Happy 10-10! Lots going on today, as President Joe Biden discussed hurricane relief, former President Donald Trump made some news in a speech to the Detroit Economic Club and Vice President Kamala Harris joined a Situation Room meeting on the storm response virtually from a campaign stop in Nevada, where she taped of a Univision Town Hall before heading to a rally in Phoenix tonight. Here’s what’s happening.
Biden Calls on Congress to Return and Provide More Hurricane Aid
After Hurricane Milton swept across Florida overnight, leaving a trail of destruction and millions of people without power, President Biden on Thursday called on Congress to come back to Washington, D.C., to pass additional emergency relief.
“I think the Congress should be coming back and moving on emergency needs immediately,” Biden said at the White House. “They're going to have to come back after the election as well because this is going to be a long haul for total rebuilding. It's going to take several billion dollars. It's not going to be a matter of just a little bit.”
Biden said that the Federal Emergency Management Agency has what it needs for the time being, but that the Small Business Administration, which also provides aid to some victims of natural disasters, is “right at the edge right now.”
At a press briefing, Homeland Security Secretary Alejandro Mayorkas warned that more emergency funding would be needed. “We will need additional funds, and we implore Congress when it returns to, in fact, fund FEMA as is needed,” Mayorkas said.
Biden said he has not yet spoken to House Speaker Mike Johnson, a Louisiana Republican, about upcoming funding needs. In a letter he sent to congressional leaders six days ago, Biden warned that the SBA need was most urgent since the agency’s disaster loan program “will run out of funding in a matter of weeks and well before the Congress is planning to reconvene.”
In Thursday’s update on hurricane response, the president again lashed out at those who have been spreading misinformation and lies about the federal relief efforts. “Those who engage in such lies are undermining confidence in the rescue and recovery work,” Biden said. “These lies are also harmful to those who most need help. Lives are on the line. People are in desperate situations. Have the decency to tell them the truth.”
Asked if he had spoken with Trump, Biden seemed to get his hackles up. “Are you kidding me?” he said. “Former President Trump — get a life, man, and help these people.”
Asked if he plans to speak with Trump, Biden responded with a blunt, “No.”
The bottom line: Congress recently provided FEMA with just over $20 billion in funding, and the agency has already spent $9 billion of that, meaning that Congress may quickly be called upon to appropriate more money for disaster relief in addition to the funding for the Small Business Administration.
Trump Pitches Two New Tax Breaks
In an address to the Detroit Economic Club on Thursday, former President Donald Trump floated some new tax breaks, criticized the federal response to Hurricane Helene and said that the Federal Reserve cut interest rates too much and too soon, allowing inflation to rise.
In the Motor City, Trump proposed to make interest on car loans fully deductible, saying that the move would “revolutionize” the auto industry, promote car ownership and stimulate domestic manufacturing. He compared the idea to a tax break on mortgage interest — and to the invention of the paper clip. “Somebody comes up with the paper clip and everybody says, ‘Why the hell didn’t I think of that?” Trump said, adding that his proposal “is a phenomenal thing, if I do say so myself.”
In a statement to The Wall Street Journal and a video posted to his YouTube channel, Trump also promised to end the taxation of American citizens living abroad. “Once and for all, I'm going to end double taxation on our overseas citizens,” Trump said in the video, in which he also asked for those citizens to vote for him. “You've been wanting this for years, and nobody has listened to you, and you deserve it, and I'm going to do it. It's the right thing to do, and no American leader has ever been willing to stand up and commit to you the way that I have on many things, but this is a very important element for your safety, security, and, frankly, for your wallet.”
As the Journal’s Richard Rubin and Alex Leary explain, the United States is the only major country to tax its citizens on their total income, regardless of where that money was earned or where they reside. “Essentially, an American living in Paris would have tax obligations to both France and the U.S., though the U.S. tax code already contains features meant to mitigate double taxation,” they write. They add that, while a narrow adjustment to the tax code could ease the financial burden on some Americans living abroad, including people who were born in the United States but have few ties to the country, a broader change “could open opportunities for wealthy Americans to move overseas, retain their citizenship and escape some U.S. taxes.”
Trump’s latest tax proposals follow promises for a slew of other tax breaks, including an end to the taxation of tip income, overtime pay and Social Security benefits.
In his speech Thursday, Trump also criticized the Federal Reserve for lowering its benchmark interest rate by half a percentage point, saying that inflation has started to rise (see below for context on this) and baselessly calling the move political. “The fact is that the Federal Reserve brought the interest rates down a little too quickly, it was too big a cut — and everyone knows that was a political maneuver that they tried to do before the election, but they did the wrong thing.”
Inflation Hits a 3-Year Low
Inflation in September registered its lowest annual reading in more than three years as the Consumer Price Index increased by 2.4% on a 12-month basis, the Labor Department reported Thursday. Although the annual rate was slightly higher than expected, it was below the 2.5% annual rate recorded in August and the smallest increase since February 2021, when the inflation rate began its pandemic-era rise.
On a monthly basis, prices increased 0.2% in September, the same as in August. However, the core price index, which ignores volatile food and fuel prices, rose 0.3%, or 3.3% on an annual basis, slightly higher than the 3.2% annual rate recorded in August and above analyst expectations.
