The Hill’s Morning Report — Federal Reserve hits the pause button
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Consumers crave lower prices, cheaper credit and higher wages. Investors want certainty and an end to interest rate hikes. President Biden, as a candidate for reelection, wants the U.S. economy to keep growing, employers to keep hiring and he wants to see inflation in retreat at the outset of 2024.
On Wednesday, the Federal Reserve said it will take a breather after 15 months of lifting its benchmark interest rates, because “we’re trying to get this right,” Chairman Jerome Powell told reporters. The central bank has opted for a new “pause” period to better assess economic data, although Powell also called it a “skip,” then caught himself. “I shouldn’t call it a skip,” he said.
The year-over-year U.S. inflation rate dropped by more than half in the past year, considered good news. But prices remain high compared with the Fed’s 2 percent inflation goal. The rate was 4.05 percent as of May 31, compared with 4.93 percent in April and a painful 8.58 percent in May 2022.
Consumers feel the strain of higher costs, and consistently indicate in surveys that the economy is their top concern, regardless of political party. But they continue to spend. And in a tight labor market, wage increases remain a reality in some fields, slowing the Fed’s ambition to chill the overall economy without tipping it into recession.
The robust job market is fueling optimism that the Fed may be able to bring down inflation without high unemployment or a prolonged contraction (The Washington Post).
Reporters noted that the Fed hinted in its policy statement on Wednesday that it could raise rates another 50 basis points before the end of 2023. The central bank has hiked rates to a range of 5 to 5.25 percent over a little more than a year and is now projecting 5.6 percent by the end of 2023, signaling it may increase its benchmark rate another two times this year (The Hill).
“Considering how far and how fast we’ve moved, we judged it prudent to hold the target range steady,” Powell said. “The things are in place that we need to see. We’re not so far from the destination.”
But the possibility of two more rate jumps in 2023 means Fed officials, who were unanimous about the decision to pause policy changes at their meeting this week, are unsure that inflation has been tamed and believe they need to know more before doing more (The New York Times). Powell in May said central bankers did not anticipate rate cuts this year.
▪ CBS News: The class of 2023 is entering the strongest job market in 70 years. The overall unemployment rate is 3.7 percent.
▪ Fox Business: Mortgage applications jump as borrowing rates ease.
▪ The Wall Street Journal analysis: The Federal Reserve is signaling that more rate hikes are coming, but if inflation keeps cooling, that’s far from certain.
Related Articles
▪ CNBC: The S&P 500 closed nearly flat on Wednesday after the Fed left rates unchanged while signaling more hikes later this year.
▪ CNBC: Why economists say it’s a near certainty that housing inflation will soon fall.
▪ The New York Times: The National Labor Relations Board, with a Democratic majority, restored a standard that counts more workers as employees rather than contractors.
LEADING THE DAY
➤ POLITICS
The criminal case against former President Trump, barring an unforeseen event, is expected to settle into a traditional trajectory through the legal system, The New York Times reports. Despite the historic circumstances, the case is expected to track routines established in the United States District Court for the Southern District of Florida, with the exception of Trump’s competing political calendar.
The only date set so far for a further step is a hearing June 27 at which Trump’s co-defendant and personal aide, Walt Nauta, will enter his plea. Beyond that, Trump must hire additional lawyers; he’s currently represented by Todd Blanche, who practices in New York and is representing the former president in the Manhattan criminal case tied to alleged hush money payments to an adult film star. Meanwhile, Federal Judge Aileen Cannon, a Trump appointee, must settle on a location for the eventual trial, and a jury must be convened.
As for speed, the Justice Department has indicated it wants to proceed quickly, while Trump wants to drag things out beyond 2024. There’s also the matter of other probes into the former president, ranging from a special counsel’s office investigation into election interference and his role during the Jan. 6, 2021, attack on the Capitol, and a Georgia probe into potential attempts to overturn the 2020 election.
