Iran War Has Cost US Households $2,000 Each, New Analysis Finds
President Trump continues his campaign blitz this week, following a rally last night in Youngstown, Ohio, with another one tonight in Wasilla, Alaska, meant to boost Republican Sen. Dan Sullivan's re-election bid. The president is scheduled to visit Arizona and Montana on Wednesday before heading to Georgia on Friday. With three weeks until Election Day, Trump says his rallies have had a "massive impact," but his repeated visits to red states indicate that Republicans are playing defense, as Democrats appear poised to win control of the House and could also capture the Senate.
Here's your evening update.
Iran War Has Cost US Households $2,000 Each: Moody's
Now in its eighth month, the war with Iran has cost the average American household about $2,000, according to a new analysis by Mark Zandi, chief economist at Moody's Analytics.
Most of the tab is connected to higher energy costs, Zandi said on social media Monday. With gasoline at about $4.35 a gallon, up from below $3 before the start of the war, and diesel at more than $6, near an all-time high, U.S. consumers are spending a lot more at the pump. Add in the higher cost of jet fuel and heating fuel, and households have spent about $1,100 more for energy since the war began - and that tab is increasing by about $50 a week.
Higher interest rates are also costing consumers, with war-driven inflation playing an important role in convincing the Federal Reserve to increase borrowing costs last month. Zandi estimates that higher rates have cost households about $540 each on average.
The cost of military operations is the third major component of the new estimate. According to numbers provided by the Defense Department, the war - which is ultimately paid for by taxpayers, Zandi notes - has cost about $540 per household.
Taken together and spread across households, the cost of the war has claimed about half of the income gains over the last eight months. "No wonder the war is so unpopular," Zandi said.
IMF Warns Major Economies Need 'Urgent' Fiscal Fixes
The International Monetary Fund is warning in its latest World Economic Outlook that global economic resilience is under strain and that leading economies need to take "urgent" action to shore up public finances and put debt levels on more sustainable paths.
"The global economy is again proving resilient, but unevenly so and with rapidly narrowing margins of adjustment in the near term," the IMF says in its new report. It adds: "Given elevated debt, rising sovereign yields, and pressing spending needs, a renewed focus on rebuilding fiscal space is increasingly urgent. Governments should implement credible fiscal adjustment plans that combine enhancements on the revenue side with spending rationalization, supported by institutional improvements."
The group's latest forecast notes that "primary deficits have remained elevated and are significantly larger than before the pandemic in many countries."
The IMF predicted that net borrowing by advanced economies this year would reach 5.2% of gross domestic product, its highest level since 2021, during the Covid-19 pandemic. It sees the United States economy growing by 2.3% on an inflation-adjusted basis, with a deficit that hits 8.5% of GDP this year and stays around 8% of GDP over the next five years.
Lawmakers Urge Trump to Rescind Oil Deal With Putin
President Donald Trump announced late last week that he had made a deal with Russian President Vladimir Putin that includes suspending sanctions on Russian diesel exports in exchange for that country's release of millions of barrels of diesel fuel into a severely constrained global energy market. On Tuesday, a bipartisan group of senators joined critics in Ukraine and beyond who are pushing back against that arrangement.
"The deal you struck with President Vladamir Putin on October 9th will not achieve just ends, nor will it benefit Americans," the senators wrote, adding that the agreement will help Putin by providing him with more money to use to continue his attacks on Ukraine.
"Granting Moscow the ability to sell Russian diesel freely in global markets damages American security interests and is a betrayal of the people of Ukraine, who continue to defend themselves from Putin's murderous, illegal war," the senators said. "This deal is a gift to our adversary and a betrayal of our Allies; it should be rescinded."
The 12 senators signing the letter include six Democrats - Richard Blumenthal, Jeanne Shaheen, Richard Durbin, Jack Reed, Sheldon Whitehouse and Christopher Coons - and six Republicans: Thom Tillis, Mitch McConnell, Susan Collins, Lisa Murkowski, John Cornyn and Alan Armstrong.
Ukraine President Volodymyr Zelensky, whose country has been fighting Russia for more than four years following its invasion in 2022, has also sharply criticized the deal, calling it a "birthday gift" to Putin that will allow him to "kill us, kill our children."
Elsewhere in Europe, political leaders have showed concern about easing sanctions on Russia. "The U.S. is our biggest ally, but our message is clear," Kaja Kallas, the European Union's top diplomat, said Monday. "If we want to end this war, the only way we can do this is by putting more pressure on Russia."
