Obviously, the news this past week has been dominated by Ukraine, it allowed the President to lead his State of the Union address with a bipartisan declaration of support with the brave citizens who are fighting Putin’s war of choice to capture Ukraine. Few issues have united Washington such as the battle being fought by Ukrainians.
The House passed a resolution of support for Ukraine on a vote of 426 to 3, all three dissenters were Republicans. The White House has asked Congress for an emergency funding of $10B for Ukrainian aid. The question now is how the funding request will fit into the government budget process.
The current Continuing Resolution (CR) that funds the entire US Government expires next Friday, March 11 and there is growing support for including the Ukraine money in whatever bill extends government funding.
Over the last few weeks, Congress has been working on a $1.5T spending bill to fund all departments of government through the fiscal year that runs until October 1. This past week the Administration asked that the $1.5T Omnibus Spending Bill be increased to include the Ukraine money and also $22.5B for Covid therapeutics, testing, and vaccines. There are Republican reservations with the covid money and now Congress must decide if they will delay Ukraine money until the covid bill is agreed to.
The government has been working under a CR since October 1, 2021, and there is widespread agreement that new funding for the 12 government departments needs to be passed with changed spending levels and new, updated priorities. In order to avoid a government shutdown next Friday night, Congress needs to pass either another CR or a new Omnibus Spending Bill before the March 11 deadline. Any new CR is likely to be of very short duration as Congress appears to be very close to approving an Omnibus Bill for FY22.
Next week will be filled with budget drama as Congress looks to keep the government open, agree to new funding levels, and come to decision on how to get the money approved for Ukraine and covid programs.
On the Fed rate watch front, last week saw the Fed Chair testify before the House and Senate Banking Committees giving the semiannual report on monetary policy. Chair Powell cleared the air on whether or not the war in Ukraine would delay Fed rate action by testifying that he expected a 25bps increase when the FOMC meets March 15/16. The President and other world leaders have made clear the risk of nuclear war prohibits the use of NATO forces in support of the Ukrainians fighting the Russian invasion, the weekend is likely to be an ugly, sad time as Putin pushes his bloody conquest of Ukraine.