Overall, the latest data show that inflation continues to cool as it falls back toward the Federal Reserve’s 2% target, but the downward path is bumpy, as many analysts warned it would be. “Things are still gradually coming down, but there is going to be volatility month to month,” Alan Detmeister, a former Federal Reserve economist now with UBS Investment Bank, told the Associated Press.
The report is not expected to change many minds at the Fed as policymakers consider additional interest rate cuts. “Inflation is dying, but not dead,” said Olu Sonola, head of US economic research at Fitch Ratings, per Bloomberg. “Coming on the heels of the surprisingly strong September employment data, this report encourages the Fed to maintain a cautious stance with the pace of the easing cycle. The likely path is still a quarter point rate cut in November, but a December cut should not be taken for granted.”
Good news for Harris, maybe: The inflation numbers are the latest in a string of solid economic reports that should be good news for Vice President Kamala Harris just weeks ahead of the election. But as Politico’s Vitoria Guida writes Thursday, it may be too late for Harris to get credit for the Biden administration’s recent successes in managing the economy.
“The unemployment rate stands at 4.1 percent, the S&P 500 stock index is up more than 20 percent this year, and GDP has been growing at a robust 3 percent pace,” Guida writes. “Middle-class Americans are more optimistic about their financial future than they were a year ago. And with inflation approaching the Federal Reserve’s 2 percent target, Chair Jerome Powell has begun lowering interest rates, providing relief to debt-burdened businesses, credit card holders and potential homebuyers.”
Polls, however, show that voters continue to hold negative views on the economy and trust Republican nominee Donald Trump more on the issue. Although Harris has closed the gap somewhat in recent weeks, a Gallup poll released Wednesday shows that 54% of likely voters think Trump would do a better job on the economy, compared to 45% who picked Harris.
The bottom line: Voters say that inflation and the economy are among their top issues this fall. Although inflation has eased significantly and the economy is showing impressive strength by most measures, voter perceptions are considerably more negative, and this could powerfully influence the vote in November.
Social Security Benefits to Rise 2.5% in 2025
Social Security recipients will receive a 2.5% cost of living adjustment in 2025, the Social Security Administration announced Thursday. It’s the smallest increase in four years, reflecting the decline in inflation.
The average Social Security payment will rise from $1,907 per month to $1,955, an increase of about $48. The maximum benefit of $4,873 per month will increase by about $122.
The Social Security Administration will send letters in December to beneficiaries explaining their individual increases. More than 72 million people currently receive Social Security benefits and Supplemental Security Income payments.
The maximum wage subject to Social Security taxes will rise, as well. Starting in 2025, the taxable maximum will increase from $168,600 to $176,100.
Fiscal News Roundup
- Biden Again Criticizes Trump Over Hurricane Misinformation: ‘Get a Life, Man’ – New York Times
- Biden: Congress Should Come Back to Fund Storm Response – Politico
- FEMA Spent Nearly Half Its Disaster Budget in Just 8 Days – Politico
- How Did FEMA Spend $9 Billion So Quickly? Back-to-Back Disasters – CNN
- Bizarre Falsehoods About Hurricanes Helene and Milton Disrupt Recovery Efforts – New York Times
- Trump Promises New Tax Relief for Car Loan Interest and Citizens Living Abroad – CNN
- Trump, Pitching Aid for Michigan Automakers, Insults Detroit – Washington Post
- Inflation Falls to 2.4%, Lowest in Three Years – Axios
- Inflation Continues Its Bumpy Decline With Mixed September Reading – Wall Street Journal
- Three Fed Officials Shrug Off CPI Report, Bostic Open to Pause – Bloomberg
- ‘The View’ Co-Hosts Come Out Swinging at Donald Trump a Day After He Insulted Them – Associated Press
- Lawmakers Spending Even More in 2024 Under Receipt-Free Expense Program – Washington Post
- Social Security Issues 2.5% COLA Increase. Here’s Why It Keeps Falling – Washington Post
- Microsoft Unveils Health Care AI Tools – The Hill
Views and Analysis
- Harris Is Riding a Dream Economy Into the Election. It May Be Too Late for Voters to Notice – Victoria Guida, Politico
- This Is a Great Economy. Why Can’t We Celebrate It? – Heather Long, Washington Post
- Trump Delivers Historically Illiterate Lecture on Tariffs – Jonthan Chait, New York
- Key Harris Tax Credits Would Largely Benefit Low and Middle-Income Households – Howard Gleckman, Tax Policy Center
- The Politics of Hurricane Milton – Gabrielle Gurley, American Prospect
- Consumer Price Index Report Shows Ongoing Inflation Risks – Courtenay Brown, Axios
- The Elderly Caregiving Crisis Is an Economic Problem – Emily Peck, Axios
- Why Pennsylvania Will Decide the Next President – Alexander Bolton, The Hill
- I Was a Whistle-Blower Under Trump. Here’s What’s at Risk for Public Health – Rick Bright, New York Times
- No-Tax-Increase Pledges May Be Good Politics, But They Make Tax Policy Goals Harder to Achieve – Adam Looney and Elena Spatoulas Patel, Tax Policy Center