In the week ahead the war in Ukraine will continue to be the major issue that dominates DC as the world looks to see if there can be an exit plan for Putin as his army seems bogged down on the ground.
President Biden heads to Europe this week for direct meetings with the other NATO leaders, a special gather of the G7, and a trip to Poland which is receiving many of the Ukrainian refugees. Last week Congress met in a joint session to hear a speech by Ukraine President Zelensky and gave the Ukrainian President a prolonged standing ovation. Congress appears ready to give Ukraine whatever it needs; it has already approved nearly $14B in the $1.5T FY 2022 spending bill it approved two weeks ago. In fact Democrats are already going after the 30 Republicans who voted against the 2022 budget which contained the Ukraine money.
In a high stakes meeting last week Biden met virtually with Chinese President Xi. China is the wild card in the search for peace in Ukraine. After a two hour meeting between the two, both nations expressed support for a cease fire and an end to the Russian invasion. China’s position, which had been neutral to a slight nod to Russia, appears to be moving more towards a role of trying to be an honest broker. Could China be the key to a Putin exit strategy? Attached is a link to the official White House readout on the meeting.
Fed
The Fed’s Federal Open Markets Committee (FOMC) made its long anticipated rate move, raising rates by 25bps. FOMC members Bullard and Waller issued statements favoring a more aggressive increase of 50bps.The Fed made clear it will watch data in the coming month before the next meeting and another rate action. The next FOMC meeting is scheduled for May 3 and 4, and rate action is anticipated. By meeting regularly it gives the central bank time to review economic data and world events. Shortly after the Russian invasion of Ukraine there was some speculation that the much telegraphed rate increase might not happen, but Fed Chair Powell quickly cleared the air and in Congressional testimony made statements pointing to the increase.
Last week saw progress on the stalemate that was holding up the nomination of Jay Powell for a second term as Fed Chair. The deadlock on Powell and the other nominees was broken when Democratic Senator Joe Manchin announced that he would oppose the nomination of Sarah Bloom Raskin. The Raskin nomination had been strongly opposed by Banking Committee Republicans and they had blocked the Committee from meeting to approve Powell’s nomination and the other nominees. Manchin’s announcement made clear that the Raskin nomination could not win approval from the Senate and she withdrew her name and cleared the way for the Committee to meet and vote.
The committee unanimously approved Philip Jefferson for a board seat and tied with a 12 to 12 vote on Board nominee Lisa Cook. A tie vote allows the nomination to go to the Senate floor for a vote. If the vote is a partisan tie on the Senate floor Vice President Harris would break the tie for confirmation.
Interestingly, the vote on Powell to be Chair was 23 to 1, with Senator Elizabeth Warren being the sole NO vote. It shows the broad support Fed policy under Powell’s leadership has had during the tough times of the pandemic.
Oil prices
As rising gasoline prices emerge as an issue in this year’s Congressional elections, Democrats have started to focus on the role of energy companies. Last week the Chair of the House Energy and Commerce Committee announced April hearings and sent letters to the top management of the major oil companies.
Profits of oil companies has long been a rallying cry for Democrats. Many Democrats have pointed to the speed with which gas prices are raised and how decreases in prices seem to move more deliberately. Reflecting on my long ago career in Congress this was an issue back during the Arab oil embargo and rising prices; issues in DC never seem to change, they merely get recycled.
SCOTUS
Hearings begin this week on the President’s nomination of Judge Ketanji Brown Jackson for the seat on the SCOTUS that Justice Breyer is vacating. Like so many issues before the Senate, her fate may ride on the vote of West Virginia Senator Joe Manchin. When Judge Jackson recently met with Senator Manchin he sounded very favorable; but attitudes can change during confirmation hearings. SCOTUS hearings are usually high drama and expect plenty of coverage this week as Judge Jackson testifies.