Tom with the BTRTN December 2021 Month in
Review.
When
Joe Biden sat down for his Thanksgiving dinner, he surely pondered his
prospects for 2022. He might have thought that while his administration would face tough sledding in the coming months, the
chances of a turnaround in 2022 were actually quite reasonable. He could envision a near-term (by summer?) reversal of a series of calamities that had plagued his
presidency, dragged his approval rating “underwater” and threatened a midterm
disaster. The big three issues on his
mind would doubtless have been the ongoing COVID threat posed by the Delta
variant, the sharp rise in inflation that had hit home with voters at the gas
tank and supermarket line, and the stubborn intransigence of Joe Manchin
and Kyrsten Sinema in thwarting his efforts to pass his historic “soft”
infrastructure bill.
His
thought process might have gone something like this. Delta was on the rise again for sure, but
would likely peak in January at a lower level than in 2020, and, as in 2020,
fall quickly from there, perhaps even achieving "endemic not pandemic" status by the spring, and life could return to normal. Inflation was forecast by many, including
Goldman Sachs and Moody’s, to be a transient blip, driven by very strong consumer
demand that had overwhelmed a “just in time”-oriented supply chain, which would
ease once the holidays and the Chinese New Year were behind us – again, in time
for the summer. And surely, given the
House’s passage of the hard infrastructure bill, the pressure on Manchin and
Sinema to find a way to "yes" on the soft one would cause them to cave, perhaps
even on Chuck Schumer’s ambitious “by Christmas” timetable. Once the signing ceremony was over, the third
Biden stimulus package would begin to roar through the economy in 2022.
If
all that fell into place, he might have hoped for “Biden Comeback” headlines
by, say, June of 2022 – months before the midterms. It might not be enough to hold onto the Democratic
trifecta, but it just might prevent the kind of bloodbath in the House that
befell previous first-termers Ronald Reagan (who lost 26 House seats in 1982),
Bill Clinton (-54 in 1994), Barack Obama (-63 in 2010) and Donald Trump (-40 in
2018), and perhaps even enough to hold the Senate in Chuck Schumer’s hands.
That
rosy scenario began to collapse that very Thanksgiving night, when word came
from South Africa of the brand-new Omicron variant, which in time proved to be
incredibly transmissible (more than Delta) but also less severe (than
Delta). New cases skyrocketed in a
number of countries, including the United States, and, at this writing, the
worst is yet to come in January. Even
with proportionately fewer hospitalizations and deaths resulting from Omicron
cases, the sheer volume of new cases ensures that many countries, again
including the U.S., are facing or will face enormous strains on their health
care systems. Apart from filling
hospital beds and ICU’s, there may not be enough health care workers to staff
the need.
The
data certainly capture the confluence of Delta – always predicted to have a
winter wave – and Omicron. There were
over 5.5 million new U.S. COVID cases in December, the most of any month, by
far, since the horrific January, 2021 peak, and more than double the November
level. Deaths were up 22% as well from
November to December, from 34,000 to 43,000.
During the last week in December there were over two million new cases,
for the first time ever. And all of
these horrific numbers understate the true number of new cases, since many went unreported with the
rise of home testing.
Apart
from Delta and Omicron, contributing to the COVID tsunami are the plateauing of
the first round of vaccinations and the slow uptake of booster shots. Only 6 million more people were “fully
vaxxed” (by the current definition) in December, pushing the total up from 198
million to 204 million Americans, 73% of the total population. Boosting was going somewhat better, with 23
million shots in December, to a total to 69 million, but that still leaves 135
million “fully vaxxed” Americans not as yet boosted. The Biden Administration was debating whether
to clarify the definition of “fully vaxxed” to include the booster, or perhaps
move to new nomenclature (such as “up to date”) that would provide for the
potential of future additional boosters.
Whatever the terms, though, clearly Biden’s hope for a glide path for
COVID from pandemic to endemic status appeared to be totally disrupted, in
short order, by the rise of Omicron.
(As
an important aside, while the Biden Administration has done many good things in COVID management in terms of vaccine
distribution and COVID relief, and cannot be blamed for the appearance and rise
of the Omicron variant, it has done a reasonably miserable job in two
areas. The first is COVID communication –
especially the CDC, which can’t seem to find the proper balance between
complexity and simplicity, or, more broadly, science and workable policy. Second, Biden has failed to secure, as he
promised, plentiful and affordable – that is, free – COVID testing kits, which
could be extremely helpful in controlling the spread.)
