Good evening. The nation today marked the 23rd anniversary of the 9/11 attacks, chewed over last night’s presidential debate and pondered whether and how it might change the race. On Capitol Hill, House Republican leaders abruptly canceled a planned vote Wednesday on their bill to fund the government, which was headed for an embarrassing defeat. Here’s your mid-week update.
Johnson Cancels Vote on Government Funding Bill
House Speaker Mike Johnson scrapped a planned vote Wednesday on a six-month stopgap spending bill ahead of a September 30 deadline.
Congress must fund the government before October 1 to avoid a partial government shutdown just ahead of the November elections. Yet Johnson’s plan, which includes legislation requiring proof of citizenship from people registering to vote in federal elections, has faced increasing opposition from members of his own party. Congressional Democrats and the White House were also lined up against it, in part because of the voting measure, which they say is unnecessary and could keep eligible voters from the ballot box.
In short, the bill appeared doomed to fail and deliver an embarrassing blow to GOP leaders, who opted to pull it instead. The episode is just the latest in a string of budget and spending battles in which Republicans seek leverage or concessions only to see their strategy undercut by intraparty divisions.
“No vote today because we’re in the consensus-building business here in Congress,” Johnson told reporters this afternoon. “With small majorities that’s what you do. That’s what I’ve been doing since I became speaker. We’re having thoughtful conversations, family conversations within the Republican conference, and I believe we’ll get there. So people have concerns about all sorts of things. That‘s how the process works and sometimes it takes a little more time.”
It's not clear that more time will make any difference though, as some conservatives in Johnson’s conference are steadfastly opposed to any short-term spending bill, preferring that lawmakers work on passing the required full-year appropriations measures.
Johnson’s plan calls for extending current funding levels through March 28. Conservatives objected to the continuation of existing spending levels in addition to their objection to the use of stopgap measures known as continuing resolutions. Defense hawks, meanwhile, have warned that keeping spending flat would undermine the military.
“The repercussions of Congress failing to pass regular appropriations legislation for the first half of [fiscal] 2025 would be devastating to our readiness and ability to execute the National Defense Strategy,” Defense Secretary Lloyd Austin warned in letters to top congressional appropriators over the weekend.
What’s next: Johnson may try to push ahead with his bill, but no partisan Republican plan can get through the Democratic-led Senate and White House.
“Our House Republican colleagues are struggling with a bad case of Groundhog Day,” Senate Majority Leader Chuck Schumer said yesterday, before the House vote was postponed. “Instead, Republicans should work with Democrats on a bipartisan package, one that has input from both sides, one that avoids harmful cuts, one that is free of poison pills. We're ready to sit down and work them immediately.”
Similar recent standoffs have ended with bipartisan bills that anger right-wing Republicans, and that may still be the most likely outcome, given the political risks involved with allowing a shutdown. But former President Donald Trump has complicated the path to such a resolution by urging Republicans to “get absolute assurances on Election Security” before passing any spending bill. That puts Johnson in an awkward position as he tries to both avoid a shutdown and keep his job.
Inflation Falls to 3-Year Low, Clearing the Way for a Rate Cut
Inflation continued to ease in August, as the Consumer Price Index rose 0.2% on a monthly basis and 2.5% on a yearly basis, the Labor Department announced Wednesday. The annual inflation rate has now fallen five months in a row, and the August reading matches the lowest annual increase since February 2021.
Food prices rose just 0.1% from the month before, and 2.1% over the previous 12 months. The price of gasoline fell 0.6% over the month and was down 10.3% over the year.
However, the core inflation rate — which strips out volatile food and fuel prices to provide a better sense of the underlying trend — was hotter than expected in August, rising 0.3% on a monthly basis and 3.2% on an annual basis. Housing prices drove most of the increase, along with travel, insurance and clothing.
The surprise increase in core inflation is not expected to delay a widely predicted rate cut when the Federal Reserve meets next week, although it could help convince the central bankers that a more modest cut of 25 basis points is preferable to the 50-point cut many investors are hoping to see.
White House sees a turning point: Following the release of the August data, Lael Brainard, director of the National Economic Council, all but declared victory in the battle against inflation. “Today’s report shows that we are turning the page on inflation, which has fallen to 2.5%, close to the level the month before the pandemic started,” Brainard said in a statement. “With inflation coming back down close to normal levels, it is important to focus on sustaining the historic gains we have made for American workers during this recovery.”
Laura Veldkamp, a professor of finance and economics at Columbia University, said the Fed has succeeded in pushing inflation close to its 2% target. “This battle against inflation is more or less done,” she told The Wall Street Journal.
Still, the cost of housing continues to bite, though experts expect that pressure to ease. “Shelter is one of the last remaining components running a bit hot, but it is a notoriously lagging component as it takes time for falling market rents to seep into the pool of existing leases,” Jason Pride, chief of investment strategy and research at Glenmede, said in a statement, per Quartz. “It would be reasonable to expect shelter to join the normalization theme in time.”
Michael Chae, the chief financial officer at Blackstone, said that overall, the outlook on inflation and the economy is positive. “Soft landings are hard to land,” he said at a conference, per Bloomberg. “They’re pretty rare in history — but where we sit today looks pretty encouraging.”