▪ The Hill: Here’s a look at what’s next in Trump’s major legal battles.
▪ CBS News: Trump indictment timeline: What’s next for the federal documents case?
▪ The New York Times: Cannon, the federal judge in the Trump documents case, has scant criminal trial experience.
▪ NPR: Here’s the court transcript of Trump’s Tuesday arraignment, with NPR’s highlighted passages.
While Trump faces both legal challenges and a mounting campaign schedule, his rivals must decide how to respond. As The Hill’s Julia Manchester and Caroline Vakil report, Florida Gov. Ron DeSantis (R) faces a vexing problem as Trump dominates the news cycle in the wake of his indictment.
DeSantis has criticized the Justice Department’s case, arguing it’s a “weaponization” of government, while also keeping a fairly low profile as other GOP presidential hopefuls make headlines by either defending or criticizing Trump. His approach underscores the unique challenge he faces as Trump’s most competitive rival. While he doesn’t want to alienate the former president’s supporters — the very people he’s counting on to carry him through the primary — he also risks being eclipsed by Trump as the indictment becomes a central topic in the 2024 race.
Biden, too, is facing an unprecedented task with no easy solution, write The Hill’s Alex Gangitano and Brett Samuels, as he deals with the indictment — handed out by his administration’s Department of Justice — while being attacked by Trump’s supporters claiming he’s behind the charges. A Fox News chyron briefly deemed Biden a “wannabe dictator” during Trump’s Tuesday speech following his arraignment, while Trump himself decried Biden as a “corrupt sitting president” who, in tandem with the Justice Department, was targeting the front-runner for the 2024 GOP presidential nomination.
And then there’s the question of media coverage, The Hill’s Dominick Mastrangelo reports. Wall-to-wall coverage of the arraignment this week has given the former president a gift of sorts in the form of a nonstop media spectacle all revolving around him. While Trump attempts to spin his federal criminal indictment as a political persecution, the nonstop coverage of this week’s arraignment by major television networks and other leading media organizations raises fresh questions about how Trump may end up benefiting from the media circus his latest legal drama has created.
Meanwhile, media and political observers are left guessing how voters will process Trump’s most serious legal fight to date, which is playing out live across their screens.
Trump’s supporters seem to be enthusiastic, as his campaign said Wednesday that it has raised $6.6 million since news of his federal indictment broke, including more than $4.5 million online. The campaign raised an additional $2.1 million during a “candlelight dinner” with top donors and campaign bundlers Tuesday night at Trump’s Bedminster golf course in New Jersey (NBC News and Politico). In a Wednesday Quinnipiac University poll, 53 percent of Republican and GOP-leaning voters supported Trump, while 23 percent backed DeSantis, and other GOP candidates all remained in the single digits (Bloomberg News).
▪ CNN: As Trump rails at prosecutors, his 2024 GOP rivals flail for a message of their own.
▪ The Guardian: “Some birthday”: Trump turns 77 under the shadow of charges, with the threat of more to come.
Public opinion: Anti-abortion conservatives are moving against national opinion and the political tide in the post Dobbs era. Following the Supreme Court’s decision to send decisions about abortion rights to the states, a record-high 69 percent of Americans say abortion should be legal in the first trimester of pregnancy, according to a May 21-24 survey by Gallup. The percentages today of Americans wanting abortion to be legal under any circumstances and illegal in all circumstances were closely matched in 2019. Over a span of four years, Americans’ preference for legal abortion under any circumstances remains a minority, but that view has swelled, rising from 25 percent in 2019 to 32 percent by 2021 and 35 percent in 2022. It is currently 34 percent. Meanwhile, fewer Americans want abortion to be illegal in all circumstances (dropped from 21 percent in 2019 to 13 percent in 2022 and 2023) (The Hill).
▪ The 19th: Lawmakers in blue states are linking protections for abortion and gender-affirming care.
