Connect with us

Economics

House Republicans fear Trump too much to aid Ukraine

Published

on

Listen to this story.
Enjoy more audio and podcasts on iOS or Android.

Your browser does not support the <audio> element.

America’s Congress does not have a reputation for productivity, but its failure to authorise more aid for Ukraine is unusual even for the underachievers on Capitol Hill. And the legislation’s already grim prospects are diminishing as the presidential election approaches.

On February 13th the Senate approved a $95bn bill. Most of that funding is meant to assist Ukraine and replenish America’s dwindling weapons stocks. The legislation also includes $14bn for Israel, $9.2bn for humanitarian relief and some $8bn for the Indo-Pacific. Almost every Democrat and 22 Republicans voted in favour.

That is as far as the legislation is likely to go. A wing of isolationist Republicans has always opposed helping Ukraine, but now some legislators previously supportive of Ukraine argue that they shouldn’t help until America resolves its border crisis. Donald Trump, aiming to keep America’s immigration mess as a campaign issue, ordered Republicans to oppose a compromise. He also has insisted any foreign assistance should come in the form of loans to be repaid in the future.

Chuck Schumer, the Senate majority leader, called on the House to take up the bill, as it would almost certainly pass the House if voted on. But Mike Johnson, the Republican House speaker, listens more closely to Mr Trump than he does to Democratic senators. “The mandate of national-security supplemental legislation was to secure America’s own border before sending additional foreign aid,” Mr Johnson said before the bill passed. “Now, in the absence of having received any single border policy change from the Senate, the House will have to continue to work its own will.”

Republicans apparently had the great misfortune of getting what they asked for. First, they demanded that the border and Ukraine be linked. When Senate negotiators offered the toughest immigration law in decades, most Republicans rejected the offer. A foreign-aid-only bill passed, and now Mr Johnson is complaining that it does nothing to control immigration.

Republicans have such a small majority in the House that a few anti-Ukraine congressmen could challenge Mr Johnson as speaker if he were to allow a vote on military aid. He could theoretically offer amendments or restart the whole process, though there is little evidence that this House is capable of doing much. He could also split the bill into pieces and offer separate votes for Ukraine and Israel, for example, though that too appears unlikely.

Perhaps the only hope for Ukraine funding is a parliamentary manoeuvre known as a discharge petition. The time-consuming, multi-step process allows a simple majority of the House to force a vote on legislation. The mechanism could take more than a month to play out, and it hasn’t been successfully used in nearly a decade. Both sides seem to agree the tactic is unlikely to succeed.

Even though a majority of the House still supports Ukraine, many Republicans don’t feel strongly enough to defy House leadership and Mr Trump. It’s one thing to support Ukraine; it’s another to risk losing a primary to a Trump-backed challenger. And some House Democrats plan to reject the bill because of its support for Israel. Every Democratic defection will require another Republican to step up.

Time is running out for Ukraine funding, but it’s not the only item on Mr Johnson’s agenda. The House impeached Alejandro Mayorkas, the secretary of homeland security, on the same day that the Senate passed the aid bill. And a partial government shutdown will begin on March 1st in the absence of legislative action. Mr Johnson says that is where he has directed his attention now. Yet a lapse in government funding looks increasingly likely: House Republicans have shown themselves to be as feckless on setting a budget as they have been on helping allies.

Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important electoral stories, and Checks and Balance, a weekly note from our Lexington columnist that examines the state of American democracy and the issues that matter to voters.

Economics

Donald Trump sacks America’s top military brass

Published

on

THE FIRST shot against America’s senior military leaders was fired within hours of Donald Trump’s inauguration on January 20th: General Mark Milley’s portrait was removed from the wall on the E-ring, where it had hung with paintings of other former chairmen of the joint chiefs of staff. A day later the commandant of the coast guard, Admiral Linda Fagan, was thrown overboard. On February 21st it was the most senior serving officer, General Charles “CQ” Brown, a former F-16 pilot, who was ejected from the Pentagon. At least he was spared a Trumpian farewell insult. “He is a fine gentleman and an outstanding leader,” Mr Trump declared.

Continue Reading

Economics

Checks and Balance newsletter: The journalist’s dilemma of covering Trump

Published

on

Checks and Balance newsletter: The journalist’s dilemma of covering Trump

Continue Reading

Economics

Germany’s election will usher in new leadership — but might not change its economy

Published

on

Production at the VW plant in Emden.

