Two Important Deadlines are Slipping
Author: Greg Valliere
August 24, 2021
IN A CITY AS DYSFUNCTIONAL AS WASHINGTON, setting deadlines is often futile. They usually slip, which is the likely fate of deadlines on a complete Afghan pullout and House approval of infrastructure legislation.
THE MORE IMPORTANT ISSUE is the Aug. 31 deadline to leave Afghanistan. Over 10,000 U.S. citizens and Afghans were evacuated yesterday, bringing the total to about 37,000 since Kabul fell. But it’s unlikely that all evacuations will be finished by Aug. 31, the Taliban’s “red line.” The final U.S. evacuees will be 6,000 troops.
G-7 LEADERS will meet virtually today, with Boris Johnson expected to urge an extension of the deadline, and Joe Biden expected to agree. We think the Taliban will relent; they may stay on good behavior for a while, eager to extract billions of Afghan dollars — much of it earned in the drug trade — that are stashed in Western banks.
THE ULTIMATE DEADLINE may be Sept. 11 — a somber date, as Al Qaeda and ISIS eye a return to sanctuaries in Afghanistan, which precipitated this war in the first place.
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THE DEADLINE FOR HOUSE PASSAGE of two infrastructure bills wasn’t met last night, with talks set to resume at noon today. This issue won’t be fully resolved for many more weeks, despite bipartisan support for the first bill, which would spend billions on infrastructure.
THE SECOND BILL, which would spend about $3.5 trillion on social programs, cannot pass in a stand-alone vote — largely because Democratic Sens. Joe Manchin and Kyrstin Sinema would never accept a pricetag close to $3.5 billion. So the two bills will have to be combined in some form; an artful compromise on the process to be used this fall is possible as early as this week.
BUT A COMPROMISE ON THE ACTUAL DETAILS (and cost) of the second bill is a long way off, as is a deal on raising the debt ceiling. The next deadline will be the Oct. 1 start of the fiscal year, but that also is likely to slip. The ultimate deadline may be some time in December.
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JEROME POWELL’S BIG ENDORSEMENT: Bloomberg reported this weekend that Treasury Secretary Janet Yellen has endorsed Jerome Powell for a second term as Fed Chairman. Yellen has tremendous clout with moderates and progressives, and if she has told the White House to keep Powell, that should be seal the deal.
MARKET IMPLICATIONS: The knock on Powell is that he’s not an aggressive regulator; other Fed officials, like Gov. Lael Brainard, favor a tougher stance. If Powell is nominated and confirmed, it would be a net plus for the financial services industry and a setback for progressives like Sen. Elizabeth Warren.
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EDITOR’S NOTE: We don’t plan to publish every day between now and Labor Day.
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