Happy Friday! Next week will be a big one in our ongoing debt limit showdown, so rest up this weekend … Here’s what you need to know.
Who's to Blame in the Debt Ceiling Showdown?
Ahead of next Tuesday’s high-stakes meeting on the debt limit between President Joe Biden, House Speaker Kevin McCarthy and the three other top congressional leaders, the White House is dialing up the pressure on Republicans.
Biden on Friday used the latest jobs report to argue that Republicans are threatening to undo the economic progress made under his administration.
“Whether you pay the debt or not doesn’t have a damn thing to do with what your budget is,” Biden said. “Let’s get it straight: They’re trying to hold the debt hostage for us to agree to some draconian cuts, magnificently difficult and damaging cuts. But unfortunately, they’re threatening to undo all this progress by letting us default. … The last thing this country needs after all we’ve been through is a manufactured crisis and that’s what this is: A manufactured crisis. That’s what it is from beginning to end, it’s a manufactured crisis driven by MAGA Republicans in the Congress.”
As Biden tries to use the bully pulpit to win support for his position, top administration officials including Chief of Staff Jeff Zients, Treasury Secretary Janet Yellen and National Economic Council Director Lael Brainerd have reportedly been calling corporate CEOs and urging them to press Congress to avoid a debt default, according to Punchbowl News.
The administration may have some work to do to sway public opinion. A new Washington Post-ABC News poll finds that, while Americans largely agree with Biden’s position that the debt limit and federal spending cuts should be handled separately, they are still narrowly divided over who would take the blame if the government defaults on its debt.
The poll finds that 39% say they would blame congressional Republicans while 36% say they would blame Biden and 16% said they would blame both sides. Among independents, 37% say they would blame the GOP compared to 29% pointing at Biden and 24% saying the two sides get equal blame.
Those numbers may suggest a slight advantage for Biden, but they may provide some comfort to Republicans given that the gap on the blame question is much narrower than the one on the question of policy. Fully 58% of those polled say they agree that the debt limit and federal spending cuts should be handled separately, versus 26% who agree with the GOP position that Congress should allow the government to pay its debts only if Biden agrees to spending cuts. The 58% majority in favor of Biden’s position has also slipped 7 percentage points since February, including sharp drops among Democrats and independents.
The poll of 1,006 adults was conducted April 28 through May 3 and has an overall margin of sampling error of plus or minus 3.5 percentage points.
Goldilocks Labor Market Keeps Rolling Along as Unemployment Rate Drops to 3.4%
The U.S. labor market just won’t quit. Employers added another 253,000 jobs in April, the Bureau of Labor Statistics announced Friday in a report that easily surpassed analyst expectations. The unemployment rate edged lower to 3.4%, matching a low set in 1969.
Wages grew by 0.5% on a monthly basis, the fastest pace since July. On an annual basis, wages rose by 4.4%, slightly higher than the 12-month reading in March.
Despite the continued strength, the data point to a gradual softening in the labor market. The job growth results for February and March were revised downward, lowering the total for those months by 149,000 jobs. And as strong as it was, April’s job growth was below the average of 290,000 over the previous six months.
A different kind of recovery: Experts continue to marvel at the durability of the economic recovery from the pandemic, even as it gradually softens. The unemployment rate for Black workers hit an all-time low of 4.7% in April, an impressive turnaround from the 16.8% unemployment rate recorded in May 2020. The gap between Black and white unemployment rates also hit a record low. The labor force participation rate for prime-age workers (ages 25 to 54) rose to 83.3% — above the level recorded just before the pandemic struck and the highest since 2008. And the overall labor force participation rate rose to 62.6%, higher than the Congressional Budget Office’s pre-pandemic forecast for where things would stand in the second quarter of 2023.
“The American labor market is simply unstoppable right now,” said Joseph Brusuelas, chief economist at RSM, who compared the labor market to one of the greatest athletes of all time. “Think of how sports commentators used to describe Michael Jordan,” Brusuelas wrote Friday. “One can’t stop him, one can only hope to contain him. So it is right now with the American labor market.”
Gus Faucher, chief economist at the PNC Financial Services Group, said the report boosts hopes that the economy can achieve the difficult goal of slowing down without falling into recession. “This is what a soft landing would look like, with job growth gradually slowing to a more sustainable pace,” he said, adding that “we won't know whether we've achieved a soft landing probably until the end of this year.”
Economist Skanda Amarnath, who leads Employ America, an advocacy group that promotes full employment policies, noted one of the key benefits of the rapid bounce back. “This recovery simply doesn't have the generationally disastrous qualities of the previous two recoveries,” Amarnath tweeted. The recovery after the 2009 financial crisis took more than 10 years, he added, while the post-2001 recovery never reached pre-crisis heights (see the chart below).
The Fed is watching: The report could complicate the inflation-fighting effort by the Federal Reserve, which announced earlier this week what many analysts think will be its final interest rate hike, at least for a while. However, a labor market that continues to show signs of strength could spur Fed policymakers to consider another rate increase when they meet in mid-June.
