Good Thursday evening. We’re just minutes away from President Joe Biden’s scheduled news conference, which could make or break his bid for a second term. Here’s what you need to know, plus a look at some important new economic data.
Biden Faces Moment of Truth as Democratic Defections Grow
President Joe Biden is about to face another massive test as he tries to save a re-election campaign that has been overrun by questions about his mental and physical fitness to serve four more years and his ability to defeat Donald Trump a second time. As pressure continues to mount on a defiant Biden to step aside, he will take questions at a rare solo news conference, stepping in front of a media throng hungry for answers about his path forward and eager to see if he stumbles at all. A weak performance would invite a flood of Democratic calls for him to withdraw.
Biden’s press conference comes as a new ABC News/Washington Post/Ipsos poll finds both reason for the Biden camp to hold out hope and evidence that the president’s support is rapidly eroding.
The poll surveyed 2,431 adults from July 5 to 9, more than a week after Biden’s debate performance. It found that the race remains tied, with each candidate getting the support of 46% of registered voters, about the same as in April polling. Biden’s approval rating, at 36%, is essentially unchanged from 35% in late April and similar numbers last year. The favorability ratings for both Biden and Trump also held steady, at 42% and 34% respectively. “Biden continues to be viewed more positively on a personal level than Trump, while Trump's job approval rating remains slightly better than Biden's,” Ipsos, which conducted the poll, notes. Meanwhile, 58% of Americans say both men are too old for a second term.
Indications of a static race may quell some fears of a post-debate collapse in support for Biden, but the president so far has failed to swing the dynamic of the race in his favor — and the poll also found that fully 67% of Americans said that Biden should step aside given his debate performance (and half of Americans say the same about Trump). Seven in 10 independents and 56% of Democrats say Biden should drop his re-election bid. Views of the president’s mental sharpness and physical health have fallen since April.
Amid rumors and reports that many more party members are poised to speak up once the president is done hosting foreign leaders for this week’s NATO summit and holds his news conference, Axios reported Wednesday evening that even Senate Majority Leader Chuck Schumer “is privately signaling to donors that he's open to a Democratic presidential ticket that isn't led by President Biden.”
Vice President Kamala Harris outperformed Biden in the ABC News/Washington Post/Ipsos poll, edging Trump 49-46 among all adults and 49-47 among registered voters — though her lead isn’t statistically significant.
The Biden campaign is reportedly doing its own polling on how Harris would fare against Trump. That survey, The New York Times reports, “could be read as the team gathering information to present a case to the president that his path forward is slim, or to argue that Mr. Biden is still the strongest standard-bearer for his party.”
In a campaign memo laying out the path ahead, Biden campaign chair Jen O’Malley Dillon and campaign manager Julie Rodriguez Chavez reportedly pushed back on the idea that any other Democrat would fare better than Biden. “In addition to what we believe is a clear pathway ahead for us, there is also no indication that anyone else would outperform the president vs. Trump,” they wrote, arguing that polling on other potential nominees doesn’t factor in the attacks and fresh scrutiny those candidates would inevitably face. “The only Democratic candidate for whom this is already baked in is President Biden,” they said.
The bottom line: Biden and his team have fumbled their efforts to stabilize the campaign and they may not have a path to salvage his candidacy and resolve Democratic concerns and divisions heading toward November. Democratic Rep. Ritchie Torres warned in an X post Thursday: “Neither the press conference tonight nor the NBC interview on Monday evening will offer the President the political salvation he seems to be seeking.”
Inflation Falls for the First Time Since Pandemic
The Consumer Price Index fell in June on a monthly basis, the Department of Labor reported Thursday, marking the first time the cost of goods and services has registered a decline since May 2020, in the early days of the pandemic.
Prices fell 0.1% in June compared to May and were up 3% compared to a year earlier. Both results were softer than analysts’ expectations, driven by a drop in the price of gasoline, used cars and household goods.
Core CPI, a closely watched measure of inflation that leaves out volatile food and fuel prices, rose 0.1% in June on a monthly basis, the smallest increase since August 2021. On an annual basis, core CPI rose 3.3%, the smallest increase since April 2021.
The case for rate cuts: “On the inflation front, just about everything seems to be going right,” Bloomberg columnist Jonathan Levin wrote, calling the report “wildly encouraging.” Noting that rent increases are cooling and used car prices are falling — both categories have been problematic sources of inflation — Levin called on the Federal Reserve to start lowering interest rates right away, to ensure that unemployment doesn’t become a problem in the coming months.
“The right move is to start lowering policy rates at the next decision on July 31,” Levin wrote, even as he admitted that rate cuts this month are unlikely. “The Fed has a dual mandate to promote maximum employment and stable prices, and recent developments leave real interest rates tight at a time when unemployment is creeping higher and job growth is slowing. Labor market trouble can snowball quickly and unpredictably once it begins.”
In a similar vein, RSM chief economist Joseph Brusuelas told The Washington Post that the report was “better than good.” In a separate blog post, Brusuelas said he is confident that inflation is falling toward the Fed’s target rate of 2% and the U.S. economy is “on the cusp of price stability.” Accordingly, he expects the Fed to cut rates by 25 basis points in both September and December, with larger cuts possible at the end of the year if the labor market shows further signs of softening.
Investors are betting that rate cuts are on the way, with the CME FedWatch probability of a September rate cut jumping to 84.6%. Seema Shah, chief global strategist at Principal Asset Management, said today’s CPI report “put us firmly on the path for a September Fed rate cut,” adding that the “smallest gain in core CPI since 2021 surely gives the Fed confidence that Q1′s hot CPI readings were a bump in the road and builds momentum for multiple rate cuts this year.”
