A Whiff of Panic in Washington
Author: Greg Valliere
July 20, 2020
AS CONGRESS RETURNS TO THIS STEAMY CITY, it’s not an exaggeration to report that there’s a whiff of panic in the air, as the U.S. fails, utterly, to control the pandemic.
THE ANXIETY IS PARTICULARLY ACUTE among Republicans, many of whom say — in private — that Donald Trump has become an albatross for the party, which now faces the very real prospect of losing the White House, the Senate and the House.
THE ECONOMY, WHICH SEEMED POISED TO REBOUND nicely this quarter, is a huge unknown, as a majority of Americans — especially in the Sunbelt — once again are reluctant to dine out, travel or go to malls. There will not be a V-shaped recovery; the public still thinks the country opened up too soon.
AN UNWIELDY, COSTLY STIMULUS BILL still looks likely by early August, but the differences between both parties — and the differences within the parties — guarantee several weeks of bickering before a bill is enacted, which may simply prevent the economy from tanking, not rebounding. More aid may be necessary.
THE DOMINANT ISSUE, OF COURSE, is the dramatic increase of infections, hospitalizations, and fatalities. The successful response has come from countries like Germany and Canada; the response in the U.S. has been a cacophony of confusing signals from leaders and the depressing refusal by many Americans to embrace social distancing and masks.
A CONSENSUS IS EMERGING IN WASHINGTON: Manage the crisis, spend another $1.5 trillion, ignore Trump (if possible) and wait for a vaccine. The mantra that we’ll have a vaccine by December is deafening; we shudder to think that this timetable may be unrealistic.
IN THE MEANTIME, there’s an election in less than four months. Trump, in his train
wreck of an interview with Chris Wallace, made it clear that there will be no limits
on his assault on Joe Biden, who still looks like a shaky front-runner. And Trump
continues to allege that the election will be rigged.
THE POLLS SEEM HARD TO BELIEVE: Is Biden really ahead by 15 points, as the Washington Post/ABC News poll showed this weekend? We think Biden’s lead is more like 10 points, and there’s downside risks for him as his leftist agenda becomes a central issue. But as one Republican told us this weekend, the issue seems to be whether Biden will win narrowly or in a landslide.
IN THE DECADES WE’VE BEEN IN WASHINGTON, there’s never been a combination like this, as a pandemic and urban gun violence persist ahead of a potential tidal wave election. A stretch of exceptional volatility looms for the financial markets, in our opinion, as the economy fizzles and it finally sinks in — the U.S. has failed, utterly, to control the virus.
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