Biden Touts His Signature Law — but Laments Its Name

Plus: A jobs sector that hasn't rebounded to its pre-pandemic peak ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   By Yuval Rosenberg and Michael Rainey Happy Monday and a very happy birthday to Social Security, which turns 88 today! Here’s what we’re watching. Biden will celebrate the Inflation Reduction Act this week. (Reuters) One Year Later, Biden Pushes Inflation Reduction Act — but Laments Its Name President Joe Biden and several top administration officials will be fanning out across the country this week to celebrate the one-year anniversary of the Inflation Reduction Act being signed into law. Biden is set to tout the law in a visit to Wisconsin Tuesday and at a White House event on Wednesday. What’s in the law: The law, passed by Democrats in party-line votes and signed by Biden on August 16, 2022, included about $500 billion in new spending and tax breaks aimed at boosting clean energy and reducing healthcare costs and prescription drug spending. It also was projected to raise more than $450 billion in new tax revenues and was initially expected to lower the deficit by more than $200 billion over a decade — though that expected savings [may not materialize](. How it’s working: A year in, the law is being credited with fueling a surge in new clean energy projects and jobs. “While the biggest impacts of the Inflation Reduction Act (IRA) will begin in 2024 and 2025, its ripple effects are already starting to take shape,” Bank of America said in a recent [report](. “To date, over 270 new clean energy projects have been announced, with investments totaling $132 billion.” The projects announced so far could create more than 86,000 jobs, according to the report. Treasury Secretary Janet Yellen on Monday touted both the economic and climate benefits of the law at a labor event in Las Vegas. “Powered by the IRA, the President’s agenda has helped drive a massive boom that is touching every corner of the country,” Yellen said in her prepared remarks. “Since January 2021, companies have committed over $500 billion in manufacturing and clean energy investments. The explosion in U.S. factory construction is a uniquely American story: one that we do not see replicated in other peer countries.” What’s in a name? One thing the law is not getting credit for: reducing inflation, as per its title. Biden himself lamented the law’s name at an event last week in Salt Lake City, Utah. “The Inflation Reduction Act – I wish I hadn’t called it that, because it has less to do with reducing inflation than it does to do with dealing with providing for alternatives that generate economic growth,” he told donors at a campaign reception, according to a White House transcript. “And so, we're now in a situation where if you take a look at what we're doing in the Inflation Reduction Act, we're literally reducing the cost of people being able to meet their basic needs.” The bottom line: The administration’s sales effort is politically necessary as Biden aims to convince Americans his economic agenda is working. A year in, Americans don’t know much about the Inflation Reduction Act, one of Biden’s signature legislative accomplishments, which the White House celebrates as “the biggest investment in climate action in history.” More than seven in 10 people say they have heard “little” or “nothing at all” about the law, and 57% say they disapprove of Biden’s handling of climate change, according to a recent Washington Post-University of Maryland [poll](. House Republicans Prepare for Government Funding Fight: Report House Republicans were scheduled to have a conference call tonight to discuss funding the government beyond September 30, when the current fiscal year ends. The issue was already a thorny one, and it may be even more complicated now that the Biden administration had requested some $40 billion in supplemental spending, including more than $20 billion for Ukraine. “One idea that’s been bouncing around House Republicans leadership circles is seeking spending cuts to offset any increase in spending from the supplemental, which is deemed an emergency and doesn’t count toward annual budget caps,” Punchbowl News [reported]( adding, “House GOP leaders may press for more border security funding. That could be one possible tradeoff in return for new Ukraine funding.” Quote of the Day “Although most forecasters still predict a recession, we think the runway for a soft landing is in sight. US economic activity remains resilient, the labor market rebalancing is making progress, and the recent CPI and PCE data suggest that disinflation may now be running slightly ahead of schedule.” – Goldman Sachs Chief Economist Jan Hatzius in a note to clients Monday. Hatzius last month lowered his forecast probability of a recession in the next year from 25% to 20%. In his latest update, Hatzius offered a rosy outlook for inflation and the economy: “In our forecast, the continued strength of real disposable income growth and a reduced drag from monetary tightening keep growth solidly positive and the unemployment rate stable near 3 1/2%. Despite this strength, declining core goods prices, slowing