Immigration Back as a Hot-Button Issue, Stalls Covid Bill

by Greg Valliere, AGF Management Ltd.

Insights and Market Perspectives

IN A COMPLICATED LEGISLATIVE DISPUTE, a relatively modest Covid aid bill has stalled, perhaps for weeks, because of renewed friction in Congress over illegal immigration. This maneuvering seems trivial, frankly, in light of the carnage in Ukraine, but it sets the tone for Congress for the rest of this session.

BOTH PARTIES ARE FURIOUSLY POSTURING ahead of the fall elections, and the Democrats will have a reason to cheer later today as Ketanji Brown Jackson wins confirmation to the Supreme Court. But Democrats were hoping to enact a Covid bill this week, and that wonā€™t happen.

A $10 BILLION COVID AID BILL ā€” small potatoes in this era of trillion dollar spending deals ā€” is gridlocked as Congress begins a two-week vacation tomorrow (a major priority is a dozen weeks of vacation by early October, which will make it difficult for Congress to address time-consuming issues such as tax hikes).

THE COVID AID BILL would increase funding for treatment, vaccines and testing, which may be necessary in light of an outbreak of variants and a sudden resurgence of the virus here in Washington. Several Cabinet secretaries and members of Congress have been infected in recent days, probably by the new BA.2 variant.

THE COVID BILL STALLED as Republicans demanded a vote to preserve immigration curbs that were imposed by President Trump. GOP lawmakers know the threat of more illegal immigration is a huge election issue for them; even some Democrats who face difficult re-election fights are reluctant to ease the so-called Title 42 restrictions that curb illegal immigration.

[ACTUALLY, the extremely tight labor market, with workers impossible to find, would benefit from looser immigration policies, but thatā€™s another story.]

BITTER CONTROVERSIES will dominate Congress for the next few months as members eye the fall elections. Yesterdayā€™s public flogging of oil industry executives in a congressional hearing was a preview of another major theme ā€” whether the industry is guilty of price gouging, despite evidence to the contrary.

ONE OF THE FEW AREAS of agreement will be more spending for the Pentagon ā€” far more than President Biden has proposed ā€” in the wake of war in Ukraine and Chinaā€™s huge buildup of sophisticated new weapons. More U.S. shipbuilding will be a major priority.

AS FOR OTHER SPENDING, the rate of growth may subside after last yearā€™s blowout, but it would be inaccurate to say that fiscal policy is becoming restrictive; it simply will be less profligate. GOP victories in November may reinforce a trend toward less accommodative spending (except for defense).

COVID, MEANWHILE, HAS NOT BEEN CRUSHED, as the U.S. nears one million fatalities, new variants erupt in Europe, and China confronts a major outbreak. The virus may kill and hospitalize far fewer people than a year ago, but it still lurks, infecting the vulnerable.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.

AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

About AGF Management Limited

Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGFā€™s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.

For further information, please visit AGF.com.

Ā©2022 AGF Management Limited. All rights reserved.

This post was first published at the AGF Perspectives Blog.

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