The Biden Agenda is in Danger of Stalling
Author: Greg Valliere
June 7, 2021
EVERY MAJOR ISSUE IN WASHINGTON — voting reform, infrastructure, taxes, you name it — is now held hostage by Sen. Joe Manchin, the obstructionist West Virginia Democrat who threatened yesterday to derail President Biden’s agenda. Manchin wants bipartisanship in a world where bipartisanship does not exist.
DEMOCRATS, ESPECIALLY HOUSE LIBERALS, have reacted furiously but they cannot rely on reconciliation or other tactics because they’re one vote short — Manchin’s, and possibly a vote from moderate Democrat Kyrsten Sinema, who is also opposed to Biden’s activist agenda.
THIS HAS ENORMOUS IMPLICATIONS:
Infrastructure: Talks have stalled; Biden and Sen. Shelly Moore Capito will try again today. Biden can’t get much more than $1 trillion over eight years, which is a non-starter for the populist left, and Republicans will accept only spending for roads, bridges, dams, broadband, water, etc. We think a scaled-back infrastructure bill may emerge later this summer, but the other major Biden goals face an uphill fight.
Social spending: The family aid bill, costing nearly $2 trillion, is on life support. Republicans say the country cannot afford free community college tuition, a permanent child tax credit, new health benefits, etc. Biden’s aides had planned to move this through reconciliation, but that can’t happen with only 48 or 49 Democratic votes; they need all 50 of their members to support it, which would result in a 50-50 tie that would be broken by Kamala Harris.
Taxes: Manchin probably will agree to a modest tax hike on the very wealthy and a hike of a few points on the corporate rate, but a sweeping tax measure looks increasingly unlikely; Republicans adamantly oppose any tax hike.
The deal cut by Janet Yellen this weekend in Europe faces huge obstacles as small countries like Ireland balk; more importantly, it’s a tax treaty, and all treaties require two-thirds approval from the Senate, a very, very high bar to clear. And there will be a furious push-back from conservatives — check out the scathing editorial in this morning’s Wall Street Journal.
BIDEN HEADS FOR EUROPE later this week with major headaches — his domestic vaccine goals haven’t been met; Russian cyberattacks are out of control; Yellen said, indiscreetly, that inflation may exceed 3% for a while; and then there’s Manchin — whose refusal to support voting reform has infuriated the party.
THERE ARE COMMON GOALS BETWEEN THE U.S. and Western Europe, confirmed once again by the poignant D-day ceremony yesterday on the 77th anniversary of the epic Normandy invasion. But European leaders view the U.S. more warily after the last four years — and surely they have noted the re-emergence of Donald Trump, and Biden’s inability to get his agenda enacted.
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.