rent inflation, and a gradual reduction in labor demand ‒ achieved mostly via lower job openings as opposed to increased layoffs – bring down inflation to near the Fed’s 2% target by the end of 2024.” Hatzius and his team now expect the Federal Reserve to be done raising interest rates — and to start cutting them in the second quarter of 2024. “At that point, we expect core PCE inflation to have fallen below 3% year-on-year and below 2.5% on a monthly annualized basis,” Goldman’s David Mericle wrote in a Sunday note. “The motivation for cutting outside of a recession would be to normalize the funds rate from a restrictive level back toward neutral once inflation is closer to the target.” State and Local Government Employment Still Below Pre-Pandemic Peak State and Local Employment Still Below Pre-Pandemic Peak Although private employment in the U.S. economy has rebounded sharply since the pandemic, state and local government employment has yet to recover fully, according to data [highlighted]( by the Urban-Brookings Tax Policy Center. While private employment regained pre-pandemic levels in the summer of 2022 and has continued to increase since then, total state and local government employment remains 0.1% below where it stood in March 2020. A big part of the story is the steep decline in local public employment in the wake of the pandemic. Between March and May 2022, local employment fell by 9%, while state employment, which accounts for just a third of state and local employment overall, fell by a more modest 4%. The job loss has been largest in the non-education sector. At the state level, the total number of education jobs has actually increased since before the pandemic. At the local level, education jobs are still 0.4% below the previous peak, but non-education employment is 1.7% lower. The numbers vary significantly by state. In West Virginia, for example, state and local employment is 6% lower than it was at the beginning of the pandemic. In Delaware, on the other hand, state and local employment is 4% higher. Overall, 38 states have lower levels of state and local public employment than they did in early 2020. The issue is particularly significant because of the role played by state and local government employment during the slow and painful recovery from the recession in 2009. It took a decade to regain all of the jobs lost at that time, and the decline in state and local public payrolls acted as a fiscal drag on economic growth for years. The recovery from the pandemic has been shaped by very different forces in the labor market, with overall employment rapidly moving higher as the economy recovered. But state and local governments, flush with cash from surging tax revenues, have yet to catch up. That lag may help tamp down inflation. But in the long run, it could hurt by reducing fiscal support in an economy that appears to be slowing, and by reducing the capacity of state and local governments to provide essential services. Fiscal News Roundup - [Biden, Yellen Lead Blitz to Celebrate Inflation Reduction Act]( – Bloomberg - [Biden’s Climate Law Has Led to 86,000 New Jobs and $132 Billion in Investment, New Report Says]( – CNN Business - [Yellen Sees Path to Easing Inflation and Keeping Healthy Job Market]( – Bloomberg - [Biden Wants Rich Companies to Pay Higher Taxes. Some Are Fighting Back]( – Washington Post - [Near-Term Inflation Outlook at Lowest Since 2021 in Fed Survey]( – Bloomberg - [Biggest Treasury ETF Sees Largest Exodus Since 2020 Meltdown]( – Bloomberg - [US Gas Prices Climb to Highest Level in Nearly 10 Months]( – CNN - [US Announces New $200M Ukraine Aid Package]( – The Hill - [Biden Officials Aim to Move Ahead on Medicare Price Negotiation]( – The Hill - [Electric Buses Get Billions in Federal Aid. A Top Maker Just Went Bankrupt]( – Washington Post - [Hospital Bosses Love AI. Doctors and Nurses Are Worried]( – Washington Post - [More Americans Are Ending Up Homeless—at a Record Rate]( – Wall Street Journal Views and Analysis - [Yes, Inflation Is Down. No, the Inflation Reduction Act Doesn’t Deserve the Credit]( – Josh Boak and Paul Wiseman, Associated Press - [The Inflation Reduction Act Finally Gave the U.S. a Real Climate Change Policy]( – Josh Bivens, Economic Policy Institute - [Biden’s Climate Bill Was Too Tame. Here Are Four Fixes]( – Mark Gongloff, Bloomberg - [The Congressional Budget Wars Are Coming Back]( – Larry S. Blinder, Wall Street Journal - [Larry Summers Was Biden’s Biggest Inflation Critic. Was He Wrong?]( – Jeff Stein, Washington Post - [5 Key Pillars of President Biden’s Economic Revolution]( – Jeff Stein, Washington Post - [America Is About to Fall Off a Child Care Cliff]( – Kathryn A. Edwards, Bloomberg - [The Economic and Political Genius of Jay Powell]( – Matthew Yglesias, Bloomberg - [To Speed Scientific Progress, Do Away With Funding Delays]( – Heidi Williams, Washington Post - [Biden Regrets Lying to You About the 'Inflation Reduction Act']( – Zachary Faria, Washington Examiner - [Two Towns, Two Factories: How a $500 Billion Boom Exposes American Failures]( – Shawn Donnan, Bloomberg Copyright © 2023 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](