by Greg Valliere, AGF Management Ltd.
Backlash Against the Greens?
DESPERATE DEMOCRATS ARE CONSIDERING THE “NUCLEAR OPTION” — a change in filibuster rules — that could avoid a debt default later this month. Sources believe there aren’t enough Senate Democrats to kill the filibuster entirely, but a carve-out for debt ceiling issues would have strong support.
THE IDEA OF CHANGING FILIBUSTER RULES has never appealed to President Biden, who’s a traditionalist on Senate protocol. But a sense of near-panic is setting in on a possible default, so Democrats are looking at all options — and Biden said yesterday there’s a “real possibility” that the party may endorse new Senate rules.
THE OBVIOUS QUESTION is whether maverick Democrats Joe Manchin and Kyrsten Sinema would go along; both would have to vote in favor, which probably would get to 50 votes, with a tie broken by Vice President Harris. (It’s possible, of course, that some other Democrats may vote against a new filibuster rule.)
FOR NOW WE’LL PUT THIS IN THE “TRIAL BALLOON” category, but the other options are shaky. Raising the debt ceiling via budget reconciliation is opposed by most Democrats because the process is cumbersome and time-consuming, but this is still the leading option.
A SENATE VOTE TODAY to raise the debt ceiling will fail, as Democrats ratchet up criticism of Mitch McConnell, claiming that his stance will jeopardize the issuance of Social Security checks.
OTHER OPTIONS LOOK LIKE GIMMICKS, such as minting a $1 trillion platinum coin, which has been dismissed by Treasury Secretary Janet Yellen as un-workable. Some liberals like the idea, or using the 14th Amendment to the Constitution to continue spending even if the debt ceiling is breached.
WE’LL KNOW WITHIN A DAY OR TWO whether the Democrats will pursue a filibuster carve-out for debt ceiling issues; Manchin and Sinema will make their views clear very soon. This is a potentially radical change, hence the nickname “nuclear option” because it would blow up Senate decorum.
THIS WOULD BRING RISKS TO DEMOCRATS, because filibuster changes could be used against them when, inevitably, they are out of power (see: judicial nominees, no longer subject to filibusters because Democrat Harry Reid changed the rules, which has allowed McConnell to confirm a tidal wave of conservative judges).
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ANTI-GREEN BACKLASH? There are many reasons why the U.K. is facing a long, cold winter — a lack of truck drivers, the still-unfolding impact of Brexit, tough new regulations curbing fossil fuel use, and an acute supply shortage. This, many analysts believe, could lead to an anti-Green backlash in England and perhaps much of Europe.
CHECK OUT TODAY’S NEW YORK TIMES COLUMN by Tom Friedman. A scary energy winter is coming, Friedman writes, with energy shortages driving up prices and disproportionately hurting the poor. “You can already smell that coming in Britain,” he says — with Iran and Russia taking advantage of the energy turmoil.
SEVERE SHORTAGES COULD TURN EUROPEANS against the Greens, with a backlash against curbs on traditional sources of energy, Friedman writes.
WE’RE NOT SURE that anger over energy supplies would prompt a similar backlash against the Greens in the U.S., as Californians seethe over an energy spill, but it’s worth noting that alternative energy spending will get a big haircut if there’s an infrastructure compromise later this fall.
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TEPID SUPPORT FOR JEROME POWELL YESTERDAY: Biden was asked if he still supports the Fed Chairman. “Thus far,” the president said. He added that “I’m just catching up with some of these assertions” of active trading among Fed officials. A White House spokeswoman said Biden supports the Fed Chairman “at this time.”
EDITOR’S NOTE: We had a typo yesterday, writing that Fed Vice Chairman Richard Clarida moved his assets just before a major Powell speech in early 2000. Obviously, Clarida’s asset transfer was in 2020, just as the Pandemic surged.
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