Biden celebrates – and warns: Speaking to reporters before a meeting with advisers at the White House, President Biden applauded the report, highlighting the job growth numbers and the decline in the unemployment rate while crediting the good news to his economic policies such as boosting investment in clean energy.
“Tomorrow, it’ll be two years since I signed the American Rescue Plan into law, Biden said. “It led to the fastest recovery of every — any major economy in the world. It laid the foundation for the progress we’ve been seeing and we see today.”
Biden Names Neera Tanden Domestic Policy Advisor
President Biden announced on Friday that Neera Tanden will take over as head of his domestic policy council, replacing the departing Susan Rice.
Tanden, who has been a senior adviser and staff secretary in the White House for nearly two years, is a prominent operative in Democratic policy circles who also served in the Clinton and Obama administrations. Prior to joining the Biden White House, she had been the head of the left-leaning Center for American Progress. Biden in 2021 tapped her to lead the Office of Management and Budget, a position that requires Senate confirmation. Her nomination ran into stiff opposition, including from senators who had been the subjects of her combative criticisms on Twitter. Her nomination to that post was withdrawn.
Tanden will be the first Asian-American to lead any of the three major White House policy councils, according to the White House.
Quote of the Day
“With great hope I declare COVID-19 over as a global health emergency.”
– Dr. Tedros Adhanom Ghebreyesus, director general of the World Health Organization, announcing Friday that his group was ending the emergency it had first declared more than three years ago. It’s a symbolically important move, but W.H.O. officials warned that the announcement does not mean that the global pandemic is done and gone. “The emergency phase is over, but Covid is not,” Dr. Maria Van Kerkhove, the W.H.O. technical lead on Covid, said.
The United States is scheduled to end its Covid-19 emergency next week, on May 11. Once that happens, labs around the country will no longer be required to report Covid cases and the Centers for Disease Control and Prevention will stop tallying them, as Bloomberg reports. “CDC will turn its attention to tracking severe Covid illness via hospital admissions, officials said on a call with reporters, while continuing to analyze wastewater and tests of international travelers to determine how the virus is spreading and evolving,” Bloomberg’s Riley Griffin and Ilena Peng write. “Covid death counts that were once based on case reporting will instead be derived from death certificates.”
The CDC says that more than 1,000 Covid deaths are still being reported every week even as weekly case counts have fallen to the lowest levels since the pandemic began in early 2020. The United States has suffered more than 1.1 million Covid deaths in total. There have been more than 6.9 million Covid deaths reported to the W.H.O as of May 3. “We know the true toll is several times higher, at least 20 million,” the W.H.O.’s Tedros said.
CDC Director Walensky Leaving Her Post
Dr. Rochelle Walensky, the director of the Centers for Disease Control and Prevention, is stepping down from her job.
Walensky has led the CDC since the beginning of the Biden administration, overseeing the continued response to Covid-19 and a reorganization for the public health agency, which she acknowledged had failed to meet expectations during the pandemic. A specialist in infectious diseases who had no prior experience running a government agency, Walensky “helped restore morale and a sense of normalcy to an agency that had been enduring significant public adversity,” the CDC said in its announcement.
Jason Schwartz, a health policy expert at the Yale School of Public Health, told the Associated Press that “no CDC director in history inherited the set of challenges she faced coming into the job.”
Biden praised Walensky and the progress she made at the agency. “Dr. Walensky has saved lives with her steadfast and unwavering focus on the health of every American,” he said in a statement. “Dr. Walensky leaves CDC a stronger institution, better positioned to confront health threats and protect Americans.”
Walensky’s last day will be June 30.
- April Hiring Gains Reflect a Still-Resilient US Job Market – Associated Press
- Blame Breaks Evenly if Government Defaults on Debt, Despite Preference for Biden's Position: Poll – ABC News
- CDC Head Resigns, Blindsiding Many Health Officials – Politico
- The Job Crunch Hits the White House as Biden Searches for a New Pandemic Czar – Politico
- The Covid–19 Crisis Is Officially Over. Everything Changed. – Wall Street Journal
- House Members Revive Bipartisan Police Funding Bill – Axios
Views and Analysis
- Taking Debt Ceiling Negotiations Seriously – David Dayen, American Prospect
- What Would U.S. Default Actually Look Like? ‘Financial Armageddon’ – Catherine Rampell, Washington Post
- Why Debt Chicken Is Such a Dangerous Game – Peter Coy, New York Times
- Doing Whatever It Takes on Debt – Paul Krugman, New York Times
- What the Heck Is Going on in the U.S. Economy? – Catherine Rampell, Washington Post
- Jerome Powell Can Now Pivot to Saving the Economy From Imploding – Kevin T. Dugan, New York
- The Right’s Economic Populism Is Breaking Progressives’ Brains – Michael Schaffer, Politico
- Asa Hutchinson: The Ideal Candidate for a GOP That No Longer Exists – Ed Kilgore, New York
- One Estate Tax Bill Protects Family Farms — Another Empowers Billionaires – Bob Lord, The Hill