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Winners and losers as America at last reaches a budget deal

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“General Hospital” has the distinction of running longer than any soap opera in American television history. Yet the months-long budget melodrama in Washington, DC, which mercifully concluded on March 23rd, at times felt destined to become almost as much of a fixture of American life as the medical serial that debuted in 1963.

The 2024 fiscal year began nearly six months ago, but only now has Congress managed to pass a long-term budget deal to fully fund the federal government through the remainder of the fiscal year. Kevin McCarthy was ousted as House speaker in October 2023 after preventing a lapse in government funding. Mike Johnson, his successor, allowed three more “continuing resolutions” to avoid unnecessary government shutdowns, but the delays culminated in an agreement that differed little from what the White House and Congress had agreed to in principle nearly a year ago.

The $1.2trn package just passed covers about 75% of government spending. (The remainder already had been authorised in a bill signed into law earlier in the month.) The latest legislation cleared the Republican-controlled House on Friday March 22nd on a 286-134 vote, while the Democrat-led Senate approved it, after much last-minute haggling, in the early hours of Saturday morning, by 74-24. The bill, more popular with Democrats than Republicans, marginally reduces government spending but on its own won’t significantly alter America’s fiscal destiny.

“It’s good to see Congress put something in place to control spending levels for one year,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan non-profit group. That doesn’t mean members of Congress should be patting themselves on the back. “There’s so much more to be done, and they are all the things that politicians are saying they won’t do, including raising taxes, fixing Social Security and fixing Medicare.”

Underperformance has never prevented legislators from claiming victory anyway. Democrats and Republicans alike will be happy to take credit for a 5.2% salary increase for military personnel, and even some Republicans can applaud 12,000 new special immigrant visas for American allies in Afghanistan attempting to flee Taliban rule. The bill also includes policy prizes that fall under neater partisan categories.

Mr Johnson won new money for Immigration and Customs Enforcement to expand immigration-detention capacity and pay for 22,000 border-patrol agents. Republicans also secured a one-year ban on funding for the UN Relief and Works Agency, which provides aid to Palestinian refugees, along with a 6% reduction in broader spending on foreign programmes. All are real wins for a party increasingly supportive of Israel, sceptical of immigration and isolationist in its global outlook.

Democrats, however, blocked a host of other policies popular among Republicans, such as anti-abortion provisions. Members of Mr Biden’s party are also touting $1bn for a climate-change programme at the Pentagon and another $1bn for child care and Head Start, an education programme for young children from poor families. This mixed outcome in any deal ought to be expected, given America’s divided government, but Republican hardliners were not impressed.

Chip Roy, a congressman from Texas, acknowledged after the bill was released that Republicans would not get everything they wanted when Democrats controlled the White House and Senate. He opposed the measure regardless. “Any Republican who votes for this bill OWNS the murders, the rapes and the assaults by the people that are being released into our country,” Mr Roy said, citing its insufficiently harsh immigration provisions. “A vote for this bill is a vote against America.”

Mr McCarthy lost his job after years of enduring this sort of over-the-top rhetorical abuse, but his replacement has largely followed his lead. The final deal had been negotiated behind closed doors between Mr Biden’s team and congressional leaders. Mr Johnson listened to the hardline Freedom Caucus, to which Mr Roy belongs, but ultimately ignored the group. To avoid a government shutdown, he even ignored a rule that previously required the House not vote on a bill until 72 hours after its text was released.

As a relatively unknown congressman, Mr Johnson was one of the most conservative members of the lower chamber. He is still deeply conservative, but the price of power is recognising the need to compromise. The provisions in this bill will expire at the end of September, weeks before the presidential election. In all likelihood a short-term spending bill will be cobbled together to carry legislators through campaign season, to avoid a messy spending fight just as Americans get ready to vote.

For now, Mr Johnson has said that he would turn his focus to providing aid for Israel, Taiwan and Ukraine. He previously declined to take up a Senate bill that paired military assistance with immigration reform, and some members of the House are working on a strategy to force a vote on the issue. If Mr Johnson supported assistance for Ukraine after cutting a deal with Democrats, could he meet the same fate as Mr McCarthy?

