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Joe Biden comes out fighting against Donald Trump

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When President Joe Biden approaches a lectern, the challenge he confronts is not high expectations. It is instead high anxiety within his own party about his capacity, at 81, to lead, and even to make a compelling case for his presidency. On March 7th he took a step towards dispelling such doubts with a forceful state-of-the-union address in which he extolled his achievements, demanded action from congressional Republicans to secure the border and make taxation fairer, and repeatedly attacked Donald Trump, the presumptive Republican nominee, whom he referred to never by name but as “my predecessor”.

It was a campaign-style speech out of keeping with the tradition of the annual address to both chambers of Congress. Mr Biden not only attacked his opponent but goaded Republicans in the chamber and scolded the justices of the Supreme Court, who sat before him, for their decision to overturn Roe v Wade. Coming from this president, an institutionalist who reveres such traditions, that in itself was a signal that he recognises Mr Trump has shifted American politics onto new terrain, and that Mr Biden intends to take the fight to him there.

Mr Biden directly tackled concerns about his age as he drew to a close after more than an hour. He noted that when he was first elected to the Senate in 1972 he was sometimes barred from Senate lifts because he was thought to be too young to be serving. Now, he continued, “I’ve been told I’m too old.” He smiled the confident smile familiar from his many campaigns, though less seen lately, then said the important question was not the age of the candidates but of their ideas. “Hate, anger, revenge and retribution are the oldest of ideas,” Mr Biden said, referring to qualities Mr Trump has embraced. “But you can’t lead America with old ideas.”

A survey conducted by the Wall Street Journal late last month found that 73% of Americans thought Mr Biden was too old to run for re-election, while 52% felt that way about Mr Trump, who is 77. (For Mr Biden that number was the same last August, but for Mr Trump it has ticked up by five points.) Though both candidates are unpopular, Mr Biden is leading the unpopularity contest. He trails Mr Trump narrowly in national polls, according to The Economist’s poll tracker, but Mr Trump has opened leads in key swing states and, more dangerously, has the confidence of more Americans when it comes to issues they consider critical, such as handling the economy and securing the border.

Mr Biden squinted at the teleprompter as he read his speech, and he swallowed some syllables and occasionally whole words. But he showed himself to be in command of his material and the chamber by baiting Republicans into jeering, then, like a boy relishing a playground scuffle, grinning and punching back. “Yeah, yeah,” he sneered, as Republicans booed his description of the bipartisan Senate border-security bill that the House speaker, Mike Johnson, has refused to bring to a vote. “Look at the facts. I know you know how to read.”

As Mr Biden rattled off the enforcement provisions of the bill, James Lankford, the conservative Republican senator who helped negotiate it for months only to see his party desert it, nodded his head and appeared to mouth, “That’s true.” Mr Biden accused Mr Trump of blocking the bill to help his electoral prospects, then challenged him: “Join me in telling Congress to pass it. We can do it together.”

Mr Biden opened his speech by saying his ambition was to “wake up the Congress” and alert the American people to threats facing the country. In a hopeful sign for aid to Ukraine that is now stalled in Congress, Mr Johnson, seated over Mr Biden’s left shoulder, nodded somberly as the president warned of Russia’s president, Vladimir Putin: “If anybody in this room thinks Putin will stop with Ukraine, I assure you he will not.” Mr Biden invoked Ronald Reagan’s demand that the leader of the Soviet Union tear down the Berlin Wall, adroitly drawing applause from Republicans even as he pivoted to his first, sudden strike at Mr Trump: “Now my predecessor, a former Republican president, tells Putin, quote, do whatever the hell you want!”

Mr Biden connected the threat to democracy in Europe to the attack on the Capitol on January 6th 2021, and said “my predecessor and some of you here seek to bury the truth” about the day. “Here’s the simple truth,” Mr Biden continued. “You can’t love your country only when you win.”

Mr Biden later turned to what he called the “gut-wrenching” violence in the Middle East. He insisted that Israel had the right to pursue Hamas, but also that it had a “fundamental responsibility” to protect civilian lives, and he gave a harrowing account of the suffering of Gazans. He said America would erect a temporary pier on Gaza’s shore and begin supplying aid by sea, and that Israel had also committed to opening a crossing into the Gaza Strip from the north.

These efforts might not mollify Democratic progressives angry at Mr Biden for his support of Israel. But Democrats in the chamber were thrilled with the pugilistic, populist tenor and substance of his speech. For the most part he avoided high-flown oratory in favour of simpler formulations as he demanded that Congress act to lower drug prices and housing costs. “Folks at home,” he shouted at one point, “does anyone really think the tax code is fair?” “No!” shouted the Democrats in the chamber, and Mr Biden promised to “keep fighting like hell to make it fair”.

Economics

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

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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

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