by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
August 23, 2021
Biden Needs a House Victory This Week —
As His Polls Slip Amid Calls for Impeachment
August 23, 2021
AS VIOLENCE ERUPTS this morning in Kabul, Joe Biden faces an enormous loss of political capital, with all eyes on a key vote this evening in the House on his
infrastructure bills.
NANCY PELOSI AND OTHER PROGRESSIVES are telling nine moderate Democrats — who are threatening to scuttle the bills — that they cannot repudiate the wounded president, whose polling numbers have plunged amid calls from the far right to begin impeachment proceedings, citing his disastrous withdrawal from Afghanistan.
SO TONIGHT HAS SUDDENLY BECOME a litmus test of Biden’s political clout. The Democrats’ nine moderates have not relented on their insistence to vote on just the Senate-passed $1.2 trillion infrastructure bill. House liberals want to pass that measure, along with a resolution that would authorize the reconciliation process for a second bill, calling for $3.5 trillion in social spending.
WE’RE HEARING THAT THERE COULD BE A COMPROMISE, effectively kicking the can down the road to an infrastructure showdown this fall. Biden could claim this as a win, which he desperately needs.
THE FALLOUT FROM AFGHANISTAN continues to generate scathing criticism, focusing on Biden’s judgment. On Sunday talk shows, Secretary of State Anthony Blinken gamely tried to spin this as a rescue effort that’s going fairly well, but he could not defend the indefensible; the pull-out has been a humiliating debacle.
CRITICISM HAS INTENSIFIED among U.S. allies in Europe, who were blindsided and now face still another immigration crisis (as does the Republican Party, which faces a divisive fight over admitting Afghan refugees in this country).
AND THERE’S AN INEVITABLE SENSE OF OPPORTUNITY IN BEIJING: We highly recommend an op-ed piece in Saturday’s New York Times titled “China Stands Ready to Fill Kabul’s Needs.”
THE WORST-CASE SCENARIO for involves whispering that the Republicans are ready to move on impeachment if they capture the House next year (they have a decent chance). If the GOP takes control, hard-line Rep. Jim Jordan would become Chairman of the House Judiciary Committee.
DOZENS OF TRUMP-SUPPORTING House Republicans would favor impeaching Biden (they have high hopes over results of the Arizona election audit, due later today). But it’s highly unlikely that the Senate would ever agree to convict; a two-thirds vote would be needed, but all Democrats would vote to acquit, and they’re likely to retain roughly 50 seats in the next election.
THE REPUBLICANS SMELL BLOOD: Biden’s job approval ratings have slipped to 50% or less (far better than Donald Trump’s numbers) but the public overwhelmingly disapproves of Biden’s handling of the Afghan withdrawal, and his scores on handling the Delta variant have plummeted.
THAT’S WHY TONIGHT’S HOUSE VOTE is so important — it will be a test of Biden’s political clout. The headlines in coming days will be harsh, as an Aug. 31 deadline looms for a complete withdrawal, and as the White House considers sending more troops back to Afghanistan.
WE STILL THINK the $1.2 trillion infrastructure bill will pass, along with a greatly
scaled-back second bill, but enactment of both is far from certain, a concern for markets that would like to see more stimulus. The infrastructure bills, and a debt ceiling hike, could stay gridlocked until late fall — still another headache for the
reeling president.
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