Is Trump Blowing Up the Senate’s Border Deal?

Is Trump Blowing Up the Senate’s Border Deal?

Trump was in a New York courtroom today, but his influence was being felt in the Capitol.
By Yuval Rosenberg and Michael Rainey
Thursday, January 25, 2024

Good evening! You look great today, and we’re not just saying that because we forgot to mention it yesterday, which was National Compliment Day. Actually, today is National Opposite Day, so maybe we should have said good morning and that you look terrible? In any case, here’s what’s happening.

Has Trump Doomed the Senate’s Border Deal?

After Republican divisions intensified this week over an emerging deal on border security measures and aid to Ukraine, Senate Minority Leader Mitch McConnell on Wednesday reportedly acknowledged that a Trumpian shift in the political landscape could derail any agreement.

"When we started this, the border united us and Ukraine divided us," McConnell told his fellow Republicans at a meeting Wednesday afternoon, NBC News reports. "The politics on this have changed."

They’ve changed in large part because of the coming elections and the desire among Republicans — and former president Donald Trump in particular — to keep immigration and border security as politically potent issues in the campaign against President Joe Biden. Trump has publicly urged House Speaker Mike Johnson to reject a Senate deal and only accept one that is "PERFECT."

Johnson and House Republicans have pushed for the package of stricter provisions in the immigration bill they passed last year, H.R. 2, which Democrats insist is a non-starter. Now Trump’s political calculations are further dimming the outlook for a compromise. "His opposition has made it more difficult to secure the support of a majority of Senate Republicans for an eventual deal, the threshold that backers say they must meet in order to persuade the House to take it up," The New York Times notes.

It was Republicans who had initially wanted to link tighter border restrictions to Ukraine aid, insisting that the former would be required to unlock the latter, even if it might mean that Kyiv’s war against Russian invasion falters in the meantime. Now it’s Republicans who want to break that linkage, leaving both issues clouded in even greater uncertainty. Leaders have started discussing a supplemental spending bill that would deliver aid to Ukraine, Israel and allies in the Indo-Pacific region but leave out border funding, The Washington Post reports. But any standalone Senate effort to deliver aid to Ukraine could struggle to pass the House, where many Republicans oppose further funding for the war effort.

McConnell still backs a border-Ukraine deal: McConnell has been pushing especially hard for a bipartisan agreement, which has yet to be finalized after weeks of talks. He reportedly told colleagues on Thursday that he still supports one. His backing has put him at odds with Johnson and stoked the wrath of Senate conservatives, who pointedly criticized both the deal and the Republican leader at a Wednesday news conference. "This bill represents Senate Republican leadership waging war on House Republican leadership," said Sen. Ted Cruz of Texas, who also complained that a bipartisan deal would allow Democrats to say they had taken steps to address the border issue. And Sen. Marco Rubio of Florida complained in a social media post: "A ‘deal’ will allow Biden to pretend he’s doing something about the border but it won’t solve the problem."

McConnell reportedly acknowledged yesterday that Republicans were "in a quandary" and told his members that, with Trump apparently well on his way to securing the GOP presidential nomination, "We don’t want to do anything to undermine him."

The senator told reporters Thursday that negotiators were still working, "trying to get an outcome," and other senior Republicans said that their leader hadn’t given up on the deal. "He wasn’t waving the white flag on border security at all," John Cornyn of Texas said, according to The Washington Post.

What’s next: The deal is not dead yet, and some Republicans are still supporting it. "I think the Republican conference is going to make a decision in the next 24 hours as to whether they actually want to get something done or whether they want to leave the border a mess for political reasons," Sen. Chris Murphy of Connecticut, the lead Democratic negotiator, told reporters earlier on Thursday. Still, any deal that emerges may be likely to die in the GOP-controlled House.

The bottom line: This Congress has already been one of the least productive in recent history. Now it’s increasingly uncertain whether these lawmakers will be able to do anything on the border and Ukraine. If a deal does fall apart, Republicans may hang onto a campaign talking point, but they will also have given Democrats a powerful one.

Defying Expectations, US Economy Surges at End of 2023

The U.S. economy grew at a robust 3.3% annual rate in the final quarter of 2023, according to government data released Thursday, pushing the growth rate for the full calendar year to 2.5%.

The numbers exceeded expectations — experts surveyed by Bloomberg were expecting to see 2.0% growth in the fourth quarter — capping off a year in which the economy consistently outperformed. While growth declined from the 4.9% rate recorded in the third quarter, it remained impressively vigorous as the economy showed no signs of recession amid the Federal Reserve’s aggressive anti-inflation campaign.

Strong consumer demand helped drive the expansion, as personal consumption spending rose by 2.8%. Government spending contributed, as well, with state and local government rising by 3.7% and federal government expenditures increasing by 2.5%.