▪ Axios: Americans’ support for the Black Lives Matter movement has fallen to its lowest point since the murder of George Floyd three years ago, according to a new Pew Research Center survey.
▪ Politico: Miami GOP Mayor Francis Suarez jumps into the presidential race.
👉 One good read: What was Nate Silver’s data revolution? (The New Yorker).
➤ CONGRESS
The decision by House Republicans to move spending bills below the caps established in this month’s bipartisan debt ceiling deal sets the stage for a clash with Democrats in the Senate and White House — and heightens the odds of a government shutdown later in the year. As The Hill’s Emily Brooks, Mike Lillis and Mychael Schnell write, the debt limit legislation, negotiated between Biden and Speaker Kevin McCarthy (R-Calif.), featured an agreement between the parties to set new top lines on discretionary spending over the next two fiscal years.
Yet House Republicans have since balked at those figures, arguing that they’re not the target levels, but merely represent a spending ceiling that Congress cannot surpass. Behind McCarthy, they intend to mark up their 2024 appropriations bills at lower, 2022 levels, estimated to cut an additional $120 billion in federal spending. Those cuts are a non-starter with Democrats, whose support will be needed to pass the appropriations bills into law and prevent a partial government shutdown on Oct. 1. The dynamics set Congress on a collision course in September over the size and scope of government spending — a debate complicated by the heightened conservative pressure on McCarthy to hold the party line on spending or face a challenge to his Speakership. Rep. Rosa DeLauro (Conn.), senior Democrat on the Appropriations Committee, said the GOP’s strategy “all but guarantees a shutdown.” And Rep. Pete Aguilar (Calif.), chairman of the House Democratic Caucus, delivered a similar warning, saying House Republicans will never win Democratic support for their spending cuts, but might very well succeed in shuttering the government.
Meanwhile, the Republican Study Committee, the largest conservative caucus in the House, put a heavy focus on opposing “woke” policies in its annual model federal budget, while proposing $16.3 trillion in spending cuts over a decade. While not representative of the whole Republican conference, the fiscal 2024 document, The Hill’s Emily Brooks reports, includes policies that oppose gender-affirming health care for transgender youth and beyond, boost protections for religious institutions, and take aim at critical race theory — a framework that examines systemic racism in institutions.
“The RSC Budget is a reflection of our commitment to defending our constitutional rights, championing conservative values, and safeguarding the foundational principles that make our country great,” Rep. Ben Cline (R-Va.), chair of the RSC Budget and Spending Task Force, said in a statement.
▪ The New York Times: U.S. support for Ukraine aid is beginning to fray in Congress after last month’s debt ceiling deal. Spending caps as part of the two-year deal have empowered critics, threatening a bipartisan coalition that has kept military assistance flowing to Kyiv.
▪ The Hill: The House voted 225-196 to table, or kill, a censure measure aimed at Rep. Adam Schiff (D-Calif.), with most Democrats joined by 20 Republicans. Seven lawmakers voted “present.”
▪ The Hill: These 20 House Republicans voted to block a resolution to censure Schiff.
▪ The Hill: Democrats rail against “petty,” “retaliatory” GOP agriculture funding bill.
▪ Washington Examiner: Push to add new long-haul flights at Reagan National shifts to Senate.
A bipartisan group of six senators and two members of the House of Representatives introduced legislation Wednesday to protect Americans’ data from being used by U.S. adversaries. The bill is the latest in a series of proposals aimed at addressing concerns about the data of Americans using foreign-owned social media apps like TikTok.
Senate Finance Committee Chairman Ron Wyden (D-Ore.), said the bill “would turn off the tap of data to unfriendly nations, stop TikTok from sending Americans’ personal information to China, and allow nations with strong privacy protections to strengthen their relationships” (Reuters).
⚾ Fox5: For the third consecutive year, Republican lawmakers crushed Democrats in the annual Congressional Baseball Game for charity, which took place Wednesday night at Nationals Park in Washington. The score: 16-6.