Marjorie Taylor Greene, a Republican congresswoman from Georgia, filed a “motion to vacate” the speakership after the legislation passed, calling it a “warning”. There is no guarantee that the resolution will be taken up, and Mr Johnson appears more secure than Mr McCarthy did before his fall in October. “The funny thing is that the reason he might survive is that there’s no one else,” says Yuval Levin of the American Enterprise Institute, a conservative think-tank. “This job, which is normally pretty desirable, is so undesirable that nobody wants to fire the current guy, because nobody wants to take it.”

Economics

Andrew Bailey on why UK-U.S. trade deal won’t end uncertainty

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Bank of England Governor Andrew Bailey attends the central bank’s Monetary Policy Report press conference at the Bank of England, in the City of London, on May 8, 2025.

Carlos Jasso | Afp | Getty Images

Bank of England Governor Andrew Bailey told CNBC on Thursday that the U.K. was heading for more economic uncertainty, despite the country being the first to strike a trade agreement with the U.S. under President Donald Trump’s controversial tariff regime.

“The tariff and trade situation has injected more uncertainty into the situation… There’s more uncertainty now than there was in the past,” Bailey told CNBC in an interview.

“A U.K.-U.S. trade agreement is very welcome in that sense, very welcome. But the U.K. is a very open economy,” he continued.

That means that the impact from tariffs on the U.K. economy comes not just from its own trade relationship with Washington, but also from those of the U.S. and the rest of the world, he said.

“I hope that what we’re seeing on the U.K.-U.S. trade side will be the first of many, and it will be repeated by a whole series of trade agreements, but we have to see that happen of course, and where it actually ends up.”

“Because, of course, we are looking at tariff levels that are probably higher than they were beforehand.”

Trump unveils United Kingdom trade deal, first since ‘reciprocal’ tariff pause

In Bank of England’s Monetary Policy Report released Thursday, the word “uncertainty” was used 41 times across its 97 pages, up from 36 times in February, according to a CNBC tally.

The U.K. central bank cut interest rates by a quarter percentage point on Thursday, taking its key rate to 4.25%. The decision was highly divided among the seven members of its Monetary Policy Committee, with five voting for the 25 basis point cut, two voting to hold rates and two voting to reduce by a larger 50 basis points.

Bailey said that while some analysts had perceived the rate decision as more hawkish than expected — in other words, leaning toward holding rates elevated than slashing them rapidly — he was not surprised by the close vote.

“What it reflects is that there are two sides, there are risks on both sides here,” he told CNBC.

“We could get a much more severe weakness of demand than we were expecting, that could then pass through to a weaker outlook for inflation than we were expecting.”

“There’s a risk on the other side that we could get some combination of more persistence in the inflation effects that are gradually working their way through the system,” such as in wages and energy, while “supply capacity in the economy is weaker,” he said.

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Economics

Trump knocks down a controversial pillar of civil-rights law

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IN THE DELUGE of 145 executive orders issued by President Donald Trump (on subjects as disparate as “Restoring American Seafood Competitiveness” and “Maintaining Acceptable Water Pressure in Showerheads”) it can be difficult to discern which are truly consequential. But one of them, signed on April 23rd under the bland headline “Restoring Equality of Opportunity and Meritocracy”, aims to remake civil-rights law. Those primed to distrust Mr Trump on such matters may be surprised to learn that the president’s target is not just important but also well-chosen.

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Economics

Harvard has more problems than Donald Trump

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A Programme at Harvard Divinity School aspired to “deZionize Jewish consciousness”. During “privilege trainings”, working-class Harvard students were instructed that, by being Jewish, they were oppressing wealthier, better prepared classmates. A course in Harvard’s graduate school of public health, “The Settler Colonial Determinants of Health”, sought to “interrogate the relationships between settler colonialism, Zionism, antisemitism, and other forms of racism”: Will these findings by Harvard’s task-force on antisemitism and anti-Israel bias, released on April 29th, shock anyone? Maybe not. Americans may be numb by now to bulletins about the excesses, not to say inanities, of some leftist academics.

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