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Will the dramatic burst of bipartisanship in Congress last?

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Something remarkable just happened in American politics. Despite intense polarisation, a burst of bipartisanship has enabled Congress to pass vital legislation, over the objections of hard-core obstructionists in the House of Representatives. How was this possible?

The Republican Party began the 118th Congress holding the fifth-narrowest House majority in American history—and its most extreme members appeared firmly in control. Kevin McCarthy became speaker after a humiliating 15 rounds of voting. As a way to win the job, Mr McCarthy agreed to place hard-right members on the powerful Rules Committee, where they could routinely undermine the party’s leaders. He also accepted a change that allowed a single member of Congress to call a vote on his ouster. The influence of the berserker caucus peaked when eight Republicans voted with the Democratic Party to remove Mr McCarthy from the speakership in October 2023.

However, the extremists have had stunningly little influence on policy, despite their formidable procedural power. The passage of legislation to aid Ukraine and other allies is only the latest example. President Joe Biden signed it into law on April 24th (along with a bipartisan move to ban TikTok unless it is sold by its Chinese owner).

In the spring of 2023 Mr McCarthy negotiated a deal to modestly cut discretionary spending in exchange for an increase to America’s borrowing limit. The House Freedom Caucus howled that the reductions were insufficient. Although 71 Republicans voted against the Fiscal Responsibility Act, the legislation still passed with help from Democrats. The insurgent wing of the Republican Party could only grumble as Mr McCarthy held on to his job.

But averting a government shutdown in September 2023 was a step too far. Mike Johnson, a Louisiana congressman, replaced Mr McCarthy after several weeks of chaos in the lower chamber. He kept the government funded with short-term spending bills, the sin for which Mr McCarthy was excommunicated, but Republicans were not eager to go through the ordeal of finding yet another speaker. Republican divisions undermined the party’s bargaining power with the White House and the Democrat-controlled Senate, and Mr Johnson eventually passed a solution for the remainder of the fiscal year that bore a striking resemblance to what Mr McCarthy had negotiated a year before.

The hard right betrayed even greater legislative ineptitude in its fight against funding for Ukraine. Many conservatives demanded drastic changes to America’s immigration system, and a group of senators negotiated what would have been the most restrictive immigration law in decades in exchange for nearly $100bn in funding for Ukraine, Israel and Taiwan. Republicans rejected the proposal because of pressure from Donald Trump, who sees the crisis on America’s southern border as a political winner as he campaigns for a new stint in the White House.

Mr Johnson, who had voted against Ukraine aid several times before taking the speaker’s gavel, had a change of heart, swayed in part by intelligence briefings. The legislation he put to the House was remarkably similar to the Senate bill, though he broke it into several pieces. Whereas a majority of Republicans supported the debt-ceiling increase and the government-funding bills, most rejected the new aid for Ukraine. Ironically, many complained that nothing had been done to tackle America’s porous border. Republican hardliners won virtually nothing they had sought in earlier negotiations, yet Congress still provided $61bn for Ukraine. Though shamefully late, it will make a big difference to Ukraine’s war effort.

While the hard right was up in arms, Mr Trump stood by the speaker. “We have a majority of one, OK?” Mr Trump said in a radio interview on April 22nd. “It’s not like he can go and do whatever he wants to do. I think he’s a very good person.”

For now Mr Johnson appears secure in his position. Marjorie Taylor Greene, an excitable congresswoman from Georgia, has threatened to oust him, but has yet to force the question. “The old maxim on Capitol Hill is that you vote when you have the votes,” says Doug Heye, a former Republican leadership aide. “Clearly Marjorie Taylor Greene didn’t have the votes.”

A strong majority of House Republicans would back Mr Johnson, as they did Mr McCarthy, but the new speaker has also built goodwill with some Democrats. “For all its rank partisanship, the House right now is functionally and uneasily governed by a group of Republicans and Democrats,” wrote Brendan Buck, a former aide to two Republican speakers.

Mr Johnson’s shift on Ukraine does not mean Congress will take up much serious legislation for the remainder of this term, especially as the campaign season shrinks the legislative calendar. Expect some tweaks—Mr Johnson is considering changes to how “earmarks”, which designate a specific recipient for certain spending, are made in funding bills, probably an attempt to shore up support with conservatives—but nothing as salient as the foreign-aid package. A serious effort to impeach Mr Biden is unlikely: even trying would alienate many of the Democrats implicitly helping Mr Johnson remain in power.

Will America’s accidental speaker be leading House Republicans next year? Retaining the House won’t be easy, and parties that lose their majorities tend to fire their leaders. The Republican Party will have to increase its majority to give Mr Johnson a chance, and the power of a Trump endorsement would depend largely on whether he wins the presidency. It doesn’t help that House Republicans have a history of punishing their leaders for doing the right thing.

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.

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Donald Trump sacks America’s top military brass

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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.

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

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

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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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