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The House of Representatives just gave Ukraine the best news it has had for a year

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JUST ONE WEEK ago, hope looked fanciful. President Joe Biden’s pitch to spend $100bn on aid for America’s allies under threat—Israel, Taiwan and especially Ukraine—had languished in Congress for six months since it was proposed in October 2023. The dithering had consequences. Ukrainian soldiers, forced to ration ammunition, are being pummelled by Russians with an artillery advantage of five to one.  America’s senior general in Europe warned that they would soon be outgunned by a margin of ten to one. Bill Burns, the CIA director, warned on April 18th that, without any more aid, “there is a very real risk that the Ukrainians could lose on the battlefield by the end of 2024.”

The man needed to see the necessary national-security budget bill through, Mike Johnson, the Republican speaker of the House, seemed unfit for the task. Thrust into the role from relative obscurity six months ago after his loud, isolationist colleagues defenestrated their previous leader, Kevin McCarthy, Mr Johnson lacked leadership experience. He had only a razor-thin parliamentary majority, had voted repeatedly against Ukraine funding himself and faced the threat of regicide from his own side if he changed his mind. For months he seemed paralysed and indecisive. And yet on April 20th, under Mr Johnson’s leadership, the House of Representatives met the moment, passing the budget bill through extraordinary parliamentary manoeuvring with large, bipartisan majorities in defiance of the isolationist faction of the Republican Party. Even though a majority of his own party voted against additional aid for Ukraine, Mr Johnson secured its passage with unanimous Democratic support. The isolationists managed to delay America’s support for its allies for six months, but ultimately could not defeat it.

Mr Johnson’s courage— what even his Democratic opponents have described as his Churchillian moment, may have come about for three reasons. First, Mr Johnson became haunted by the briefings he received as one of the congressional leaders in the Gang of Eight, who can receive highly classified intelligence. “I really do believe the intel and the briefings that we’ve gotten,” he said in recent remarks to the press. “I believe that Xi [Jinping] and Vladimir Putin and Iran really are an axis of evil.”

Second, Mr Johnson seemed to realise that his turn in power was destined to be brief, regardless of his actions. Marjorie Taylor Greene, an irrepressibly isolationist Republican congresswoman who seems to believe that Mr Putin is fighting on the side of Christianity against Ukraine, filed a “motion to vacate” (or sack) Mr Johnson after he passed a bill to keep the federal government open with Democratic votes. The speaker could have laboured in fear of such a threat or, as he daringly did, strike a bargain with Democrats to support him in exchange for bringing up the foreign-aid bill.

Third, Mr Johnson may have cleverly secured the tacit blessing of Donald Trump by paying a flattering visit to Mar-a-Lago last weekend. It did not hurt that one of Mr Trump’s ideas, of labelling economic aid to Ukraine’s government as a loan instead of a grant, was incorporated. Rather than urge his fellow Republicans to vote against the bill, Mr Trump only griped that Ukraine’s survival “should be much more important to Europe than to us but it is also important to us!”

The House was the last significant hurdle. Chuck Schumer, the Democratic Senate majority leader, expects to hold a vote on the combined package on Tuesday. Because the Senate overwhelmingly passed a very similar aid package in late February, it should do so again. Mr Biden is certain to sign it into law.

The consequences for Ukraine will be nearly immediate, preventing serious setbacks on the battlefield in the near term and undercutting Russia’s long-term belief that its war economy—it is devoting at least 6% of GDP to defence—is an unstoppable juggernaut. America is planning to send $61bn to Ukraine in total. The vast majority of that will be spent on lethal aid by replenishing American military stockpiles, allowing more to be given away, and procuring new weapons and ammunition from American arms firms. The first priority is desperately needed shells. An American three-star general has already been assigned the job of organising arms deliveries, subject to the vote. The Pentagon should be able to start getting shells to Ukraine within two weeks, reckons Michael Kofman of the Carnegie Endowment, a think-tank, and can supply enough to last for a year or so. Larger weapons systems will take much longer to ship; some still need to be ordered, let alone manufactured. The hope is that it will be enough to fend off a larger-scale Russian offensive that Kyrylo Budanov, the head of Ukraine’s military-intelligence service, has said he expects in June.

Ukraine has other looming problems, though. Its stock of air-defence interceptor missiles, fired from a mix of American, European and Soviet-era launchers, has dwindled. Russian attack jets have recently been providing close air support to troops with seemingly little risk of being shot down. America’s Patriot missile-defence systems are in high demand elsewhere, including Israel, and production is low. At the same time, Russia is deploying effective new weapons. On April 11th it successfully launched an attack on a thermal power station in Kyiv using a Kh-69 stealth cruise missile that eluded a Patriot interceptor. Even with enough kit, Ukraine confronts a serious manpower disadvantage compared with Russia. This month Volodymyr Zelensky, Ukraine’s president, reduced the age for conscription to the armed forces to 25 despite the considerable unpopularity of that measure.