The fourth-quarter report includes good news on inflation, as well. Consumer prices rose at a 1.7% rate in the final three months of the year, below the Fed’s target of 2%. Core inflation, which ignores volatile food and fuel prices, came in at 2% on the nose. On an annual basis, the consumer price index rose 2.7%, down from 5.9% in 2022. The annual core number was 3.2%, down from 5.1% a year earlier.

Here’s what the experts are saying:

Smashing expectations: "This year has been like Rock ‘Em Sock ‘Em Robots, and the economy is knocking the blocks off the economists, always outperforming," said Dan North, senior economist at Allianz Trade Americas, per CNBC. (See the chart below from former White House adviser Steven Rattner showing how GDP growth consistently beat expectations in 2023.)

A major win: "Stunning and spectacular," said Diane Swonk, chief economist at KPMG, per The New York Times. "We’ll take the win." In a separate note, Swonk said the "economy performed remarkably well in 2023, accelerating on the heels of aggressive rate hikes by the Federal Reserve. Much of that resilience can be attributed to the healing of balance sheets, spurred by the pandemic and the aid that accompanied it and a rebound in productivity growth."

Hitting the Fed’s target: "Goodness, the increase in GDP at the end of last year was meaningfully stronger than I had expected," said Moody’s chief economist Mark Zandi. "Not only did consumers spend and businesses invest more, as anticipated, but unexpectedly trade and inventories added to growth. But despite the robust growth, inflation was tame. … Strong growth and low inflation. Feels very good."

Looks like a soft landing: "To my surprise & delight we have landed softly," said economist Jason Furman. "Risks we veer off the runway into resurgent inflation or recession are real but balanced & not unusually high. Fed deserves a lot of credit ..."

Brian Rose, senior economist at UBS, had a similar take. "It’s hard to imagine how things could look better for the soft landing," he said, per the Times. "Looking back at last year, the combination of growth and inflation that we had was not considered in the realm of possibility by most people. To have such strong growth, low unemployment and to have inflation coming down that quickly, even the optimists weren’t that optimistic."

Better than Goldilocks: "This is not a Goldilocks economy," said economist Paul Krugman. "Goldilocks found a bowl of porridge that was neither too hot nor too cold. We have an economy that is both satisfyingly hot (GDP) and refreshingly cold (inflation). Get this straight, people!"

But tomorrow is another day: Some experts cautioned against forgetting that bad news is always just around the corner, at least potentially. "Most economists have walked back their recession calls, but we’re still not convinced," said Bloomberg economist Eliza Winger. "GDP could slow meaningfully in the first half of 2024 given rapid cooling in the labor market and concerns about credit availability and consumer demand."

Still, most economists seem to accept that they have been too gloomy about the U.S. economy, even if the historical record offered some dire warnings. "This cycle is historically unique; we’ve never had a global pandemic before," said Bank of America’s Michael Gapen. "Maybe the fault was relying too much on history and too much on models."


Biden Touts Infrastructure Dollars at Work in Wisconsin

President Joe Biden on Thursday made an election-year visit to a crumbling bridge in the upper Midwest to highlight his administration’s trillion-dollar investment in American infrastructure.

Standing beside the John A. Blatnik Memorial Bridge, which links Superior, Wisconsin, and Duluth, Minnesota, at the western tip of Lake Superior, Biden announced $5 billion in funding for specific infrastructure projects nationwide, including $1 billion to help fund a replacement for the Blatnik bridge. The funds come from the $1.2 trillion infrastructure bill Biden lobbied for and signed into law in 2021.

"For decades, people talked about replacing this bridge, but it never got done. Until today," Biden said, standing on the Wisconsin side of the bridge, which has been closed to truck traffic due to structural deterioration. "This bridge is important, but the story we’re writing is much bigger than that."

Underlining the inevitably political nature of the event in a key swing state, Biden drew a contrast with Republican failures to invest in infrastructure, which became a punchline during the Trump administration. "My predecessor, though, he chose a different course — trickle-down economics, cut taxes for the very wealthy, big corporations, increasing the deficit significantly," he said, referring to former president Donald Trump and the broader Republican approach to public investment.

The political appeal of infrastructure investment was sufficient to draw the attention of Republican Rep. Peter Stauber, who was happy to take some credit for the major investment in his Minnesota district. The only problem, as the White House and its allies quickly pointed out, is that Stauber voted against the Infrastructure Investment and Jobs Act.

"I hate to talk politics when there’s good news to celebrate but this is too brazen to ignore," said Tim Walz, the Democratic governor of Minnesota. "Mr. Stauber voted against every screw, steel beam, and concrete pier in this bridge."

The bottom line: Expect to hear more about infrastructure investment from the White House as the presidential campaign picks up steam.

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