IN FOCUS/SHARP TAKES
➤ INTERNATIONAL
Russian President Vladimir Putin suggested Tuesday that he could order his troops to try to seize more territory in Ukraine to protect bordering Russian regions — a threat with questionable credibility because Moscow lacks full control over areas it already annexed. Putin also asserted that Ukrainian forces had suffered “catastrophic” losses in a new counteroffensive, but he said he was not contemplating a new troop mobilization, as many Russians have feared, and reiterated the Kremlin’s assertion that Ukraine was responsible for blowing up a Dnieper River dam that caused vast flooding on both sides of the front line last week in the country’s south (The Associated Press).
Defense Secretary Lloyd Austin is in Brussels to host a meeting of the Ukraine Defense Contact Group, which includes ministers from almost 50 countries assisting Kyiv’s war efforts. Austin tweeted Thursday that the United States will “resolve to continue to support Ukraine for as long as it takes,” and that the participants of the conference “stand united” with Kyiv (The Washington Post).
The New York Times: “It doesn’t count as a war crime if you had fun”: Inside the minds of some Russian soldiers.
European Union regulators filed new antitrust charges against Google, which could lead to fines and orders for the company to change its business practices. The tech giant may need to sell off part of its advertising business to prevent it from abusing its dominant position in the market and shutting out competitors. Google “may have abused its dominant position by favoring its own ad tech business,” antitrust Commissioner Margrethe Vestager said at a press conference Wednesday.
She said the ad tech sector is “highly dynamic,” and “has changed a lot over the last 15 years,” adding Google was “pervasive” across the ad tech value chain and that offloading one part of its business could be “the only way to solve this” (Politico EU).
▪ Reuters: Nigeria boat capsize death toll rises to more than 100.
▪ The Associated Press: Greece finds no more survivors after sinking of migrant boat. Hundreds are still feared missing.
Turkey is still not supporting Sweden’s bid to join NATO ahead of the military alliance’s summit in Lithuania next month, President Recep Tayyip Erdoğan said Wednesday.
“Sweden’s expectations don’t mean we’ll follow them,” Erdoğan said during a trip to Azerbaijan, referring to Stockholm’s hopes of becoming a NATO member before the summit. Spurred by Russia’s war in Ukraine, Sweden and Finland officially asked to join NATO last year and later committed to joining the alliance together. While Finland joined the alliance earlier this year, Sweden’s bid has yet to be accepted. Other than Turkey, Hungary is the only other NATO member that has not allowed Sweden to join; new members of the alliance must be accepted by all members (Politico EU).
➤ ADMINISTRATION
The fraught U.S.-China relationship appears more likely to get worse than better as Secretary of State Antony Blinken heads to Beijing for a trip meant to improve communications between the two powers, writes The Hill’s Laura Kelly. U.S. officials are setting low expectations for the two-day visit, but they are hoping to walk away with at least one commitment: When the U.S. phones China, they pick up.
Blinken “wants to establish communication channels that are open and empowered — to discuss important challenges, address misperceptions and prevent miscalculation — so as to manage competition that does not veer into conflict,” Daniel Kritenbrink, assistant secretary of state for East Asian and Pacific affairs, said in a briefing call with reporters Wednesday.
Blinken will visit Beijing Sunday and Monday, the two sides have confirmed, a move that could put bilateral relations on better footing after months of acrimony. While in Beijing, Blinken will meet senior officials to discuss the importance of maintaining open lines of communication to responsibly manage the relationship, the State Department said. He will also raise bilateral issues of concern, global and regional matters, and potential cooperation on shared transnational challenges, spokesman Matthew Miller said. In earlier conversations, Foreign Minister Qin Gang urged the U.S. to “show respect” and stop undermining China’s interests (South China Morning Post).
The Wall Street Journal: The administration launched a quiet diplomatic push with Iran to cool tensions.