Although the provisions for Ukraine are the most important, the other bits passed by the House are consequential, too. Progressive Democrats strenuously objected to the $16bn in military aid for Israel, because of the dire humanitarian conditions in Gaza. Much of this spending would replenish defensive weapons like those used by Israel’s Iron Dome, but it also provides billions for new offensive weapons. American authorities would be given the ability to seize $5bn in Russian sovereign assets that have been frozen since the start of the war and transfer them to Ukraine to help defray the cost of defending itself. Riding along with the bill is a hotly debated law that would force the sale of TikTok, a time-sucking app, to a non-Chinese owner within the next year.

Seeing all of this through will be the legacy-defining achievement of Mr Johnson. Ukraine will get the ammunition and weapons systems (including, perhaps, more long-range ATACMS) that it needs to weather a Russian offensive—at least until the next president is sworn in next year. Many feared that a Trump victory would force Ukraine to accept either defeat or a huge territorial loss in 2025. Without congressional action, though, that might have happened even while Mr Biden remained president. Mr Johnson’s reward for defying members of his own party is unlikely to be more power—some are already speculating that his speakership might be over within a matter of weeks. “I could make a selfish decision and do something that’s different but I’m doing here what I believe to be the right thing,” he said this week. “History judges us for what we do.”

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Will the class of ’24 turn out like the boomers?

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This is the introduction to Checks and Balance, a weekly, subscriber-only newsletter bringing exclusive insight from our correspondents in America.

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U.S. job growth totaled 175,000 in April

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U.S. job growth totaled 175,000 in April, much less than expected, while unemployment rose to 3.9%

The U.S. economy added fewer jobs than expected in April while the unemployment rate rose, lifting hopes that the Federal Reserve will be able to cut interest rates in the coming months.

Nonfarm payrolls increased by 175,000 on the month, below the 240,000 estimate from the Dow Jones consensus, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate ticked higher to 3.9% against expectations it would hold steady at 3.8%.

Average hourly earnings rose 0.2% from the previous month and 3.9% from a year ago, both below consensus estimates and an encouraging sign for inflation.

The jobless rate tied for the highest level since January 2022. A more encompassing rate that includes discouraged workers and those holding part-time jobs for economic reasons also edged up, to 7.4%, its highest level since November 2021. The labor force participation rate, or those actively looking for work, was unchanged at 62.7%.

Wall Street already had been poised for a higher open, and futures tied to major stock market averages added to gains following the report. Treasury yields tumbled after being little changed before the release. The report raised the prospect of a “Goldilocks” climate where growth continues but not at such a rapid pace to force the Fed to tighten policy further.

“With this report, the porridge was just about right,” said Dan North, senior economist at Allianz Trade. “What would you like at this point the cycle? We’ve had interest rates jacked up pretty high, so you would expect to see the labor market slow down a little. But we’re still at pretty high levels.”

Consistent with recent trends, health care led job creation, with a 56,000 increase.

Other sectors showing significant rises included social assistance (31,000), transportation and warehousing (22,000), and retail (20,000). Construction added 9,000 positions while government, which had shown solid gains in recent months, was up just 8,000 after averaging 55,000 over the previous 12 months.

Revisions to previous months took the March gain to 315,000, or 12,000 from the initial estimate, and February to 236,000, a decline of 34,000.

Household employment, which is used to calculate the unemployment rate, increased by just 25,000 on the month. Workers holding full-time jobs soared by 949,000 on the month, while those hold part-time jobs slumped by 914,000.

The report comes two days after the Fed again voted to hold borrowing costs steady, keeping its benchmark overnight borrowing rate in a targeted range between 5.25%-5.5%, the highest in more than 20 years.

Following the decision, Chair Jerome Powell characterized the jobs market as “strong” but noted that inflation is “too high” and this year’s economic data has indicated “a lack of further progress” in getting inflation back to the Fed’s 2% target.

But market action shifted after the jobs report indicated an easing labor market and softer wage increases. Traders priced in a strong chance of two interest rate cuts by the end of 2024, with the first reduction expected to come in September, according to CME Group data.

