Wake Up To Politics - May 10, 2021

Good morning! It’s Monday, May 10, 2021. Election Day 2022 is 547 days away. Election Day 2024 is 1,275 days away. I hope all of the moms out there had a happy Mother’s Day, especially my own mom (WUTP’s first subscriber!)

In today’s newsletter: The latest on Liz Cheney’s ouster and President Biden’s infrastructure package. Plus, everything you need to know about Friday’s jobs report in this week’s “Economics Roundup.”

Two stories driving the week in Washington

Congress is returning to Washington this week after 10 days of recess. Here’s a preview of the two stories that will drive the week ahead:

The House GOP leadership fight. Rep. Liz Cheney (R-WY), one of former President Donald Trump’s fiercest Republican critics, is expected to be ousted from her House GOP leadership position by week’s end.

The highly-anticipated vote to remove Cheney as House Republican Conference Chair is likely to take place on Wednesday. A simple majority of the conference will be required to remove her from the post, which is the third-ranking leadership position in the House GOP.

When a similar vote was held in February, after Cheney voted for Trump’s impeachment, the conference opted to keep her in the post by a 145-61 secret ballot. But this time around, Cheney has lost her highest-profile defender from the February vote: House Minority Leader Kevin McCarthy (R-CA). The GOP leader went to bat for Cheney earlier in the year, but now he’s “had it with her” after months of dissension over Trump’s role in the party and his false elections claims.

McCarthy formally endorsed Rep. Elise Stefanik (R-NY) to replace Cheney on Sunday, making her removal almost a foregone conclusion. The drama is a reminder that no Republican is safe in the post-Trump presidency GOP, where loyalty to the former president is increasingly a key dividing line. Even McCarthy himself faces opposition within Trump’s orbit: according to the Washington Post, some Trump advisers are urging the ex-president not to back McCarthy as Speaker if Republicans retake the House in 2022, although it is unclear if he would move forward with the threat.

Biden meets with the “Four Corners.” Across Pennsylvania Avenue, another key showdown will take place on Wednesday: President Biden’s first meeting with the top four congressional leaders. Senate Majority Leader Chuck Schumer (D-NY), Senate Minority Leader Mitch McConnell (R-KY), House Speaker Nancy Pelosi (D-CA), and House Minority Leader Kevin McCarthy (R-CA) will all make the pilgrimage to the Oval Office to meet with the president about his infrastructure proposal.

It will be Biden’s first presidential interaction with McCarthy, the only one of the “Four Corners” (as the top congressional leaders are known) to back Trump’s efforts to overturn the 2020 election. He has already met with or spoken on the phone with the three others.

The huddle — as well as a Thursday meeting between Biden, Sen. Shelley Moore Capito (R-WV), and other Republican senators — will help determine whether bipartisan negotiations on infrastructure have any sort of serious future.

Biden has outlined a $2.3 trillion plan, while Capito has made a $568 billion counteroffer. Democrats have it within their power to go solo on the infrastructure package, as they did with the stimulus bill earlier this year, and pass it through the reconciliation process, although Biden has again suggested that he would like to try and strike a deal with Republicans first.

As the president launches those cross-party talks in earnest, he faces competing pressures from both sides of his own party’s slim 50-vote majority: centrist Sen. Joe Manchin (D-WV) has said he may withhold his reconciliation vote if Biden doesn’t seriously engage with Republicans, while progressive Sen. Bernie Sanders (I-VT) is showing little patience for dealmaking.

“The American people want results,” Sanders told Axios in an interview on Sunday.

And now, for a third major story to keep an eye on, here’s the debut column from WUTP economics contributor Davis Giangiulio:

Policy Roundup: Economics

The week’s top economic news, by Davis Giangiulio.  

The Labor Department revealed on Friday 266,000 jobs were added in April, a figure that dramatically missed expectations. While the total labor force figure, which includes all employed and those actively looking for work, rose to a pandemic-level high, that was mainly driven by men as the total number of women in the labor force fell. The core unemployment rate, which subtracts those who are temporarily unemployed of which there are many due to COVID, is still stubbornly high at 5.9%, close to the pandemic’s peak.

