Our Cut-Rate President. Wither the Senate?

 

Our Cut-Rate President

 

When the job market was faltering, the president pressured the Fed for a rate cut. Last month, the job market did better than expected — and the president called for a rate cut anyway. So: good economy, bad economy, indifferent economy, the president’s demand never changes — cut the rates! Let’s then to call him our cut rate president.

Speaking of cutting rates, it’s time for another Federal Open Market Committee meeting — it feels like we just had one. This one runs September 15–16, and all signs point, much to the president’s chagrin, toward a rate hike. The prediction market at the Chicago Mercantile Exchange puts the odds of a 25-basis-point hike at 86.5%.

https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

It’s the inflation that won’t go away. It has held steady at 3.4 percent, well above the Fed’s avowed target of 2 percent. Core inflation — excluding food and energy — rose 0.3%, which many speculate would be enough to trigger a hike. At the last meeting, three members dissented voting to raise the Fed funds rate. Others hinted that if things didn’t cool down, they’d support a hike too. Meanwhile, the tariffs have continued, as has Trump’s war with Iran. 

With gas prices over $4 and diesel over $6 nationally, a case could be made that the Fed should do the opposite — cut rates to ward off a recession, even at the cost of more inflation. That’s surely what the president wants. But having lived through an inflationary recession and having dealt with one as a member of the board of the National Credit Union Administration, I would not recommend it. Inflation has taken a real toll on consumer sentiment. The University of Michigan’s index of consumer sentiment has slipped to 47.8, the second-lowest level in the index’s history.

But yelling at the Fed is just a way of the president pointing a finger at someone else. The president isn’t about to admit that his own policies are largely responsible. He’ll blame the Fed. He’ll blame Joe Biden. But this time most of the public aren’t fooled.

Wither the Senate?

 

Trump’s economy may end up costing republicans the Senate — something unthinkable just a few months ago. Susan Collins is behind in the polls in Maine. Yes, I know, Susan Collins is always behind in the polls in Maine. She even trailed a candidate who was, in essence, a perverted, nazi-tattooed fake oyster farmer. Now she trails his replacement, Troy Jackson, who could only manage third placein the democratic governor’s primary. The Senate looks like his consolation prize. Collins is being dragged down by Trump’s peevish spat with Canada, Maine’s largest trading partner. Republicans may also lose Iowa, where tariffs have hurt agricultural exports and rising fuel, fertilizer, and equipment costs are pushing some farmers toward bankruptcy. Then there’s Michigan, where the democratic Senate nominee is an avowed socialist. This should be a slam dunk for the republicans but the trade war with Canada looms large over a state whose economy, especially its auto industry and energy sector depends on Canadian trade. Ohio ordinarily leans republican, but Sherrod Brown, who lost to Bernie Moreno, is back and leading incumbent Jon Husted in the polls. The president forced out North Carolina’s Thom Tillis and opened the door for former democratic governor Roy Cooper who will probably win. Then there’s Texas, where Trump attacked incumbent John Cornyn and endorsed the ethically challenged Ken Paxton, who beat Cornyn by an embarrassing 25 points. Now a distinctly unconventional democrat, James Talarico, is actually leading Paxton in the polls. Texas is now left choosing the lesser of two lessers. In Alaska, former representative Mary Peltola leads incumbent Dan Sullivan in what has traditionally been a Republican stronghold.

Trump himself deserves much of the blame for Georgia having two democratic senators, thanks to his fraud allegations and trashing the republican governor and secretary of state’s not aggressively pursuing his claims. He urged his supporters to sit out the runoff, which handed democrats 50 Senate seats — with Kamala Harris casting the tie-breaking vote. For the record, democrat Raphael Warnock won his re-election race against Herschel Walker, now ambassador to the Bahamas. The other Senate democrat, Jon Ossoff, is now well ahead against Rep. Mike Collins, who is fending off corruption allegations along with claims that his son-in-law is a white-supremacist influencer – you mean there is such a thing? Time was when virtually all of Georgia’s elected politicians were white supremacist influencers. Now of the state’s two senators, one is black and the other is Jewish. So much for white supremacy!