Listen to the Voters
Author: Greg Valliere
August 12, 2021
THE WASHINGTON SPIN MACHINES were in overdrive yesterday, as moderate Democrats battled with progressives over infrastructure legislation that already appears to be in trouble. There are four warring camps:
1. Nancy Pelosi can count votes, and she realizes that House progressives will not accept the $1 trillion infrastructure bill that passed in the Senate earlier this week. They are insisting on a $3.5 trillion companion bill; without it, Congress
could gridlock.
2. House moderates are pleading with Pelosi — why not take a victory: the $1 trillion bill for highways, bridges, dams, water, broadband etc., could pass immediately and the moderates will gladly take it. But at least 50 progressives in the House would not gladly take it, and neither will she.
3. Here comes Joe Manchin, the moderate Democrat who undoubtedly is eager to appear on this weekend’s talk shows. He and Sen. Kyrsten Sinema will not support a $3.5 trillion price tag; the issue becomes what number is acceptable — $2 trillion? $1.5 trillion? That’s a non-starter, of course, among House liberals.
4. And just to complicate the narrative, Mitch McConnell has warmly congratulated Joe Biden for winning approval of the $1 trillion bill; an astonishing 19 Republicans voted for the measure. That gives them cover this fall, of course, when they unanimously oppose the $3.5 trillion package and refuse to raise the debt ceiling.
LISTEN TO THE VOTERS: With this kind of uncertainty, members of Congress will do what they always do in August — they will listen to their constituents.
OUR SENSE IS THAT THE PUBLIC supports the $1 trillion bill but has deep reservations about spending another $3.5 trillion, which would increase uneasiness over inflation. That’s a big concern, along with crime and illegal immigration. (Republicans think voters will rebel over tax hikes, but polls show the public has no problem with raising taxes on the wealthy and big corporations.)
THE GREAT WILD CARD DURING THIS AUGUST BREAK will be the Delta variant and a growing perception that Govs. Ron DeSantis and Greg Abbott are too inflexible on wearing masks, which many school districts support. On this issue as well, Republicans have to listen to voters — not just the loudest ones, but parents who don’t want their children to become political pawns.
IT MAY TAKE A FEW WEEKS for public opinion to gel on these issues, plenty of time for Pelosi, Manchin and others to recalibrate. The one constant is the unflappable and pragmatic Biden, who — like Ronald Reagan — is content to take half a loaf. Biden can get his infrastructure spending this fall, but only if it’s scaled back.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2022 AGF Management Limited. All rights reserved.