What Harris and Trump Said on Taxes and Healthcare at the Debate
Last night’s debate between Vice President Kamala Harris and former President Donald Trump likely won’t be remembered for fiscal policy points as much as, say, discussion about abortion, immigration and the eating of pets. Still, the candidates did have some notable exchanges on economic plans, taxes, healthcare and other issues. In case you missed it, here’s a recap.
Taxes: In the first question of the debate, Harris was asked whether she believes Americans are better off than they were four years ago. She dodged, responding instead about her plans to boost the middle class and create an “opportunity economy,” including proposals to offer a $50,000 tax deduction to start-up small businesses and to expand the Child Tax Credit to provide up to $6,000. She also criticized Trump’s promise to extend his 2017 tax cuts, warning that the plan would increase deficits by $5 trillion — the Congressional Budget Office has estimated the cost at $4.6 trillion over 10 years — and that the benefits would flow to “billionaires and big corporations.”
She also warned of a “Trump sales tax” — a reference to the former president’s call for tariffs of 10% to 20% on foreign imports (and at least 60% on imports from China), which she called “a 20% tax on everyday goods” that would cost middle-class families about $4,000 a year. The left-leaning Center for American Progress Action Fund estimated that Trump’s proposals would amount to tax hike of about $3,900 a year for a middle-income family.
Harris later cited independent analyses that have favored her plans: “What Goldman Sachs has said is that Donald Trump's plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession.”
Trump didn’t get into details of his plan. “Everybody knows what I'm going to do. Cut taxes very substantially. And create a great economy like I did before,” he said. He claimed that Wharton professors think his plan is “brilliant.”
“It's going to make people want to be able to go and work and create jobs and create a lot of good, solid money for our country,” he said.
He also disputed the idea that he is proposing a sales tax. He and Sen. JD Vance, his running mate, have been falsely describing how tariffs work, insisting that foreign countries pay the costs. But Trump also noted that the Biden-Harris administration didn’t reverse tariffs he imposed in his first term before veering off to criticize the vice president over inflation and immigration.
Healthcare: Trump has said he’d keep the Affordable Care Act unless he can “do something much better.” He was asked last night if he has a plan to replace the healthcare law. “What we will do is we're looking at different plans,” he said. “If we can come up with a plan that's going to cost our people, our population less money and be better health care than Obamacare, then I would absolutely do it. But until then I'd run it as good as it can be run.”
Pressed for an answer as to whether he has a plan, he said: “I have concepts of a plan. I'm not president right now. But if we come up with something I would only change it if we come up with something better and less expensive. And there are concepts and options we have to do that. And you'll be hearing about it in the not-too-distant future.”
Harris, asked about her past support for a government-run health care system, said she support private healthcare options and would seek to strengthen the Affordable Care Act. She also touted the Biden administration law allowing Medicare to negotiate drug prices for the first time, capping the cost of insulin at $35 a month and limiting out-of-pocket prescription drugs costs for seniors at $2,000 a year.
Numbers of the Day: 63%, 69% and 55%
In a CNN flash poll of people who watched last night’s debate, 63% of registered voters, including 69% of independents, said that Vice President Kamala Harris did a better job than former President Donald Trump. But 55% of voters came away from the debate saying that Trump would better handle the economy, up from 53% pre-debate.
Fiscal News Roundup
- Speaker Johnson Calls Off a Vote on a Bill to Avoid a Partial Government Shutdown – Associated Press
- Johnson Forced to Delay Vote on Stopgap Funding Plan as GOP Opposition Rises – Politico
- Debate-Watchers More Likely to Say Harris Won, but Perceptions of the Candidates Remain Largely Unchanged – Associated Press
- Tracking Attacks in the First Harris-Trump Debate – New York Times
- Trump Says He Doesn’t Know if He and Harris Will Have ‘a Rematch’ – Associated Press
- 'Not His Best': Trump's Conspiracy-Laced Debate Performance Prompts Concern From Some Allies – NBC News
- Donald Trump Faces His Own Debate Fallout Just Months After Benefiting From Joe Biden’s – Associated Press
- After Years of Threats, Trump Still Doesn't Have a Plan to Replace Obamacare – NBC News
- Inflation Cools to 2.5%, Slowest Rate in More Than Three Years – NBC News
- Top US and UK Diplomats Pledge Almost $1.5B in Additional Aid for Ukraine During Visit to Kyiv – Associated Press
- Social Security Benefits Are Projected to Rise 2.5% in 2025 – CBS News
Views and Analysis
- Fact Checking Debate Claims From Trump and Harris' 2024 Presidential Faceoff – CBS News
- Harris and Trump Dodge America's Dire Fiscal Future – Bloomberg Editorial Board
- Harris and Trump Bet on Their Own Sharply Contrasting Views of America – Peter Baker, New York Times
- Mike Johnson’s SAVE Act Stunt May Shut Down the Government – Ed Kilgore, New York
- The Question Kamala Harris Couldn’t Answer – Kathleen Kingsbury, New York Times
- ‘Trump Brought Darkness; Harris Brought Light’: 14 Writers on Who Won the Presidential Debate – New York Times Opinion
- Harris Excels. ABC Does Its Job. Both Were Deadly for Trump – Jennifer Rubin, Washington Post
- Trump's Worst Debate Moments Came on Abortion, Health Care – Lisa Jarvis, Bloomberg
- Donald Trump Doesn’t Know What Donald Trump Is Doing – David Dayen, American Prospect
- If Football Were Treated Like Inflation – Peter Coy, New York Times