On
to the inflation bubble bursting…soon thereafter it became clear that the rosy
“transitory” scenario for inflation was overly optimistic as well. Economists began to back up their predictions
for when the current 7% rate would drop, from the spring to the summer to the
“second half” of 2022. The Fed indicated
they expected not one but three separate interest rate increases in 2022. The ongoing supply chain issues, continued labor
shortages and some quasi-predatory pricing by businesses all contributed to the
more negative forecasts, and the only thing Biden could describe as “transitory”
was his own view that inflation would be short-lived.
(An
aside to all this is that, ironically, despite the gloom and doom of inflation,
the underlying economy is actually roaring.
Most forecasters believe that Q4 growth will be in the 5-7% range, and
unemployment is down to 4.2%. Further
growth and drops in unemployment are expected in 2022. Wages are growing by 4%, child poverty is
down sharply thanks to the American Rescue Plan, and that $1.2 trillion of hard
infrastructure spending will provide further stimulus in the years to come. The only thing wrong with the economy is that
business cannot keep up with it.)
And
then, to cap off the utter destruction of the rosy scenario, Joe Manchin put
the kibosh on the soft infrastructure bill.
Manchin shocked the White House with his announcement, which came on a
FOX Sunday talk show less than a week after an apparent commitment – made
directly to Biden – to continue to work towards a deal. Manchin had been demanding a 10-year
accounting rather than five, while insisting on a $1.75 trillion cap, the
combination of which would have drastically shrunk the bill from the House
version. But nevertheless the White
House clearly thought active negotiations were still possible. Manchin’s “no” appeared to kill that notion.
(And
now for the legislative aside…Chuck Schumer and Nancy Pelosi may not have
solved the Manchin dilemma on the soft infrastructure bill, but it was a
productive December nonetheless. Schumer
got Mitch McConnell to blink on raising the debt ceiling, as the two concocted
one of those bizarre, arcane compromises that allowed everyone to save face and
do the deed. They also managed to pass
the National Defense Authorization Act, with its $770 billion price tag, with a
minimum of fuss, and they avoided a dreaded shutdown by funding the government
through mid-February via a continuing resolution. Schumer may have bit off more than he could
chew by committing to doing all that -- and the soft infrastructure bill --
before the holidays. But the Manchin no
on the soft bill should not minimize the accomplishment of getting those three
major pieces of legislation to Biden’s desk for signature – not to mention the
$1.2 trillion hard infrastructure bill he signed in November.)
Apart
from COVID, inflation and Joe Manchin, the Biden Administration and the
Democrats wrestled with a number of other challenges as well. On the foreign policy front, Biden (and Obama
before him) have long wished to shift the focus from Russia and the Middle East
to China, a strategic shift that has been eternally confounded by events in
those theaters. Biden’s rather messy
exit from Afghanistan was a stumbling step in the China-focused direction, as
was the submarine deal with Australia that temporarily, well, submarined U.S.
diplomatic relations with France, our oldest ally, by undercutting their own
deal with the Aussies – without a warning.
Biden
made a proactive move against China, albeit a symbolic one, with a December
decision to conduct a diplomatic boycott of the Beijing Winter Olympics in
2022. But the Sino-centric machinations
were interrupted when Vladimir Putin began a troop buildup on the Ukraine
border, threatening another invasion modeled on the 2008 war on Georgia and the
2014 annexation of Crimea. Putin’s play
was to stop Ukraine’s longstanding desire to join NATO cold, and put an end to
Western support of such a move. As with
Georgia and Crimea, Putin used the language of emancipating Russian-speaking
peoples as he amassed his army. Biden
has threatened severe economic reprisals as his stick against Putin, and the
two exchanged December phone calls at each other’s behest. Biden has ruled out the use of U.S. troops
and, at month’s end, had been able to maintain the peace. But Putin is nothing if not a disruptor, and,
even if his Ukraine ploy amounts to nothing, he will have successfully
deflected Biden’s focus yet again, keeping his adversary just slightly
off-balance and preoccupied.
Back
stateside, neither Biden nor Schumer have figured out a path for a voting
rights reform bill, an issue many Democrats believe dwarfs all other
legislative priorities, because it would solve so many of them (Democrats could
more easily win elections if there was true voting rights reform, making it
easier to achieve many other progressive objectives). The House passed its version in August, aimed
to counter a wave of voter suppression bills that GOP state legislatures had
been enacting in the name of the Big Lie.