Sina Schuldt | Picture Alliance | Getty Images

The struggling German economy has been a major talking point among critics of Chancellor Olaf Scholz’ government during the latest election campaign — but analysts warn a new leadership might not turn these tides.

As voters prepare to head to the polls, it is now all but certain that Germany will soon have a new chancellor. The Christian Democratic Union’s Friedrich Merz is the firm favorite.

Merz has not shied away from blasting Scholz’s economic policies and from linking them to the lackluster state of Europe’s largest economy. He argues that a government under his leadership would give the economy the boost it needs.

Experts speaking to CNBC were less sure.

“There is a high risk that Germany will get a refurbished economic model after the elections, but not a brand new model that makes the competition jealous,” Carsten Brzeski, global head of macro at ING, told CNBC.

The CDU/CSU economic agenda

The CDU, which on a federal level ties up with regional sister party the Christian Social Union, is running on a “typical economic conservative program,” Brzeski said.

It includes income and corporate tax cuts, fewer subsidies and less bureaucracy, changes to social benefits, deregulation, support for innovation, start-ups and artificial intelligence and boosting investment among other policies, according to CDU/CSU campaigners.

“The weak parts of the positions are that the CDU/CSU is not very precise on how it wants to increase investments in infrastructure, digitalization and education. The intention is there, but the details are not,” Brzeski said, noting that the union appears to be aiming to revive Germany’s economic model without fully overhauling it.

“It is still a reform program which pretends that change can happen without pain,” he said.

Geraldine Dany-Knedlik, head of forecasting at research institute DIW Berlin, noted that the CDU is also looking to reach gross domestic product growth of around 2% again through its fiscal and economic program called “Agenda 2030.”

But reaching such levels of economic expansion in Germany “seems unrealistic,” not just temporarily, but also in the long run, she told CNBC.

Germany’s GDP declined in both 2023 and 2024. Recent quarterly growth readings have also been teetering on the verge of a technical recession, which has so far been narrowly avoided. The German economy shrank by 0.2% in the fourth quarter, compared with the previous three-month stretch, according to the latest reading.

Europe’s largest economy faces pressure in key industries like the auto sector, issues with infrastructure like the country’s rail network and a housebuilding crisis.

Dany-Knedlik also flagged the so-called debt brake, a long-standing fiscal rule that is enshrined in Germany’s constitution, which limits the size of the structural budget deficit and how much debt the government can take on.

Whether or not the clause should be overhauled has been a big part of the fiscal debate ahead of the election. While the CDU ideally does not want to change the debt brake, Merz has said that he may be open to some reform.

“To increase growth prospects substantially without increasing debt also seems rather unlikely,” DIW’s Dany-Knedlik said, adding that, if public investments were to rise within the limits of the debt brake, significant tax increases would be unavoidable.

“Taking into account that a 2 Percent growth target is to be reached within a 4 year legislation period, the Agenda 2030 in combination with conservatives attitude towards the debt break to me reads more of a wish list than a straight forward economic growth program,” she said.

Change in German government will deliver economic success, says CEO of German employers association

Franziska Palmas, senior Europe economist at Capital Economics, sees some benefits to the plans of the CDU-CSU union, saying they would likely “be positive” for the economy, but warning that the resulting boost would be small.

“Tax cuts would support consumer spending and private investment, but weak sentiment means consumers may save a significant share of their additional after-tax income and firms may be reluctant to invest,” she told CNBC.  

Palmas nevertheless pointed out that not everyone would come away a winner from the new policies. Income tax cuts would benefit middle- and higher-income households more than those with a lower income, who would also be affected by potential reductions of social benefits.

Coalition talks ahead

Following the Sunday election, the CDU/CSU will almost certainly be left to find a coalition partner to form a majority government, with the Social Democratic Party or the Green party emerging as the likeliest candidates.

The parties will need to broker a coalition agreement outlining their joint goals, including on the economy — which could prove to be a difficult undertaking, Capital Economics’ Palmas said.

“The CDU and the SPD and Greens have significantly different economic policy positions,” she said, pointing to discrepancies over taxes and regulation. While the CDU/CSU want to reduce both items, the SPD and Greens seek to raise taxes and oppose deregulation in at least some areas, Palmas explained.

The group is nevertheless likely to hold the power in any potential negotiations as it will likely have their choice between partnering with the SPD or Greens.

“Accordingly, we suspect that the coalition agreement will include most of the CDU’s main economic proposals,” she said.

Germany is 'lacking ambition,' investor says

Continue Reading

Trending