Good morning. Here’s your Daily Situational Awareness for Thursday, 20 July 2023.
- READ TIME: 6 Minutes, 8 Seconds
- Inside the Beltway
- (1) Bidenomics Bombing in the Polls
- (2) House GOP Using Spending Bill to Kill EPA Emissions Rules
- (3) Senate Votes to Prevent President from Leaving NATO
- (4) Foggy Bottom Gets the Tuberville Treatment
- (5) Bill to Ban Lawmakers’ Stock Trading
- Domestic INTSUM
- (6) RFK Jr: Back Treasuries With Bitcoin or Precious Metals
- (7) The Gen X Retirement Nightmare
- (8) Summer of Strikes: UPS Pilots Say They Will Support Teamsters
- Russia-NATO SITREP
- (9) Russia Says All Black Sea Traffic to Ukraine is Party To War
- China & Indo-Pacific SITREP
- (10) China Warns of Retaliation if U.S. Expands Tech Restrictions
INSIDE THE BELTWAY
- (1) BIDENOMICS BOMBING IN THE POLLS: According to a poll by the Monmouth University Polling Institute, President Biden’s disapproval ratings were higher than his approval ratings on jobs, infrastructure, and inflation.
- Monmouth said the numbers were “mediocre to poor” and consistent with polling on Biden’s handling of the economy from September 2022.
- Why It Matters: “Bidenomics” is going over with the public like a lead balloon, and this could spell trouble for Biden heading into 2024 as he makes the economy the centerpiece of his campaign. – R.C.
- (2) HOUSE GOP USING SPENDING BILL TO KILL EPA EMISSIONS RULES: The House appropriations bill funding the Interior Department and related agencies, including the Environmental Protection Agency (EPA), includes amendments overturning pending EPA rules imposing stricter emissions standards on power plants and vehicles.
- The House version of the appropriations bill includes a proposed 39% cut to the EPA’s budget.
- Why It Matters: There is a trend of the Biden administration putting the cart before the horse on green energy initiatives, and the EPA’s zero-emission engines standards meant to push Americans from internal combustion engine cars to EVs is a prominent example; charging infrastructure remains the largest hurdle, and even if it wasn’t the U.S. grid couldn’t support mass adoption of EVs in its current state. This is especially true if the EPA’s rule set for the end of the year is implemented, which is expected to drive fossil fuel power plants offline without renewable replacements. There will be a fight over the numbers with the Democratic-controlled Senate. Still, Republicans may be able to get the power plant rule ban through and prevent a possibly catastrophic loss of energy generation capacity. – R.C.
- (3) SENATE VOTES TO PREVENT PRESIDENT FROM LEAVING NATO: The Senate voted 65-28 to add an amendment to the 2024 National Defense Authorization Act (NDAA) which would prevent the President from unilaterally leaving the NATO military alliance.
- Why It Matters: Former President Trump said he would consider pulling the U.S. out of the NATO alliance if he won. Lawmakers in the Senate who oppose his stance on NATO might see his or another Republican candidate who may be aligned with Trump on foreign policy, chances of winning increasing and are taking preemptive steps to prevent a U.S. exit from NATO. – R.C.
- (4) FOGGY BOTTOM GETS THE TUBERVILLE TREATMENT: Senators J.D. Vance (R-OH) and Rand Paul (R-KY) are holding up more than three dozen ambassador and international commission nominees over diversity initiatives and COVID-19, according to the American Foreign Service Association.
- A senior Biden official said, “China, Russia, almost no country has to go through a process like this.”
- Why It Matters: Republicans in the Senate have found a successful strategy for getting attention to their policy priorities by holding up unanimous consent votes for appointments. Democrats are pushing Majority Leader Chuck Schumer (D-NY) to push through the ambassador appointments through regular order, which is more realistic than circumventing Sen. Tommy Tuberville’s (R-AL) blockade on general officers. Expect Senate Republicans to find more opportunities to hold up appointments through procedural rules to pressure Democrats. – R.C.
- (5) BILL TO BAN LAWMAKERS’ STOCK TRADING: Senators Kirsten Gillibrand (D-NY) and Josh Hawley (R-MO) introduced a bill to prevent members of the executive branch, Congress, and Congressional staff from trading individual stocks.
- The bill would also prohibit ownership of individual companies in blind trusts.
- Executive and Congressional members could still own mutual funds and index funds.
- Why It Matters: Members of Congress, their staff, and executive branch regulators have an incredible stock market edge. Thanks to social media, U.S. citizens can see these federal officials profiting from insider information. Although this bill is unlikely to pass, it will shine a light on people who claim to be public servants but are best serving themselves. – H.B.