Trump, who has been trying to find a way to lower energy costs ahead of the midterm elections, defended the deal. "Anything that could help our farmers, our ranchers, I like," Trump said Monday outside the White House.
Energy experts, though, have questioned how effective the deal will be in lowering prices. The quantities of diesel fuel promised by Russia represent less than 1% of global demand, or about a single day of consumption.
"It does not even touch the sides - it is very, very small," Neil Atkinson, former head of the International Energy Agency's oil industry and markets division, told CNBC.
Quote of the Day: Dems' Campaign Cash Concern
"Republican ads and mail and field programs are being funded by the same billionaires and price-gouging corporations that made life so unaffordable in the first place. The checks are coming in from every entity looking to buy a pardon, curry favor, and move the needle in favor of their personal interests. ... Republicans enter the final stretch with an extraordinary financial advantage."
− Senate Democratic Leader Chuck Schumer, raising concerns about Democrats' relative lack of campaign cash in a letter to colleagues Tuesday that was provided to Punchbowl News.
As Punchbowl notes, the Democratic Congressional Campaign Committee last week also warned in a memo that Republicans have a massive cash advantage and that Democrats are at risk of losing winnable seats because of a funding shortfall. "We need an additional $17 million between now and October 22nd to take advantage of the opportunities we have," DCCC Executive Director Julie Merz wrote, trying to drum up donations.
Fiscal News Roundup
- Trump Faces Growing GOP Revolt Over His Russian Diesel Deal – Bloomberg
- Vance Announces Plan to Use Wartime Authority to Boost Fuel Production at Texas Refinery – The Hill
- Supreme Court to Review Access to US DOGE Service Records – Washington Post
- Investors Brave US Treasury Rout to Lock In Highest Yields in Decades – Financial Times
- Higher Rates Could Be Needed to Avoid 'Inflationary Mindset' Taking Hold, Says Fed's Hammack – CNBC
- IMF Warns Global Economy Nearing "Limits of Resilience" – Axios
- Top Economies Heading for Biggest Budget Deficits Since Covid, IMF Warns – Financial Times
- IMF Warns Bond Yields Could See a 'Disorderly' Spike as Debt, Inflation Risks Worsen – CNBC
- Axios-Ipsos Poll: "Medicare for All" Support Surges – Axios
- Democrats Say Trump's Trade Deals Were Corrupt. They're Gearing Up to Investigate – Politico
- House Democrat Introduces Bill Seeking to Cut ICE, CBP, Replace DHS – The Hill
- Republicans Doubt Their Big Lame-Duck Ambitions Pan Out – Politico
- Farmers Say They'll Take the Relief of Trump's EO - but They're Still Hurting – NPR
- Social Security Commissioner Predicts Program Will Last 'for Another 90 Years' – The Hill
- Trump Says He Cares for Americans. They Think He's More Focused on His Wealth, an AP-NORC Poll Finds – Associated Press
Views and Analysis
- The Forces Driving Up Bond Yields Take a Troubling Turn – Joe Rennison, New York Times
- Why the US Needs a Fiscal Commission to Help Solve the Debt Crisis – William McBride, Tax Foundation
- Medicare for All Is the Big Policy Fight Splitting Democrats – Aaron Zitner, Wall Street Journal
- How Governments Spend Money – Toby Nagle, Financial Times
- Scammers Are Stealing Millions From Food Stamp Recipients. Congress Could Fix It - but Won't – Eli Hager, ProPublica
- From Iowa Steel to Philly Ships, Trump's Industrial Promises Face Big Tests – Bob Tita and Costas Paris, Wall Street Journal
- Tax the Rich? Follow Switzerland - Not the Left – Warren Gorlick, Washington Post
- The Nobel Prize in Economics Is a Message to the Fed – Jonathan Levin, Bloomberg
- One Trump SNAP Reform Actually Is Improving Health – Leana S. Wen, Washington Post
- This Is the U.S. Government's Most Maddening Poverty Trap – Mark Blondin, New Republic
- Billionaires Are Leaving Britain - and Sending a Warning to the U.S. – Washington Post Editorial Board
- Why Trump's Diesel-Supply Deal With Russia Won't Ease Fuel Prices Much – Ryan Dezember, Wall Street Journal
- Trump Is Dangling Cash Before the Midterms. Voters See the Gimmick – Jacob Soboroff and Erin Clifford, MS Now
- Trump Is Using a Program for Unaccompanied Children to Separate Families – Jacob Soboroff and Dina Moss, MS Now
- We Know How to Fix Homelessness. Look at Denver – German Lopez, New York Times
- What Flock Actually Costs Cities Across the Country – Caroline Haskins, Wired