Good evening! President Biden held a large, jubilant signing ceremony for the Respect for Marriage Act on Tuesday, hosting some 5,300 lawmakers and other guests on the South Lawn of the White House to celebrate the new law protecting same-sex and interracial marriages. In Congress, lawmakers indicated that they are closing in on a full-year agreement on government funding and introduced a one-week funding patch to buy themselves a bit more time. And over in Qatar, Argentina cruised into the World Cup final, beating Croatia 3-0.
Vamos!
Congress Prepares Short-Term Funding Patch to Avoid a Government Shutdown
House Appropriations Committee Chair Rosa DeLauro (D-CT) on Tuesday released the text of a stopgap bill extending federal funding from December 16, when it’s currently set to expire, through December 23. The bill, known as a continuing resolution, is meant to provide time for negotiators to finalize a full-year funding package.
The continuing resolution is slated to get a vote on the House floor on Wednesday “or, at the latest, Thursday,” House Majority Leader Steny Hoyer (D-MD) said. He added that he expects an agreement on a larger omnibus spending bill “in the next few days.”
Senate Majority Leader Chuck Schumer (D-NY) said Tuesday that “there’s a lot of work left to do” on the omnibus but expressed optimism that the package would get done by the holidays. “After all the progress made towards an omnibus agreement, I hope nobody here in the Senate stands in the way of getting a one-week CR passed quickly, through [unanimous] consent if needed,” Schumer said. He said that he expects the omnibus will include priorities both sides want to become law, including additional funding for Ukraine and the Electoral Count Act clarifying the election certification process. “The best option, the most responsible option, is to proceed toward an omnibus even if it won’t contain everything both sides want,” Schumer said.
Senate Minority Leader Mitch McConnell said Tuesday that if the bipartisan omnibus isn’t done by December 22, Republicans will push a continuing resolution extending into early 2023. “We intend not to be here between Christmas and New Years,” McConnell said.
The bottom line: The full-year budget deal isn’t done yet, but party leaders and negotiators sound optimistic that they’ll finalize an agreement soon. As talks proceed, lawmakers are preparing to buy some extra time and avert any chance of a partial government shutdown when current funding expires after Friday.
Inflation Cools as Fed Eyes a Smaller Rate Hike
Inflation cooled a bit in November, according to data released by the Bureau of Labor Statistics Tuesday, as the Consumer Price Index for All Urban Consumers (CPI-U) rose 7.1% on an annual basis and 0.1% month over month. Both numbers were better than expected, boosting hopes that the Federal Reserve’s effort to bring down inflation is starting to have a significant effect on the economy at the same time as supply chains are being unsnarled and the energy market shock of war in Ukraine fades.
The closely watched core inflation measure, which strips out volatile fuel and inflation costs, rose by 6% annually, and 0.2% on a monthly basis — down from 0.4% in October and the smallest increase since August 2021.
The increasing cost of shelter was the biggest factor in the still robust inflation topline number, and the price of food continued to rise, with grocery prices up 12% on an annual basis. Used cars, gasoline and heating fuel got cheaper, though, putting downward pressure on the overall inflation level.
President Biden called the price report “welcome news for families across the country” as we head into the holiday season, and credited his economic policies for helping to reduce inflation. At the same time, Biden acknowledged that inflation may continue to be a problem into 2023, saying he hopes things are closer to normal “by the end of next year.”
The Fed persists: While the latest report indicates that inflation is moving in the right direction, it is unlikely to have much influence on the Fed as it plans its next rate hike this week. The central bank is still expected to announce a 50-basis-point increase in its key interest rate at the conclusion of its final meeting of the year on Wednesday — a smaller increase than the 75-basis-point hikes at the last four meetings, but one that was pretty well telegraphed before the latest inflation data was announced.
Still, the relatively good news on the inflation front boosts confidence that the Fed could soon ease up its tightening efforts and consider slowing if not pausing its rate hikes early in 2023. That in turn raises hopes that the Fed will be able to pull off a soft landing — pushing inflation down toward its target level of 2% while avoiding a recession.
Here’s what the experts are saying about the latest inflation data:
We have a trend: “What the November CPI report showed is that this is no longer a ‘one datapoint doesn’t make a trend’ story and that inflation is now on a clear disinflation trajectory,” said Eugenio Aleman, chief economist at Raymond James. “This disinflationary trajectory will probably cement itself in the coming quarters as we expect shelter prices, which represent about a third of the weight on the CPI index, to start weakening. This CPI report will not change this week’s Federal Reserve decision to increase the federal funds rate by 50 basis points, but it may help keep the Fed from overtightening monetary policy.”
