High Stakes at the White House This Week
Author: Greg Valliere
May 8, 2023
ALL SORTS OF GIMMICKS are getting one last look, but we think the 14th amendment to the Constitution, pledging to honor all debts, is a long-shot — as is a scheme of minting a $1 trillion coin, which theoretically would cover all debts through the end of the year.
WITH SUCH LIMITED OPTIONS — AND NO CONSENSUS ON SPENDING — there’s only one gimmick that makes any sense: a “kick the can” delay until fall, allowing members of Congress to debate spending cuts and a debt ceiling extension through the summer.
MEMBERS OF CONGRESS ARE GRUDGINGLY considering an extension until Sept. 30, when the fiscal year ends. This would set up an enormous battle on the 2024 budget and the debt ceiling, all at once. We think this would require another extension, with the dysfunctional Congress debating just before Christmas on still another chaotic year-end package.
THE PROBLEM WITH THIS SCENARIO: Lots of House Republicans may refuse to vote for a “kick the can” extension, and they may demand a debt default showdown in June. We we still think there’s a 60-40 chance of an ultimate deal — but first there would have to be an agreement on an extension, and that vote would be very close.
* * * * *
PRESIDENT BIDEN’S POLL NUMBERS continue to slip, according to an extensive Washington Post-ABC News poll that was released over the weekend. His job approval has hit a new low at 36%.
PARTY LEADERS ARE ALARMED to see Biden’s numbers plunging among young people and Hispanics, and Donald Trump now has a 54% positive rating on his handling of the economy, compared to 36% for Biden.
ASTONISHINGLY, 63% OF RESPONDENTS said Biden “does not have the mental sharpness to serve effectively as president,” while 64% said Trump has sufficient mental abilities. Despite his surge in the polls, Trump scores poorly on his personal honesty.
IN HEAD-TO-HEAD matchups, Trump leads Biden by six points while Florida Gov. Ron DeSantis leads Biden by five points. With most Democrats saying that they favor a nominee other than Trump, you have to wonder if some ambitious governor may be thinking of challenging Biden for the nomination. The president looks very vulnerable.
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.
©2023 AGF Management Limited. All rights reserved.