- (6) RFK JR: BACK TREASURIES WITH BITCOIN OR PRECIOUS METALS: The Democratic Presidential candidate said that by backing U.S. dollars and debt with hard assets, we could restore dollar strength, rein in inflation, and usher in a new era of American financial stability, peace, and prosperity.
- Kennedy plans to start small, with “perhaps 1% of issued T-bills [that] would be backed by hard currency, by gold, silver, platinum, or bitcoin.”
- He also wants to exempt Bitcoin profits from capital gains taxes.
- Why It Matters: RFK Jr. is a long shot to win the 2024 Democratic nomination for U.S. President. If he wins the nomination and then the Presidency, this policy idea is still unlikely to pass. But at least RFK Jr. is getting out these ideas about the dollar’s value and U.S. finances, and he’s not alone. Judy Shelton, a President Trump nominee to the Federal Reserve Board who was never confirmed, proposed a partial backing of Treasurys with gold. – H.B.
- (7) THE GEN X RETIREMENT NIGHTMARE: America’s Generation X, born between 1965 and 1980, is in a tough financial spot as the generation’s oldest members approach retirement age.
- The typical Gen X household has $40,000 in retirement savings, and 40% of Gen Xers haven’t saved a penny for retirement, according to a recent National Institute on Retirement Security study.
- An earlier study noted that 64% of Gen X respondents stopped saving for retirement because they couldn’t afford it.
- Why It Matters: For many Gen Xers, a personal financial crisis has already hit. Xers were the first generation to start working after the shift from defined benefit pension plans to defined contribution plans. Now, they’re sandwiched between elderly parents and children who can’t afford to leave home. As the economy worsens, we expect more struggling Gen Xers and greater generational tensions. – H.B.
- (8) SUMMER OF STRIKES: UPS PILOTS SAY THEY WILL SUPPORT TEAMSTERS: The United Parcel Service (UPS) Pilots’ union announced they would not cross the picket line if the Teamsters go through with their own strike scheduled to start 01 August.
- The Teamsters Union said their other planned strike at Yellow could come as soon as Monday, 24 July.
- According to union President Shawn Fain, the United Auto Workers (UAW) Union is on track to strike if union demands for a new contract are not met by Ford, General Motors, and Stellantis by 14 September.
- Why It Matters: The Yellow strike will be a preview for a larger strike, with more severe supply chain and economic consequences due to UPS’s market share in the logistics field if UPS and the Teamsters cannot get back on track. The official Biden administration position is still that it isn’t the right time to step in, and Teamsters President O’Brien is urging the White House to stay neutral and avoid a repeat of the administration’s actions that ended the planned rail strike last year. – R.C.
- (9) RUSSIA SAYS ALL BLACK SEA TRAFFIC TO UKRAINE IS PARTY TO WAR: Russia’s Defense Ministry said on Wednesday that all shipping traffic bound for Ukraine is suspected of carrying military cargo, and their flag countries are now belligerents in the conflict.
- The announcement follows Russia’s withdrawal from the Black Sea grain agreement that gave safe passage to ships carrying grain from Ukraine’s ports.
- Russia also declared the southeastern and northwestern waters of the Black Sea as temporarily unsafe for navigation.
- Why It Matters: Russia appears to be shutting down the Black Sea to prevent military material from being shipped to Ukraine. Its announcement also forces Ukraine to route its grain overland through Europe – a move mostly opposed by European countries who want to protect their grain markets from Ukrainian exports. Expect Russia to board and divert any ships inbound to Ukraine through the Black Sea. Worst case, Moscow might order foreign vessels fired on as part of a general blockade of Ukraine’s southern coast. – M.M.
China & Indo-Pacific SITREP
- (10) CHINA WARNS OF RETALIATION IF U.S. EXPANDS TECH RESTRICTIONS: China’s ambassador to the U.S. warned that China would retaliate against the U.S. if it continued placing restrictions on technology transfers to China.
- China’s ambassador said Beijing was not interested in a tech or trade war but would not tolerate further restrictions.
- Washington is considering an outbound investment review mechanism and further prohibiting exporting AI chips to China.
- Why It Matters: China views U.S. tech and chip restrictions as economic warfare and has already taken retaliatory steps by restricting the export of rare earth minerals to the U.S. and other Western nations. AI tech and chip restrictions are one of the few mechanisms the U.S. has to slow down China’s rapid military modernization and expansion. Expect more U.S. restrictions along with Chinese retaliatory actions that could impact the U.S. economy. – M.M.
— END REPORT
M.S. indicates analyst commentary from Mike Shelby
M.M. indicates analyst commentary from Max Morton
J.V. indicates analyst commentary from Jared Vaughn
R.C. indicates analyst commentary from Robert Cook
H.B. indicates analyst commentary from Harrison Burge