Under current Senate rules, however, passage any voting rights bill
would require 60 votes; it is not the type of bill that can be addressed via reconciliation,
as it does not incur any direct financial impact. Thus far, neither the House bill, nor a less
ambitious bill championed by (none other than) Joe Manchin has attracted anywhere
near enough GOP interest to get to 60 votes.
Thus the clarion call for creating a voting rights “exception” to the
filibuster; the Democrats in theory have the votes to both create the carve-out,
and then pass a comprehensive voting rights bill. Joe Biden and Chuck Schumer support such a
move, and even Manchin is apparently “engaged” in a process of investigating
how to do it. But, alas, Sinema is
adamantly opposed to any changes at all in the filibuster. And so it goes, the herding of cats
continues.
The
January 6th commission had another impressive month, continuing to
exceed expectations in terms of unveiling new evidence and its determination to
get to the truth. The big bombshell this
month was the release of some text messages from high profile Trump
supporters. Some (notably from Rick
Perry and Jim Jordan) were timed before the election, proposing to overturn the
election (presuming a Biden win) via alternate slates of electors in swing
states, the very framework Trump ultimately pressured Mike Pence to
follow. Other texts, from Donald Trump,
Jr., Sean Hannity and others to then Chief of Staff Mark Meadows during the
January 6 insurrection, showed them pleading with Meadows to get Trump to call
it off.
You
will hear increasing mention of the “187 minutes” between the time Trump urged
his supporters to go to the Capitol to the time of his half-hearted video
asking them to stop. Lynn Cheney clearly
is of the belief that this dereliction of duty in not calling them off when
Congress was under attack is enough for a criminal referral on Trump; it
remains to be seen whether the committee will take this stop (and other
potential criminal referrals). Regardless,
when the committee’s public testimony begins in 2022, it will be damning, and
could impact his path back to power.
Months of adverse testimony could sway some open-minded voters in the middle
to abandon Trump, discourage others who raise money and would otherwise work
for his nomination and re-election, and, of course, energize the Democrats.
By
month’s end, one might reasonably begin asking….is the Biden comeback dream for
2022 really dead? As Biden settled in
for New Year’s Eve festivities, he might have allowed himself a few cautious
notes for optimism.
On
the COVID front, new reports that South Africa’s Omicron curve resembled a
firecracker, with a startling upward trajectory but an equally rapid descent,
with the whole cycle over in a month. Some
scientists were forecasting the U.S. could follow the same path. Further, more studies emerged that the
pathogen was indeed less severe, attacking upper respiratory areas (throat,
nose, windpipe) but not nearly as often invading the lungs. Finally, with December news of FDA-approval
of a promising Pfizer anti-COVID pill, treatment help was on the way as
well. Barring the emergence of a new
variant, the hope for COVID fading into endemic-only status at some point in
2022, even as early as the spring, is back on the table.
Inflation
could indeed persist, of course, but the price of gasoline has already dropped
12 cents from November peaks, and a post-holiday worldwide lull could indeed
give supply chains a chance to breath and recover. Any downward trend in inflation could alter
perceptions of Biden’s handling of the economy markedly, given the strength of
consumer demand -- especially if Omicron wanes.
If, say, initial 2022 GDP reports were indeed in the 4-5% range, such a
narrative could easily emerge.
Finally,
Joe Manchin, since his FOX announcement, has shown every sign of a willingness
to come back to the negotiating table.
It turns out that the Manchin “No” was at least in part precipitated by
the White House mentioning him by name in a statement, when he had specifically
requested that his name be omitted. His
fury at being called out by the White House in this manner triggered his abrupt
end to the negotiations. It is a measure
of the man that he would let the fate of millions of Americans be dictated by
his own damaged ego. Having said that,
the hope remains that Biden and Schumer can corral him and Sinema on the soft
infrastructure bill, and sometime in early 2022 add it to the hard bill and the
American Rescue Plan as a truly historic trio of legislative triumphs for this
still young presidency.
So
IF all that happens, and IF Putin stays on his side of the
Ukraine border, and IF no new crisis
or gaffe derails him…you get the picture.
MADNESS
Kamila Harris has not had an easy time of it as Vice President. Whether she is the victim of an impossible
standard due to her historic status as the first woman (and first black, and
first Asian-American veep, or instead (as critics would have it) simply
performing in an underwhelming manner, this much is clear: she really blew it in a Los Angeles Times
interview. Harris said that the Biden
Administration “didn’t see” either the Delta or Omicron variants coming, and
thus implied they were caught underprepared.