This miss in job growth is fueling conversation about a labor shortage. Earlier in the week, the Washington Post reported that the White House has “been peppered by complaints” by businesses lamenting they can’t find workers as the economy recovers. Why? According to Bloomberg, executives blame stimulus checks and expanded unemployment insurance (UI) for disincentivizing workers from getting back on the job.

But not everyone is buying that there is a labor shortage: some economists blame a lack of wage growth and structural barriers preventing the return to work. Nearly 3 million people were not looking for work in April because of fear of catching COVID on the job, and lack of child-care and closed schools is a reason many mothers have yet to return to the workforce.

Nevertheless, the expanded UI enacted in the March stimulus package is getting a second look, amid fears that it is incentivizing people not to look for work. Gov. Greg Gianforte (R-MT) announced Tuesday that he would end his state’s enhanced UI benefits two months early, instead promising that workers would receive a $1,200 bonus after returning to their jobs for four weeks. South Carolina made a similar move to end unemployment benefits on Thursday, so did Arkansas on Friday, and Georgia and Wyoming are considering it too.

President Biden, however, said on Friday that there was “nothing measurable” connecting the disappointing jobs figure and expanded UI, and Treasury Secretary Janet Yellen argued that UI expansion isn’t making a big difference in the pace of the recovery. But with more states examining their pandemic UI models and the Chamber of Commerce calling for an end to the extra $300 payments, it seems as if this is an issue that may dominate the next period of the recovery.

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Ask Gabe

Your questions, answered.

Q: Last week, you wrote that some Democrats were urging President Biden to “utilize deficit spending rather than raising taxes” to pay for his economic agenda. What does that mean? — Karel A. of Havana, Cuba

A: President Biden has proposed spending about $4 trillion over the next 10 years in his sweeping economic packages, leading to a looming question that is dividing Washington: How should those proposals be paid for? Biden has proposed financing the packages through tax increases, seeking to raise the corporate tax rate to pay for his infrastructure plan and to raise the top marginal income tax rate and the capital gains tax to pay for his “families plan.”

But there are other ideas being kicked around too. Republicans have offered a smaller infrastructure proposal that would be paid for by “user fees” (such as raising the federal gas tax) instead of tax hikes for corporations and wealthy Americans. Some Democrats, meanwhile, are urging Biden not to include a pay-for at all and instead employ “deficit spending,” which would mean financing the plan by borrowing money (taking on debt) instead of raising new revenue through taxation.

Biden embraced deficit spending for his $1.9 trillion stimulus package, and the federal deficit soared to record heights after passage of the legislation, which was paid for entirely by borrowing. But he has resisted calls to do the same for his next two economic proposals: “I’m willing to compromise, but I’m not willing to not pay for what we’re talking about,” Biden said last week. “I’m not willing to deficit spend.”

Daybook

What’s happening in Washington today. (All times Eastern.)

President Joe Biden will receive his daily intelligence briefing at 9:30 a.m. Then, at 10:30 a.m., he will attend a virtual meeting with the Bucharest Nine (B9), the countries of the NATO Eastern flank, to “convey his desire for closer cooperation with our allies in Central Europe and the Baltic and Black Sea regions on the full range of global challenges.”

At 1:15 p.m., Biden will deliver remarks on the economy. According to Axios, the president will also meet with Senate Environmental and Public Works Committee Chairman Tom Carper (D-DE) to discuss infrastructure.

• Vice President Kamala Harris will have lunch with UN Ambassador Linda Thomas-Greenfield at 12 p.m. and then attend Biden’s speech on the economy.
• White House Press Secretary Jen Psaki will hold a press briefing at 12 p.m. The Senate will convene at 3 p.m. Following Leader remarks, the chamber will consider Andrea Palm’s nomination to be Deputy Secretary of Health and Human Services. At 5:30 p.m., the Senate will hold a cloture vote to advance Palm’s nomination. Palm served in the Obama administration and managed Wisconsin’s COVID-19 response under Gov. Tony Evers (D-WI) last year.
  The House is not in session.
• The House Administration Committee will hold a hearing at 3 p.m. on the U.S. Capitol Police response to the January 6 riot. Michael Bolton, the Capitol Police inspector general, will testify.

The Supreme Court is not in session.

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