President Biden delivered the last State of the Union address of his first term while making his case for a second. Biden also submitted his fiscal year 2025 budget request to Congress. The Securities and Exchange Commission (SEC) unveiled a long-awaited final rule on corporate reporting on greenhouse gas emissions and climate risks. Italian Prime Minister Giorgia Meloni was welcomed to the White House. Federal Reserve Chair Jerome Powell delivered his semi-annual report to Congress. Inflation continued to challenge policymakers and ticked up slightly last month while the jobs market continued to defy the expectations of economists. Trump secured the necessary delegates to lock up the Republican Presidential nomination, setting up a rematch of the 2020 Presidential contest. And Congress is staring down another federal funding deadline with a risk of a partial Government shutdown due to deep disagreements between the two parties over immigration and border security.
On March 7, President Joe Biden used the final State of the Union address of his first term to make the case for a second term. While former President Trump was never named, Biden directly attacked his “Republican predecessor” as a threat to freedom, democracy, and individual rights. Another key goal for the President was to show voters he is capable of serving another four-year term, at a time when polls show voters don’t think he is.
Many presidents use the occasion and location of the State of the Union to pitch Congress on a legislative “wish list.” That was not this address—it was pure campaign rhetoric and messaging. Biden was pugnacious, feisty, and commanding during the 66-minute address, which presented the President’s best opportunity to reach the broadest swath of Americans. Over 32 million people tuned in live to watch the speech, making it Biden’s second-most-watched speech to Congress. Biden punched back against Republican criticism and directly engaged with House Republican members heckling him from the chamber creating a very raucous affair. Biden also sought to shift the blame for the crisis along the southern border to Republicans – he portrayed them as responsible for the ongoing problems, seeking to use the issue for political advantage rather than make progress through policy remedies. On abortion and reproductive rights, Biden also drew a clear contrast with Republicans – an issue that Democrats see as a political winner and voter motivator. With regard to the economy, crime, foreign conflicts, and the health of American democracy, the speech was more political than policy, marking one of Biden’s opening salvoes in the general election. The address also fueled his campaign’s most lucrative fundraising day since he launched his bid for re-election.
A more recent tradition associated with the annual State of the Union address is the response from the opposing party. This year, freshman Senator Katie Britt of Alabama delivered the rebuttal. In choosing Britt, a 42-year-old freshman senator, Republicans were trying to present a figure representative of the next generation and remind viewers of Biden’s age. This was also the third consecutive year that Republicans chose a woman to give the rebuttal, a clear strategy targeting female voters. However, Britt’s address was widely criticized, and rather than elevate her national profile and draw a contrast with the President, she was mocked on Saturday Night Live and joined the ranks of speakers whose State of the Union responses have gone down in history as missteps such as Louisiana Gov. Bobby Jindal in 2009 and Florida Senator Marco Rubio in 2013.
President Biden unveiled his fiscal year 2025 budget request on March 11, days after he delivered the State of the Union address and in the midst of ongoing fiscal 2024 government funding negotiations. The $7.3 trillion budget is a 5.6% increase over last year’s budget request. Key provisions include efforts to reign in drug prices by building on the drug pricing measures in the Inflation Reduction Act and increasing the number of drugs subject to negotiation in Medicare. The budget would also expand rental assistance for low-income families and provide incentives to address the existing shortage of affordable housing in America. Addressing a challenging policy and political issue, the budget calls for increased border security measures and includes funding for thousands of additional border patrol and customs offers.
The budget calls for making permanent the expanded federal premium subsidies for Obamacare policies, which are currently set to expire at the end of 2025. To offset spending on key domestic priorities such as more money for housing and tax credits for families, the budget would increase taxes on corporations and the wealthy, echoing a pledge made during the State of the Union. Biden also claims that this budget request is fiscally responsible and that his tax and spend agenda would lower the deficit by $3 trillion over ten years compared to current policy. On corporate taxation, Biden wants to collect $2.1 trillion more over the next ten years, in part by increasing the rate companies pay from 21% to 28%, while also capturing more of their foreign earnings. This also signals that there will be tense negotiations with Congress in 2025 over many measures that former President Trump signed into law, including expiring sections of the $1.9 trillion Tax Cuts and Jobs Act of 2017. While the budget assumes capturing trillions of dollars from corporations and wealthy Americans, under the plan there will still be trillion-dollar budget deficits for the next ten years, for a total of $16.3 trillion.
