Happy Thursday! The House left today for its summer recess, holding its last vote until September 9, which is 46 days away. Before departing, lawmakers passed a non-binding resolution introduced by Republicans that “strongly condemns the Biden Administration and its Border Czar, Kamala Harris’s, failure to secure the United States border.” The vote saw 214 Republicans joined by six Democrats.
At the White House, President Biden and Vice President Harris held separate meetings with Israeli Prime Minister Benjamin Netanyahu, who will also meet with former President Donald Trump in Florida tomorrow.
House Starts Summer Recess Early as Republicans Stall Out on Spending Plans
The House is now out until the week after Labor Day, meaning that lawmakers will have a key item on their agenda when they return: funding the government. Congress will need to pass a stopgap funding measure known as a continuing resolution, or CR, to avoid a government shutdown that would otherwise start when the calendar turns to October and a new fiscal year begins.
The House has passed five of the 12 annual appropriations bills, largely along party lines. House Speaker had pledged to pass all 12 bills before lawmakers left for their August recess, but the Republican leader’s ambitious plans and aggressive timetable were derailed by divisions within his own conference — the same divisions that plagued Republicans during last year’s drawn-out appropriations process and were always likely to arise again.
“Johnson has been bringing bills to the floor, only to pull them from consideration before they failed as far-right Republicans take hard-line stances on their own priorities,” The Washington Post reported. GOP leaders were forced to pull their Energy and Water bill Tuesday night.
House Majority Leader Steve Scalise blamed Democrats for the lack of progress. “When you have a situation where the Democrats all vote no on every appropriations bill, you eventually hit a wall because, you know, we have a few of our own members that vote against some of these bills,” he told The Hill this week.
Of course, House Republicans’ partisan spending measures would have gone nowhere in the Democratic-led Senate, which has yet to pass any of its own spending bills, though the Senate Appropriations Committee on Thursday advanced four funding bills with bipartisan support. That brings the total number approved by the Senate panel to seven, and the five remaining bills are scheduled for consideration on August 1.
“Getting here has not been easy,” Senate Appropriations Chair Patty Murray said in her opening remarks at Thursday’s markup hearing. “It has required all of us to make some tough decisions and seeking out common ground. But as I made clear at our last markup, here in the Senate, we are moving ahead with strong bipartisan bills that can actually be passed and signed into law, and which actually address the issues we all hear about back home, and the many challenges we are seeing abroad.”
Lawmakers are scheduled to be in session for just three weeks — 13 legislative days — in September before departing again until after the November elections.
“Republicans hoping to govern responsibly ahead of the election want to extend funding until the end of the year,” the Post reports, adding that the lawmakers would then look to pass a larger funding package to avoid dropping a crisis on Donald Trump’s doorstep, if he’s re-elected. “But far-right members want any extension of current fiscal levels to go through early next year and include the SAVE Act, which would require voters to present proof of citizenship to vote.”
That would essentially dare Senate Democrats to oppose such a bill, potentially putting Congress on track for a shutdown. But conservatives may not be able to get their wish, and the speaker is still deciding on how he wants to approach the CR.
Economy Surges in Second Quarter, Surprising Forecasters
The U.S. economy grew at a faster pace than expected in the second quarter, according to data released by the Commerce Department Thursday, dampening fears of an impending slowdown while raising the odds of achieving a “soft landing” in the battle against inflation.
Gross domestic product increased at an annualized rate of 2.8% from April to June, doubling the 1.4% rate recorded in the first quarter of 2024. Economists had expected to see growth closer to 2%.
Consumer spending drove the surprisingly strong results, rising 2.3% during the quarter. “Consumer spending picked up across the board, after slowing in the first quarter,” said KPMG chief economist Diane Swonk. “Big box retailers, who tend to lead the trend for the industry, made a move to roll-back prices to make up on volume what they would lose on margin. The gambit paid off, as consumers came back and boosted their spending on everything from services to goods.”
Inventory buildups also played a role, as did business investment, which rose 5.2%, driven by an 11.6% annual increase in equipment investment. Government spending driven by defense outlays also helped, but residential investment was a drag as high interest rates continued to take a toll on real estate.
President Biden celebrated the good economic news while pointing out the enviable position of the U.S. relative to other advanced economies. “When I took office, we were in the midst of the worst economic crisis since the Great Depression,” he said in a statement. “Today’s GDP report makes clear we now have the strongest economy in the world.”
Biden also linked the results to the policies that he — along with his vice president, now the presumptive Democratic nominee — have put in place. “Thanks to my and Vice President Harris’s economic agenda, our economy grew a robust 2.8% over the last quarter, based on strong American consumers and business investment,” he said. “We’ve created nearly 16 million jobs, wages are up, and inflation is coming down. We’re rebuilding the Nation and bringing manufacturing back to America.”
