but far short of the 14.7% inflation seen in the waning days of the Carter presidency. Many economists cite imbalances in supply and demand due to lingering effects of the coronavirus on supply chains as well as businesses increasing prices to offset higher labor costs. The unemployment rate dropped from 4.6% to 4.2%, but the number of open jobs continues to outpace workers by 3.6 million—an abnormally large gap that shows no signs of abating. Some year-over-year highlights from the BLS data below:
Bleak Poll Numbers for Democrats
Recent poll numbers are painting a bleak picture for Democrats in the 2022 mid-term elections. While the election is 11 months away and events between now and the election will certainly alter the landscape, right now Republicans hold an edge in the generic ballot polls by an average of 3.3%. A CNBC poll released last week showed Republicans up in the generic ballot by 10 points, which is the highest ever in their polling. Democrats continue to see members of the House and Senate deciding to retire or run for other offices at a concerning pace this early in the cycle. Other polling is showing a slow, but measurable, erosion of Democratic support among the Hispanic community. A recent Wall Street Journal poll showed Hispanic voters evenly split between Democrats and Republicans in the generic Congressional ballot. Hispanic support for President Biden has dropped significantly in Texas and currently stands at 35% approval and 54% disapproval. Texas gained two seats in reapportionment of Congress and Republicans are looking to bolster their chances at retaking the majority in the House with wins in the state. The top three issues for voters in the CNBC poll were inflation, immigration and crime. If you would like to receive more information on political developments, please be sure you have signed the ClubPAC prior authorization form to receive the monthly ClubPAC Insider newsletter.