What We’re Hearing on Capitol Hill
Author: Greg Valliere
January 31, 2024
THE PACE IS PICKING UP in Washington as January finally comes to a close. Here’s a quick look at what we’re hearing on Capitol Hill on ten crucial issues:
1. Geopolitics is the dominant concern, as a fear grows that the Mideast war will expand. President Biden has no choice but to attack Iranian forces, probably within days, and then the focus will shift to how Iran retaliates.
Meanwhile, chances of a Hamas-Israeli truce and a hostage exchange has only fair odds, as Biden’s relations with Benjamin Netanyahu continue to deteriorate.
2. Members of both parties are stunned by Donald Trump’s audacity; he’s calling the shots on Capitol Hill, bullying the rookie Mike Johnson in the House and the frail Mitch McConnell in the Senate. Trump may single-handedly block an immigration bill.
3. A compromise tax bill, with an expanded child tax credit and some corporate breaks, seems to be stalling. A deal is still possible but momentum has faded.
4. It’s dawning on Congress that the economy is improving. Voters still worry about inflation, but on Capitol Hill there’s a consensus that the economy may not be an albatross for Biden after all. A wild card: growing anger among homeowners who are saddled with enormous insurance bills.
5. There’s an overwhelming belief that the Senate will flip back to the Republicans, yet Democrats are favored to regain control of the House. Abortion will drive the House races.
6. No one can figure out how to reduce the budget deficit. Strong receipts will help, but there’s little sentiment to cut spending or raise taxes. Tax policy is about to become a major issue, as Congress grapples with extending the Trump tax cuts.
The price tag could be in the neighborhood of $4 trillion, and while some provisions will pass, a massive tax cut will have to rely on getting 60 votes in the Senate, a tall order.
7. Most members of Congress want to approve military aid for Ukraine and Israel, and it probably will happen. But this will take time — and Ukraine doesn’t have much left. In the final analysis on Capitol Hill, no one wants the blame for Ukraine losing the war.
8. Congress continues to stall on a budget bill, and a shutdown in March is possible. A growing number of lawmakers would like to simply pass continuing resolutions every few months until the fiscal year ends on Sept.30.
9. Doing virtually nothing is an acceptable strategy — perhaps even a plus for the financial markets — but voters are uneasy. They want action on soaring crime rates, illegal immigration, fentanyl deaths, and many other issues that Congress has neglected.
10. And we come full circle to Donald Trump, who has taken all the oxygen out of the room. He’s almost certainly the GOP nominee, as the vast majority of Republicans endorse him (even though he’s extremely unpopular on Capitol Hill).
Is Trump the next president? If the election were today, he would win — and that prospect worries a majority of Congress, where the memory of Jan. 6 is still fresh.
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