But inflation is still unusually high: “While inflation is moving to a better place, it is not yet in a good place,” said Mark Hamrick, senior economic analyst at Bankrate. “The month over month changes show inflation pressures are cooling. But compared to a year earlier, prices broadly remain historically high. Consumers rejoice that the price of gasoline has dropped sharply. But rising prices for other necessities, most notably food and shelter, remain elevated and continue to strain household budgets.”
And inflation could linger: “The areas that continue to keep inflation higher now lie largely within the services component of CPI, like rent and housing prices,” said Gargi Chaudhuri of iShares Investment Strategy. “The service components within CPI tend to be stickier – price growth in services takes longer to slow because they are thought to reflect wage growth and don’t have their prices adjusted as much as goods. Because of this, the move from 5% to 2% year-over-year inflation will not be as easy as the move from 9% to 5% inflation. We continue to believe that inflation will remain stubbornly high and above the Fed’s 2% target in 2023.”
Biden Administration Proposes to Make It Easier to Buy Obamacare Plans
The Biden administration on Monday proposed policies aimed at making it easier to buy Obamacare plans, including a special enrollment period for people who lose Medicaid or Children's Health Insurance Program (CHIP) coverage.
The proposed rule released by the Centers for Medicare & Medicaid Services would allow those who lose their Medicaid or CHIP insurance 60 days before or 90 days after they lose coverage to pick an Affordable Care Act plan.
The proposal also would limit the number of plan options insurers can offer through the marketplaces. The average number of plans available to consumers on the marketplace has soared from less than 30 for plan year 2019 to well over 100 for 2023, the Department of Health and Human Services said. “Having too many plans to choose from can limit consumers' ability to make a meaningful selection when comparing plan offerings,” HHS said. “Streamlining the plan selection process would make it easier for consumers to evaluate plan choices available on the Marketplaces and to select a health plan that best fits their unique health needs.”
Why it matters: As we mentioned last week, an estimated 18 million people stand to lose Medicaid coverage if the coronavirus public health emergency is allowed to expire in April 2023, so it makes sense to make it easier for those eligible to sign up for other coverage.
Quote of the Day
“I think it’s a good time to mask. … Given where we are right now with hospitals being at very close to capacity, especially in pediatric hospitals with R.S.V. and with flu, I think that anything that you can do to slow down community transmission is going to be helpful.”
– Dr. Helen Chu, an associate professor of allergy and infectious diseases at UW Medicine in Seattle, as quoted in a New York Times article describing how a number of cities and counties as well as public health experts are again encouraging people to wear masks in indoor public settings in response to the “tripledemic” of coronavirus, flu and respiratory syncytial virus.
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News
- Schumer Says He Expects Omnibus to Include More Ukraine Aid, Reforms to Electoral Count Act – Washington Post
- House Races to Pass Short-Term Funding Bill to Delay Shutdown Deadline – The Hill
- Biden Seeks Political Boost From Slowing Inflation – Washington Post
- McConnell Raises Pressure as Government Funding Talks Churn On – Politico
- Warren, Welch Press Pfizer CEO on COVID Vaccine Price Hike – The Hill
- Senate to Vote on Manchin’s Permitting Amendment to Defense Spending Bill – The Hill
- Earned Income Credit Backers Aim to Keep Expansion on the Radar – Roll Call
- World Leaders Pledge $1 Billion in Immediate Aid for Ukraine – New York Times
- It’s Time to Wear a Mask Again, Health Experts Say – New York Times
- Experimental Skin Cancer Vaccine Shows Promising Early Results – Washington Post
- How Medicare Advantage Plans Dodged Auditors and Overcharged Taxpayers by Millions – Kaiser Health News
Views and Analysis
- CPI Justifies the Market’s Exuberance This Time – Jonathan Levin, Bloomberg
- The Real Risk of Higher Inflation Is Lower Wages – Tyler Cowen, Bloomberg
- The Real Scandal Tainting the Commerce Secretary: Doing Her Job – Catherine Rampell, Washington Post
- Surprise Bills From Ground Ambulances Is Next Up in the Move Toward Reform – Rachel Roubein, Washington Post
- The Two Percent Obsession – Robert Kuttner, American Prospect
- Why Capitalism Needs Sick People – Malcolm Harris, New York
- What Comes Next for the War on Drugs? The Beginning of the End – New York Times Editorial Board
- Why America Is Getting Tough on Trade – Paul Krugman, New York Times
- Musk’s Ugly Attack on Fauci Shows How Right-Wing Info Warfare Works – Greg Sargent, Washington Post