Good evening. The House is back and it’s going to be busy — with a Biden impeachment inquiry now added to its agenda. Here’s the latest.
With a Shutdown Looming, McCarthy Orders Biden Impeachment Inquiry
Under pressure from hard-right members of his caucus, Speaker Kevin McCarthy on Tuesday directed House committees to open an impeachment inquiry into President Joe Biden. The inquiry will focus on Hunter Biden’s business dealings and GOP allegations of corruption or financial wrongdoing involving the president.
The politics at play: “House Republicans have uncovered serious and credible allegations into President Biden’s conduct,” McCarthy said. “Taken together, these allegations paint a picture of a culture of corruption.”
The White House pushed back on those claims, with spokesman Ian Sams calling the inquiry “Extreme politics at its worst.” In a social media post, Sams said that House Republicans have been investigating Biden for nine months and have turned up no evidence of wrongdoing, with McCarthy’s own members have acknowledged.
McCarthy also did not seek a full house vote to initiate the inquiry, contrary to his past statements — an acknowledgment that such a vote would be likely to fail given Republican divisions on the matter.
“Several Republicans, including those from districts Mr. Biden won, have indicated they did not support an impeachment inquiry unless investigators could tie the business dealings of Hunter Biden, the president’s son who engaged in transactions with overseas firms, to his father, or uncover evidence of high crimes and misdemeanors,” Luke Broadwater of the New York Times writes. “After months of digging, Republicans have found no such proof, though they argue they have received enough information to warrant more investigation.”
The fiscal implications: McCarthy’s announcement comes as he prepares for a showdown over federal spending and faces threats to his position from a band of far-right lawmakers who extracted key concessions from him in January as he sought to become speaker and have continued to complicate his job ever since.
Speculation has swirled for weeks that an impeachment inquiry might be a way to mollify conservatives and win some additional support for the stopgap spending bill needed to avert a shutdown after September 30. The conservative House Freedom Caucus said last month that it would not support a short-term spending bill unless several of the group’s policy demands were met, and Rep. Marjorie Taylor Greene of Georgia said she would not vote to fund the government unless an impeachment inquiry was launched.
Politico reported: “Several GOP senators speculated that moving forward with the inquiry was a way for McCarthy to placate conservatives, who have signaled they are open to temporarily shuttering the government if their demands aren't met. And one unnamed Republican senator reportedly told The Hill: “Maybe this is just Kevin giving people their binkie to get through the shutdown.”
But some GOP members aren’t pacified. Rep. Matt Gaetz of Florida on Tuesday said on the House floor that McCarthy was “out of compliance” with the January deal he struck to become speaker, citing a lack of votes to require term limits and balanced budgets. Gaetz threatened to oust McCarthy if the speaker brought up a stopgap spending bill. "September 30 is rapidly approaching and you have not put us in a position to succeed. There is no way to pass all the individual appropriations bills now and it's not like we didn't know when September 30 was going to show up on the calendar," Gaetz said.
McCarthy’s January deal with conservatives allows any single House member to call for a simple majority vote to force him out of the speaker’s job, known as a motion to vacate. "The path forward for the House of Representatives is to either bring you into immediate, total compliance or remove you pursuant to a motion to vacate the chair," Gaetz said.
Yet even as Gaetz calls for passage of individual appropriations bills, other Republicans are already voicing opposition to the defense funding bill the House is set to consider this week. And Gaetz also threatened to have lawmakers start "every single day in Congress with the prayer, the pledge and the motion to vacate."
The bottom line: The coming weeks will be challenging for McCarthy and his fractious members, and averting a shutdown will be difficult.
Poverty Rate Soared in 2022 as Pandemic Programs Came to an End
A key measure of poverty in the U.S. jumped by 4.6 percentage points in 2022, according to data released Tuesday by the U.S. Census Bureau. The big jump in poverty, which translates to an additional 15.3 million people falling below the poverty line, occurred as aid programs that had provided a financial cushion to millions of households during the Covid-19 pandemic came to an end, even as another legacy of the pandemic era, inflation, raised the cost of living.
Although the official poverty rate in 2022 was 11.5%, slightly lower than the 11.6% rate recorded a year earlier, a more comprehensive gauge known as the Supplemental Poverty Measure showed a poverty rate of 12.4% in 2022, up from 7.8% in 2021. The SPM includes the effects of a wide range of government programs on poverty and is widely seen as providing a more accurate picture of poverty in the U.S. than the standard measure.
The increase in poverty among children was particularly pronounced, rising from a record low of 5.2% in 2021 to 12.4% in 2022, as measured by the SPM. The end of the enhanced Child Tax Credit, which temporarily provided direct cash payments to millions of households with young children, played a significant role in that increase.
A focus on policy: The White House highlighted the role of policymaking in the well-being of American citizens. “Today’s data tell an important story about consequential impacts of public policy for low-income Americans’ living standards,” the Council of Economic Advisers said in a blog post. “The Biden-Harris Administration has shown that, with targeted tax policies, we can substantially lower the rate of poverty, in general, and child poverty, in particular. Today’s release unequivocally shows the flip side of that insight: allowing these policies to lapse sharply raises poverty.”