Good news for Biden? Ordinarily, strong economic data would provide a boost to an incumbent president and would be especially welcome by one facing an election in just a few months. But as Semafor’s Jordan Weissmann observed earlier this week, the growing controversy over President Biden’s age and aptitude is “burying good economic news for Democrats.”
Weissmann noted that positive reports on inflation and the labor market have been published since the June 27 presidential debate, but the panic over Biden’s cognitive capabilities is claiming the political spotlight, making it impossible for Democrats to present their case to the American people that they have succeeded in fixing an economy that had been severely battered by the pandemic.
“There is broad frustration in the building that there will not be a political news cycle about this data,” a White House insider told The Washington Post’s Jeff Stein, who wrote about the same issue Thursday. “Everyone feels the strong inflation data is just getting lost in the political news right now. You can easily imagine an alternative political universe where this is the top story from the campaign.”
The inability of Democrats to turn the focus to fundamental economic issues could be disastrous in the fall, potentially producing an echo of 2016, when the recovery from the great recession engineered by the administration of former President Barack Obama wasn’t enough for Democrats to maintain control of the White House. “If Biden’s age problem proves politically fatal,” Weissmann wrote, “he could be setting up a repeat, handing off an economy with tame inflation, low unemployment, and falling interest rates to an opponent who will be happy to tout it as his own.”
Deficit Tops $1.2 Trillion for First 9 Months of 2024
The federal budget deficit in June was $66 billion, the Treasury Department reported Thursday. The monthly tally brings the total for the 2024 fiscal year, which began in October, to $1.27 trillion.
The monthly deficit in June was significantly smaller than the $347 billion deficit recorded in May, but much of the difference was produced by the fact that June 1 fell on a Saturday, shifting the timing of certain benefits payments. Without the calendar shift, the June deficit would have been $159 billion.
The nine-month deficit is 9% smaller than the total recorded in the first nine months of 2023. Receipts of $3.8 trillion are 10% higher than a year ago, and outlays of $5.0 trillion are 5% larger.
Interest payments on the national debt continue to be an important factor in the size of the deficit. Net interest payments in June were $81 billion, and $682 billion in the first nine months of the fiscal year, significantly higher than the $494 billion nine-month deficit recorded last year.
Numbers of the Day
$1 Billion: In its effort to collect unpaid taxes from what it calls high-income, high-wealth individuals, the IRS has now recovered more than $1 billion, the Treasury Department announced Thursday.
The IRS has assigned dozens of senior employees to the initiative, which was launched in 2023 with a focus on taxpayers who have more than $1 million in income and unpaid tax bills of $250,000 or more. Funding for the effort was included in the Inflation Reduction Act of 2022, which provided $80 billion over 10 years to the IRS, although that sum has been reduced by $20 billion amid fierce opposition from Republican lawmakers.
“President Biden’s Inflation Reduction Act is increasing tax fairness and ensuring that all wealthy taxpayers pay the taxes they owe, just like working families do,” said U.S. Secretary of the Treasury Janet Yellen. “A new initiative to collect overdue taxes from a small group of wealthy taxpayers is already a major success, yielding more than $1 billion in revenue so far.”
IRS Commissioner Danny Werfel said that in the past, some wealthy taxpayers skipped paying their taxes because they knew the government lacked the resources to pursue them. “Our message for these taxpayers is that now that we are resourced, we can do the job of ensuring that they pay,” he said.
$230 Million: The Pentagon said Thursday that U.S. troops had failed yesterday in an attempt to reconnect a $230 million temporary pier built to deliver humanitarian aid to Gaza and that the military will instead bring the pier and related equipment to Ashdod, in southern Israel, “where they will remain until further notice.”
Maj. Gen. Pat Ryder, a Pentagon spokesman, blamed the weather and technical issues for the difficulty in re-anchoring the pier, which has been plagued by problems almost since it was first announced in March. “The pier will soon cease operations, with more details on that process and timing available in the coming day,” Ryder said in a statement. He added that the U.S. operation in Gaza has delivered nearly 20 million pounds of food to an area where it can be collected for distribution by humanitarian organizations.
“I see any result that produces more food, more humanitarian goods getting to the people of Gaza as a success,” White House National Security Adviser Jake Sullivan told reporters Thursday.
Fiscal News Roundup
- 'No One Involved in the Effort Thinks He Has a Path': Biden Insiders Say the Writing Is on the Wall – NBC News
- Some Biden Advisers Are Discussing How to Convince Him to Step Aside – New York Times
- The Embattled Biden Campaign Tests Kamala Harris’s Strength vs. Trump – New York Times
- The U.S. Is Winning the Inflation Fight, Setting Scene for Long-Awaited Interest Rate Cut – NBC News
- Democrats Fear Biden Drama May Squander Goldilocks Economy – Washington Post
- Legislative Branch Spending Bill Defeated in House – Roll Call
- House Appropriations Panel Clears HHS Bill That Cuts Agency Funding – The Hill
- Social Security’s 2025 COLA Is Forecast to Be Lower Than in 2024 – MarketWatch
- Trump Claims Not to Know Who Is Behind Project 2025. A CNN Review Found at Least 140 People Who Worked for Him Are Involved – CNN
Views and Analysis
- Why Chuck Schumer Hasn’t Put the Squeeze on Joe Biden – Michelle Cottle, New York Times
- Democrats Are Drifting Toward the Worst of All Possible Worlds – Ezra Klein, New York Times
- Donald Trump Is Unfit to Lead – New York Times Editorial Board
- Trump Is Planning for a Landslide Win – Tim Alberta, The Atlantic
- The Fed Should Cut Rates Now. Sadly, It Won’t – Jonathan Levin, Bloomberg
- Why Has Medicare’s Innovation Center Failed? – Chris Pope, The Hill