On March 6, the Securities and Exchange Commission (SEC) approved a rule requiring some public companies to report their greenhouse gas emissions and climate risks. The rule was one of the most anticipated actions from America’s top financial regulator, drawing more than 24,000 comments over a two-year process. The rule passed along partisan lines, 3-2, with three Democratic commissioners supporting it and two Republicans opposed. The rule will bring the U.S. closer to the European Union on corporate climate disclosure rules. The final version is significantly scaled back from what the agency proposed in 2022 after last-minute revisions that weakened the directive in the face of intense pushback from companies. The initial draft rule would have required all public companies to disclose their direct emissions and also made some companies report emissions from their supply chains and the use of their products. The final version will only make large and midsize companies report their emissions that come from generating the electricity a company uses in an effort to lighten the compliance and reporting burden. They will have to report emissions for their fiscal years that start in 2026 and 2028, respectively. Since the rule was proposed two years ago experts have predicted that the matter would likely face litigation almost immediately. The day after the final rule was announced, ten U.S. states petitioned to vacate the rule, accusing the Securities and Exchange Commission of overstepping its statutory authority. The SEC is bracing for lawsuits from supporters and critics of climate rule.
On March 1, President Biden welcomed Italian Prime Minister Giorgia Meloni to the White House. The tone of the meeting was warm and collegial as the leaders sought to portray themselves as united on topics including confronting global migration and trying to prevent a broader war in the Middle East. The bilateral meeting was part of a larger effort from the White House to bring in European officials to demonstrate a united front against Russia’s invasion of Ukraine as military aid for the embattled country has stalled in Congress. During the press conference following the Oval Office meeting, the Italian prime minister said that as the chairwoman of the Group of 7 nations, she was focused on “defending freedom and building peace for Ukraine,” complementing Biden’s push on House Speaker Mike Johnson to allow a vote on aid.
In early March, Federal Reserve Chair Jerome Powell testified before the House Financial Services Committee and the Senate Banking Committee on the Fed’s semiannual monetary policy report. Powell told lawmakers the Federal Reserve was focused on supporting economic conditions that would keep bringing inflation down while maintaining solid growth and a healthy labor market. When asked pointedly whether the economy will stick a “soft landing,” an economic term that refers to a historically rare outcome in which a central bank raises interest rates in a way that brings inflation down without a significant increase in unemployment, Powell demurred and would not even indulge in using the phrase. Nevertheless, Powell said he saw “no reason to think” that the U.S. economy faces an immediate risk of falling into a recession. On potential rate cuts, Powell reinforced his belief that the Federal Reserve will cut its key interest rate this year but not until officials have “gained greater confidence that inflation is moving sustainably” toward the central bank’s 2% target. In his testimony, Powell also said regulators could scale back or rework a sweeping capital-requirements proposal, known as the “Basel III Endgame,” that Wall Street C.E.O.s have been complaining bitterly about and lobbying against for months, stating, “I do expect that there will be broad and material changes to the proposal.”
The latest Consumer Price Index (CPI) from the Bureau of Labor Statistics showed that inflation ticked up in February by 3.2% year over year—making it the third month in a row it has crept up. That is slightly higher than January’s annual reading of 3.1%, and higher than economists’ expectations. On a monthly basis, CPI rose by 0.4% in February, the fastest pace since September. According to the Bureau of Labor Statistics, a spike in gas prices and the steady increase in shelter costs pushed inflation higher last month, with those two categories accounting for 60% of the monthly increase. Nevertheless, there was some good news for American consumers as food prices did not rise–the first time there was no increase since April of last year. Fed Chair Powell and other Fed policymakers have continuously said that they want to see more “good data” before they start cutting interest rates. The latest CPI presents a mixed picture and decreases the likelihood of a rate cut during the Fed’s next policy meeting with many observers thinking rate cuts are more likely in May or June.