What the experts are saying: Analysts said the report shows an economy that just won’t quit, even as it throttles back from post-pandemic highs. “Economic growth is solid, not too hot and not too cold,” said Chris Rupkey, chief economist at Fwdbonds, per The Washington Post. “The soft patch we had at the beginning of the year has gone away, and with it, the risks of a recession are dying on the vine.”
CNN’s Bryan Mena said the economy is on the verge of a rare achievement: a soft landing, in which the inflation rate is reduced to the Fed’s 2% target level without a recession. Mena says that has happened only once before, in the 1990s.
The strong showing for business investment is a good sign for the future, according to The Washington Post’s Heather Long. “Business investment continues to be really robust. Companies only invest if they are optimistic about the future,” she wrote. “+5.2% non-residential fixed investment in Q2 2024. That's the strongest in a year. Bottom line: Companies believe in the ‘soft landing.’”
That could be good news for the Federal Reserve, which is still seeking solid proof that inflation has been defeated, even as the central bank aims to keep the economy moving forward. Many analysts expect the Fed to start cutting interest rates in September, and the GDP report did little to change that outlook. “This is a perfect report for the Fed, growth during the first half of the year is not too hot, inflation continues to cool and the elusive soft landing scenario looks within reach,” said Olu Sonola of Fitch Ratings in a research note, per Bloomberg.
Joseph Brusuelas, chief economist at RSM, said the latest data is a clear rebuke to critics who are claiming the economy is in trouble. “It’s a truly remarkable economic & policy narrative that should be carefully studied & widely celebrated,” he said on X. “Not sure about you but I’ve had it with the economy is in the ditch crowd. It most decisively is not.”
The bottom line: The U.S. economy continues to outperform both analyst expectations and global peers. Economists say the pace of growth could cool in the second half of the year, but there are few signs of serious trouble ahead.
Fiscal News Roundup
- U.S. Economy Grew 2.8% in Second Quarter, a Robust Unexpected Strengthening – Washington Post
- The US Economy Is Pulling Off Something Historic – CNN
- Senate Negotiators Advance More Than Half of Government Funding Bills for 2025 – The Hill
- Harris Narrows Gap Against Trump, Times/Siena Poll Finds – New York Times
- Harris Campaign Hits Trump Over Fox News Interview: ‘This Guy Shouldn’t Be President Ever Again’ – The Hill
- Harris’ Senate Portfolio Included Maternal Health, Telehealth – Roll Call
- A JD Vance-Aligned Think Tank Is Stirring the Pot With Conservatives – Politico
- Sanders May Bring His Populist Brand to Powerful Finance Panel – Roll Call
- Harvard’s $465 Million in Tax Benefits Draw New Scrutiny – Bloomberg
- Highly Effective HIV Drug Could Cost Patients $40 a Year – The Hill
- Mental Health Inequities Projected to Cost US $14 Trillion Over 16 Years, New Study Says – The Hill
Views and Analysis
- House GOP Is in a Funding Stalemate Once Again – Marianna Sotomayor and Leigh Ann Caldwell, Washington Post
- The Republican Party’s Elite Conundrum – Pamela Paul, New York Times
- Kamala Harris Confounds the Republicans – Wall Street Journal Editorial Board
- Fact Check: Trump Made at Least 10 False Claims About Kamala Harris in a Single Rally Speech – Daniel Dale, CNN
- Trump Risks Losing Voters He Needs With Loaded Attacks on Harris – Nancy Cook, Bloomberg
- J.D. Vance Has Made It Impossible for Trump to Run Away From Project 2025 – Andrew Prokop, Vox
- The Bipartisan Reform Opportunity Staring Kamala Harris in the Face – David Dayen, American Prospect
- Trump's No Tax on Tips Proposal Wouldn't Benefit Tipped Workers – Emily Peck, Axios
- The Economic Slowdown That Wasn't – Courtenay Brown and Neil Irwin, Axios
- Democrats Hope Bad Polls Were a Biden Problem, Not a Policy Problem – Paul Kane, Washington Post
- Full Employment Is Joe Biden’s True Legacy – Zachary D. Carter, Slate
- Democrats Must Prioritize the Workforce to Win Back the Working Class – Taylor Maag and Stuart Malec, The Hill
- Why Is the Government Encouraging a Taxpayer Bailout? – Mark Calabria, Tom Hoenig, Dennis Kelleher and Aaron Klein, Politico
- How Four U.S. Presidents Unleashed Economic Warfare Across the Globe – Jeff Stein and Federica Cocco, Washington Post