This, of course, was both untrue and pretty dumb. Biden, Dr. Fauci, the CDC, the NIH and all
the experts in their employ certainly understood that variants would
emerge. It was a commonly discussed news
item, for all of us, as well. But even if
her claim were true, what rational
politician would so baldly throw their own administration under the bus? There is not much more damning a charge than
to say they were blindsided. What was
she thinking?
Did you ever think the base would boo Trump? It happened, after he delivered two
full-throated endorsements of using vaccines (claiming, of course, that he
himself invented them, as if he was in the lab). Candace Owens, the far right interviewer who
was flummoxed (and cut off) by Trump and his pro-vax statements, surmised later
that Trump “came from a time before TV, before internet, before being able
to conduct their independent research.”
Trump has not only lived squarely in the TV era, but was also, of course, a
bona fide reality TV star.
BIDEN APPROVAL RATING
Joe Biden’s approval rating remained at 45% for the fourth
consecutive month, with a -5% “net.”
This remains Biden’s low water mark for his presidency.
HOW BIDEN IS HANDLING KEY
ISSUES
From June through November,
Joe Biden’s positive ratings on his handling of five different issues – the economy,
COVID, foreign policy, immigration and the catch-all “overall direction of the
country” have either declined or stay the same every single month. No individual measure showed any improvement
by even a point in any month.
That unfortunate stretch ended
in December, when Biden’s standing rose on four of those measures, and by
sizable amounts on both foreign policy and immigration.
GENERIC BALLOT
In December polling, on
average the GOP continues to leads the Democrats on the generic ballot by a
single point. Using BTRTN’s proprietary
models (which have been extremely accurate in midterm elections), if this lead
was still in place on Election Day in 2022, the GOP would pick up about 20
seats and take over the House with some room to spare, though hardly in the magnitude
of the losses experienced by Bill Clinton in his first midterms (-54 seats) or
Barack Obama (-63), or even Donald Trump (-40).
BIDENOMETER
For all the talk about inflation and economic woes, the
“Bidenometer” actually improved in December from November levels, from +38 to
+43. Four of the five measures improved,
including a drop in the price of gas, a rise in the Dow and in consumer
confidence, and an upward adjustment of Q3 GDP.
As a reminder, this measure is designed to provide an
objective answer to the legendary economically-driven question at the heart of
the 1980 Reagan campaign: “Are you
better off than you were four years ago?”
We reset the Bidenometer at this Inaugural to zero, so that we better
demonstrate whether the economy performs better (a positive number) or worse (a
negative number) under Biden than what he inherited from the Trump
Administration.
With a
Bidenometer of +43, the economy is clearly performing much better under Biden compared
to its condition when Trump left office.
This exclusive BTRTN measure is comprised of five
indicative data points: the unemployment
rate, Consumer Confidence, the price of gasoline, the Dow-Jones Industrial
Average and the U.S. GDP. The measure is
calculated by averaging the percentage change in each measure from the
inaugural to the present time.
Using January 20, 2021 as a baseline measure of zero, you
can see from the chart below that under Clinton the measure ended at +55. It declined from +55 to only +8 under Bush,
who presided over the Great Recession at the end of his term, then rose from +8
to +33 under Obama’s recovery. Under
Trump, it fell again, from +33 to 0, driven by the shock of COVID-19 and
Trump’s mismanagement of it. Now we have
seen it move upward to +43 under Biden.
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Notes
on methodology:
BTRTN calculates our
monthly approval ratings using an average of the four pollsters who conduct
daily or weekly approval rating polls: Gallup Rasmussen, Reuters/Ipsos and You
Gov/Economist. This provides consistent and accurate trending information and
does not muddy the waters by including infrequent pollsters. The outcome tends to mirror the RCP average
but, we believe, our method gives more precise trending.
For
the generic ballot (which is not polled in this post-election time period), we
take an average of the only two pollsters who conduct weekly generic ballot
polls, Reuters/Ipsos
and You Gov/Economist, again for trending consistency.
The Bidenometer aggregates a set of
economic indicators and compares the resulting index to that same set of
aggregated indicators at the time of the Biden Inaugural on January 20, 2021, on
an average percentage change basis. The basic idea is to demonstrate whether
the country is better off economically now versus when Trump left office. The indicators are the unemployment rate, the Dow-Jones
Industrial Average, the Consumer Confidence Index, the price of gasoline and
the GDP.