According to the most recent data from the Department of Labor, the labor market remains hot, defying the expectations of economists. The February numbers show that the U.S. added 275,000 jobs, exceeding the 200,000 many economists predicted. The jobs report came the day after President Biden touted America’s post-pandemic economic recovery and the administration’s investments during the State of the Union address. In his speech, Biden referenced the record-breaking job growth while criticizing the media for ignoring “the greatest comeback story never told.” While inflation continued to be a vexing challenge for policymakers, reaching 40-year highs and forcing a series of rapid interest rate hikes that followed, the U.S. economy has remained remarkably strong, and the jobless rate has been below 4 percent for the longest stretch since November 1969. Nevertheless, while the unemployment rate is low it is taking jobseekers longer to find new employment—the Bureau of Labor Statistics data shows the number of people experiencing unemployment for 15 to 26 weeks has climbed 53% since it hit a low in March 2022.
On March 12, former President Trump formally secured the necessary delegates to secure the Republican Presidential nomination, ending the Republican primary contest the way many expected. This sets up a rematch of the 2020 presidential election, pitting Trump against Biden in a unique contest between two, in effect, incumbents. It will be a long general election campaign that could be the most negative in modern times — and the most consequential for the future of the United States. Both candidates have significant vulnerabilities. Trump incited an insurrection and tried to overturn the 2020 results, is also facing over 90 felony counts, and has threatened to be a dictator (if only for one day) if elected in November. Trump also faces the likelihood of having to split time between a courtroom trial and the campaign trail. At 81, Biden is the oldest president in American history, and the public increasingly doubts his capacity and capabilities to serve. While the economy has navigated difficult terrain and is performing, by many measures, very well, Americans still lack confidence in the economic prospects and inflation continues to provide a political vulnerability. Both men are also historically unpopular. The political expert class cites an unpredictable environment and argues that past metrics are not necessarily a reliable guide this year.
Yet again, Congress needs to address fiscal 2024 funding for much of the government. Six appropriations bills—Defense, Financial Services, Homeland Security, Labor-HHS-Education, Legislative Branch, and State-Foreign Operations—are set to expire on March 22. These bills cover roughly three-quarters of all federal discretionary spending. While there is agreement over five of the appropriations measures, there is a dispute over funding for the Department of Homeland Security due to deep disagreements between the two parties over immigration and border security. That leaves Congress scrambling to avert a partial government shutdown by the March 22 funding deadline. This is the latest in a series of funding fights during this fiscal year but may be the last shutdown showdown before November’s elections as this package of six spending bills will secure funding for the remainder of the fiscal year if passed.
Department of Commerce – Roderick Anderson is the acting Inspector General. Oliver Wise is acting Undersecretary for Economic Affairs. Steve Presing is the acting Deputy Assistant Secretary for Policy and Negotiations. Susan Ruffo is Deputy Assistant Secretary for International Affairs at National Oceanic and Atmospheric Administration. Elizabeth A. Kelly is the director of the Artificial Intelligence Safety Institute.
Department of Defense – Ronald T. Keohane was confirmed as Assistant Secretary of Defense for Manpower and Reserve Affairs. Cara L. Abercrombie was confirmed as the Assistant Secretary of Defense for Acquisition.
Department of State – Victoria Nuland, undersecretary of state for political affairs, is retiring, Ambassador John R. Bass will be acting undersecretary. Former Secretary John Kerry, the Special Presidential Envoy for Climate, is leaving his post. Ned Price is now the Deputy to the U.S. Permanent Representative at United States Mission to the United Nations. Sean Patrick Maloney was confirmed as the Permanent Representative to the Organization for Economic Cooperation and Development (OECD). Joe Scheidler is now an advisor in the Office of the U.S. Special Coordinator for the Partnership for Global Infrastructure and Investment
United States Trade Representative – Katy Mastman is now the Assistant U.S. Trade Representative for Labor Affairs.
The White House – John Podesta, currently the Senior Advisor for Clean Energy Innovation and Implementation, will also serve as Senior Advisor to the President for International Climate Policy. Samantha E. Silverberg is now Deputy Assistant to the President for Infrastructure Implementation. Daleep Singh is now the Deputy National Security Advisor for International Economics. Kota T. Mizutani is now a senior advisor in the Office of Public Engagement. Dr. Gretchen K. Campbell is the new Director of the National Quantum Coordination Office in the Office of Science and Technology Policy.
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