“This is the jobs report the Fed would have scripted,” said Seema Shah, chief global strategist at Principal Asset Management. “The first downside payrolls surprise in several months, as well as the dip in average hourly earnings growth, will bring the rate cutting dialogue back into the market and perhaps explains why Powell was able to be dovish on Wednesday.”

Though inflation has come well off its highs in mid-2022, it is still considerably above the central bank’s comfort zone. Most reports this year have shown inflation around 3% annually; the Fed’s own preferred measure, the core personal consumption expenditures price index, most recently was at 2.8%.

Higher prices have been putting upward pressure on wages, part of an inflation picture that has kept the Fed on the sidelines despite widespread market expectations that the central bank would be cutting interest rates aggressively this year.

Most Fed officials in fact had been mentioning the likelihood of reductions in their public comments. However, Powell at his post-meeting news conference Wednesday made no mention of the likelihood that rates would be lowered at some point this year, as he had in the past.

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Immigrant workers are helping boost the U.S. labor market

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Help Wanted: Immigrants fueling U.S. workforce

The strong jobs market has been bolstered post-pandemic by strength in the immigrant workforce in America. And as Americans age out of the labor force and birth rates remain low, economists and the Federal Reserve are touting the importance of immigrant workers for overall future economic growth.

Immigrant workers made up 18.6% of the workforce last year, a new record, according to Bureau of Labor Statistics data. Workers are taking open positions in agriculture, technology and health care, fields where labor supply has been a challenge for those looking to hire.

Despite the U.S. adding fewer-than-expected jobs in April, the labor force participation rate for foreign-born workers ticked up slightly, to 66%.

“We don’t have enough workers participating in the labor force and our birth rate has dropped down 2% last year from 2022 to 2023. … These folks are not taking jobs. They are helping to bolster and helping us build back — they’re adding needed workers to the labor force,” said Jennie Murray, CEO of the National Immigration Forum, a nonpartisan nonprofit advocacy organization. 

The influx of immigrant workers is also a projected boost to U.S. output, and is expected to grow gross domestic product over the next decade by $7 trillion, Congressional Budget Office Director Phillip Swagel noted in a February statement accompanying the 2024-2034 CBO outlook.

“The labor force in 2033 is larger by 5.2 million people, mostly because of higher net immigration. As a result of those changes in the labor force, we estimate that, from 2023 to 2034, GDP will be greater by about $7 trillion and revenues will be greater by about $1 trillion than they would have been otherwise. We are continuing to assess the implications of immigration for revenues and spending,” Swagel wrote.

‘Huge competition’

Goodwin Living, a nonprofit faith-based elder-care facility in Northern Virginia that cares for 2,500 adults day to day, is heavily reliant on immigrant workers. Some 40% of its 1,200 workers are foreign-born, representing 65 countries, according to CEO Rob Liebreich, and more workers will be needed to fill increasing gaps as Americans age and need assistance. 

“About 70% of 65-year-olds are expected to need long-term care in the future. We need a lot of hands to support those needs,” Liebreich told CNBC. “Right now, one of the best ways that we see to find that is through people coming from other countries, our global talent, and there’s a huge competition for them.”

In 2018, Goodwin launched a citizenship program, which provides financial resources, mentorship and tutoring for workers looking to obtain U.S. citizenship. So far, 160 workers and 25 of their family members have either obtained citizenship or are in the process of doing so through Goodwin. 

Wilner Vialer, 35, began working at Goodwin four years ago and serves as an environmental services team lead, setting up and cleaning rooms. Vialer, who came to the U.S. 13 years ago from Haiti, lost his job during the pandemic and was given an opportunity at Goodwin because his mother had been employed at the facility.

He applied for U.S. citizenship before getting his current job, but after he worked there for six months, the Goodwin Living Foundation covered his application fee of $725, the nonprofit said. Vialer became a U.S. citizen in 2021, and his 15-year-old daughter received a citizenship grant and became a U.S. citizen in 2023.

Vialer’s hope is to have his wife join the family from Haiti, as they have been separated for six years.  

“This program is a good opportunity,” Vialer said. “They help me, I have a family back home. … This job really [does] support me when I get my paycheck to help them back home.”

Workers are not required to stay with Goodwin after becoming U.S. citizens, but those who do stay are there 20% longer than those who do not participate in the program, Liebreich said. Speeding up the path to citizenship is key to remaining competitive in a global economy, he added.

“If we want to attract and retain this global workforce, which we desperately need, we need to make the process a lot easier,” Liebreich said.

Looking ahead to November, immigration will be a hot topic on the presidential campaign trail and for voters. Both President Joe Biden and former President Donald Trump have made trips to the southern border in recent months to address the large number of migrants entering the country.

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