Calling the year-over-year change in poverty “stunning,” Sharon Parrott, president of the liberal Center on Budget and Policy Priorities, also focused on the importance of public policy. “The rise in the poverty rate, the largest on record in over 50 years both overall and for children, underscores the critical role that policy choices play in the level of poverty and hardship in the country," Parrot said in a statement. “If Congress had continued the American Rescue Plan’s Child Tax Credit increase in 2022, about 3 million additional children would have been kept out of poverty, preventing more than half of the 5.2 million increase in the number of children in poverty last year,” she added.
Writing at The Washington Post, columnist Catherine Rampell focused on the capricious nature of the largest increase in child poverty on record. “For the most part, these kids didn’t become poor because the economy is lousy, or their parents were fired, or they were newly orphaned,” she wrote. “Most fell below the poverty threshold because, as a country, we chose to make them poor. Specifically, we chose to make them poor again, by snatching a short-lived safety-net program away.”
And at Politico, reporter Adam Cancryn underlined the shifting political landscape that serves as a background for the report. “President Joe Biden’s war on poverty is unraveling fast,” he wrote. “Just two years after orchestrating the largest expansion of the U.S. safety net in a half-century, Biden’s $2 trillion bet that big-government policies could vastly improve life for the poorest Americans is coming to a close. The historic injection of pandemic-era aid was, by many measures, a clear success. And it may never happen again.”
Median income drops again: The Census also reported that median income of U.S. households fell by 2.3% in 2022, to $74,580, as inflation ate away at nominal gains. Median income has fallen by 4.7% since 2019, when it reached a peak of $78,250.
More recently, however, incomes have seen growth in real terms as the labor market remains resilient and inflation eases. “Shifting into the present and into the future, the prospects are better for wages to make up for some of the ground lost during the last couple of years,” Bill Adams, chief economist at Comerica Bank, told The Wall Street Journal.
The White House said the latest income data only confirm the importance of specific policy choices. “While high inflation contributed to the decline in real median household income in 2022, our pursuit of tight labor markets and lower price pressures have helped to deliver rising real incomes and wages since 2022,” the Council of Economic Advisers said.
Number of the Day: $135 Billion
Thieves may have stolen $1 out of every $7 spent on unemployment assistance for American workers during the Covid-19 pandemic — or as much as $135 billion. That number comes from a new report published Tuesday by the U.S. Government Accountability Office, which estimates that between 11% and 15% of all unemployment insurance money paid out during the pandemic was siphoned off through fraud.
“The UI system has faced long-standing challenges with program integrity, which worsened during the COVID-19 pandemic,” GAO wrote. “In response to historic pandemic job losses, Congress created new temporary UI programs to provide relief for the unemployed. The unprecedented demand for benefits and need to quickly implement the new programs increased the risk of fraud.”
We will never know the true amount of funds lost to fraud, GAO said, and its estimate is based on statistical sampling and imputation techniques. But the agency has provided numerous suggestions to reduce the risk of fraud in the unemployment insurance system, some of which have yet to be implemented.
Fiscal News Roundup
- McCarthy, Facing an Ouster and a Shutdown, Orders an Impeachment Inquiry – New York Times
- Matt Gaetz Threatens McCarthy With Daily Attempt to Remove Him as Speaker – Axios
- House Lawmakers Return to Looming Budget and Impeachment Decisions – Washington Post
- The Senate Easily Overcame the First Hurdle to Passing a Government Funding Package – Politico
- Senate Republicans Are Shrugging at the House GOP's Impeachment Inquiry – Politico
- Top Democrats Ready Emergency Child Care Cash Infusion – Roll Call
- Poverty Rate Soared in 2022 as Aid Ended and Prices Rose – New York Times
- U.S. Incomes Fall for Third Straight Year – Wall Street Journal
- ‘We Put in Air Conditionin’, Stayed Year-Round, and Ruined America’ – Politico
Views and Analysis
- Biden Built the Strongest Safety Net in U.S. History. Now It’s Collapsing Around Him – Adam Cancryn, Politico
- We Let Child Poverty Soar Last Year. We Could Choose Differently – Catherine Rampell, Washington Post
- The House Is Back. The Shutdown Clock Starts Now – Leigh Ann Caldwell and Theodoric Meyer, Washington Post
- McCarthy Needs to Pull Off His Most Impossible Balancing Act Yet – Stephen Collinson, CNN
- House Republicans Marching Toward ‘Cloud-Cuckoo Land’ – Walter Shapiro, Roll Call
- Biden’s New ‘New Deal’ Falls Short in Two Critical Areas – Diana B. Henriques, New York Times
- FEMA Isn’t Ready for Our New Age of Climate Disasters – Mark Gongloff, Bloomberg
- Why the Fed Should Lift Its 2% Inflation Target – Joseph Brusuelas, RSM
- How Goldilocks Came to the U.S. Economy – Paul Krugman, New York Times
- The Stealth Attack on the Power to Tax – Robert Kuttner, American Prospect
- A New Way to Tackle Medical Debt Gains Traction – Caroline Anders, Washington Post
- A Retooled Covid Vaccine Is on the Way – Rachel Roubein, Washington Post
- Covid Is Here to Stay. That Means Long Covid Is, Too – Leana S. Wen, Washington Post
- California Gets Smart With a New Tax on Guns and Bullets – Washington Post Editorial Board