by Greg Valliere, AGF Management Ltd.
Insights and Market Perspectives
Author: 8
July 27, 2021
What We’re Hearing on Capitol Hill
July 27, 2021
VIRTUALLY EVERYONE IN THIS SWELTERING CITY wants to get out of town by early August, not to return until mid-September. But there are at least two weeks of drama ahead — and a growing sense that President Biden’s agenda is in trouble.
HERE’S WHAT WE’RE HEARING ON CAPITOL HILL —
EVERYTHING HAS GROUND TO A HALT: Passage of a Senate infrastructure measure still isn’t imminent as disagreements persist on key issues like spending on clean water and public transit.
IF THERE’S A SENATE DEAL later this week, Chuck Schumer will then press ahead on a second bill — costing $2.5 trillion or more — that has no support among Republicans and some wavering from Democrats. Only progressive zealots are excited about this second bill.
EVEN IF THE SENATE AGREES TO THE $1 TRILLION COMPROMISE, final enactment probably is unlikely until fall. People we talk with dread the fall workload — it may be Christmas Eve before there’s a budget for the new fiscal year.
PRESIDENT BIDEN IS WELL-LIKED ON CAPITOL HILL, but there’s a sense that his political capital may be slipping. Members of Congress are getting an earful about crime and inflation; the latter may subside but the former could be a huge albatross for the Democrats.
THE VAST MAJORITY OF DEMOCRATS on Capitol Hill scoff at “defund the police,” but the label has stuck; progressives have inflicted tremendous damage to the Democrats’ brand. The left has one winning issue — more health benefits: dental, vision, hearing.
BIDEN’S HIGH SCORES on handling Covid may slip, as confusion reigns over masks, booster shots and travel restrictions. There’s resignation on Capitol Hill that this latest Covid wave may not peak for another two months.
NO DEMOCRATS WILL SAY THIS PUBLICLY, but party leaders concede in private that they may lose the House next fall. The Senate is too close to call.
MEMBERS OF CONGRESS ARE HEARING from companies in their home districts that they’re worried the Biden regulatory activism will be bad for business.
ANTIPATHY TOWARD CHINA is overwhelming on Capitol Hill; Beijing’s curbs on its own tech companies have made investors leery. Biden’s hard-line stance on China has widespread support.
THERE’S SURPRISINGLY STRONG SUPPORT from the public for tax hikes on the rich and big corporations; even some Republicans could support higher taxes.
THERE’S GROWING UNEASE OVER THE BUDGET DEFICIT on Capitol Hill, but most constituents want to spend more money. Republicans will try to blame big spending for the pickup of inflation.
THERE’S CONCERN OVER INFLATION AROUND THE COUNTRY, but Fed Chairman Jerome Powell has solid support on Capitol Hill; no one is expecting a rate hike for at least another year.
THERE’S LITTLE ENTHUSIASM AMONG VOTERS to re-visit the Jan. 6 riot; testimony begins today but the hearings are all about politics. The GOP looks bad on this issue, but — in public at least — most Republicans are afraid to challenge Donald Trump.
TRUMP AND BIDEN are widely viewed as the likely 2024 nominees, but some members agree with us that neither may run — not the increasingly frail Biden or the scandal-plagued Trump.
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