Washington Update - August 31
The House of Representatives returns from August recess this week to clear legislation for President Donald Trump’s signature to fund government through December 11. When the Senate reconvenes in two weeks, it will attempt to pass a budget resolution facilitating reconciliation legislation further expanding the deficit. Other September agenda items include proposals to reform college sports, expand sanctions targeting Russia, renew overseas spy powers, the defense authorization, and the farm bill. Most of the agenda will be postponed until the post-election Lame Duck session.
The six-month long war on Iran and rising cost-of-living are the issues most influencing the mid-term election outcome that presently favors Democrats to win the House majority and a slight Republican advantage to control the Senate. Other influences include how President Trump spends his campaign warchest, the Republican mid-term convention, candidate and party fundraising, how those funds are allocated, and candidate debates.
Notably, leaks last week suggested the President will spend his campaign money on advertising polishing his own image. When Republican candidates are seeking to focus campaigns on a choice between themselves and their opponents, having the President turn the election into a referendum on himself would be counterproductive, given his low approval ratings. The leak was probably intended to alert candidates to the problem so they would register objections with the White House, hoping to reverse the President’s plan.
The most important influence outside the public eye is campaign organization. Effective candidates have been working for months to bring together coalitions that will turn out their supporters to vote. Voter enthusiasm favors Democrats this year, increasing the productivity of their organizational work.
Federal Reserve Chair Kevin Warsh expressed concerns last week that inflation trends have not improved, leading traders to increase the odds of a September interest rate hike from 30 to 60 percent.