OPINION
■ Trump invited this indictment, by Karl Rove, columnist, The Wall Street Journal.
■ The U.S. has started a food fight with Mexico, by Marc L. Busch, opinion contributor, The Hill.
WHERE AND WHEN
📲 Ask The Hill: Share a news query tied to an expert journalist’s insights: The Hill launched something new and (we hope) engaging via text with Editor-in-Chief Bob Cusack. Learn more and sign up HERE.
The House will meet at 9 a.m.
The Senate will convene at 10 a.m. to resume consideration of the nomination of Nusrat Choudhury to be a U.S. District Court judge for the Eastern District of New York.
The president will receive the President’s Daily Brief at 9:30 a.m. Biden will speak at 1:45 p.m. about hidden “junk fees” and federal efforts to protect consumers. He will host a screening on the South Lawn of the film “Flamin’ Hot,” directed by Eva Longoria, at 7:45 p.m. EDT (Deadline).
Secretary of State Antony Blinken participates at 8 a.m. in a roundtable discussion with members of the Congressional Black Caucus. At 11 a.m., he will mark the release of information in a report about Trafficking in Persons. Blinken will meet at 3:30 p.m. with Maldivian Foreign Minister Abdulla Shahid at the State Department. The secretary at 5 p.m. joins a reception at Blair House for the Minnesota Expo 2027.
Treasury Secretary Janet Yellen will speak at 8 a.m. during a virtual event hosted by the Coalition of Finance Ministers for Climate Action.
Economic indicators: The Labor Department at 8:30 a.m. will report claims for unemployment benefits filed in the week ending June 10.
First lady Jill Biden will speak at a Biden Victory Fund political event in Washington, D.C., at 5 p.m. She will join the president for a White House film screening on the South Lawn at 7:45 p.m.
ELSEWHERE
➤ HEALTH & WELLBEING
A recent Florida law bans gender-affirming care for minors, but it also sets up serious barriers for transgender adults to get needed treatment, write The Hill’s Brooke Migdon and Nathaniel Weixel, and puts the providers who care for them at significant risk of losing their licenses.
“You’re talking about potentially tens of thousands of trans people across the state who got a call two weeks ago that their health care provider would no longer be renewing their prescriptions,” said Brandon Wolf, a spokesman for Equality Florida. “It is nothing short of a health care crisis in the state of Florida for trans adults right now.”
▪ Vice News: “It’s time to start worrying”: Trans people are questioning their future in the U.S.
▪ CBS News: New York City Mayor Eric Adams (D) signed an executive order protecting gender-affirming care in the Big Apple.
The Hill’s ongoing series about cancer focuses today on climbing cancer rates among young people, asking why?. … Catch up with The Hill’s cancer reporting: How COVID-19 set back the fight against cancer; Who you are, where you live help determine your chances of beating cancer and Special Report: Curing Cancer.
THE CLOSER
Take Our Morning Report Quiz
And finally … It’s Thursday, which means it’s time for this week’s Morning Report Quiz! Alert in Washington to House rules, we’re eager for some smart guesses about congressional procedure.
Be sure to email your responses to asimendinger@digital-stage.thehill.com and kkarisch@digital-stage.thehill.com — please add “Quiz” to your subject line. Winners who submit correct answers will enjoy some richly deserved newsletter fame on Friday.
Which D.C. institution has a lending library for senators, and what can they borrow?
- The National Gallery of Art loans paintings
- The National Zoo loans office pets
- The U.S. Botanic Garden loans plants for Senate offices
- The National Air and Space Museum loans model airplanes
The Constitution mentions which congressional office, but offers virtually no guidance on election to that office?
- Speaker of the House
- House chaplain
- Senate clerk
- Senate majority leader
Senators are issued blank paper and envelopes based on ____ ?
- Seniority in the chamber
- First-come, first-served
- Lottery
- State population
U.S. House rules span more than 1,000 pages.
True
False
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