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CONGRESS RETURNED TO WASHINGTON yesterday after spending time with constituents who are increasingly uneasy about three issues that now dominate the political world: rising crime, antipathy toward China, and the cost of virtually everything.
AS THE ECONOMY RECOVERS and fear of Covid subsides, new issues are emerging, and surely will be factors in the 2022 election. The Republicans have a decent chance of recapturing the House; the Senate is far too close to call.
THREE BIG NEW ISSUES —
1. Crime has surged in recent months. A wave of gun violence now grips most American cities, from Portland to Chicago to New York. Mayors of these cities — mostly all Democrats — seem unable to stop the surge. Republicans think they can exploit the issue, but the GOP’s resistance to virtually any gun reforms gives the Democrats an opening (if they stay away from cries to defund the police).
2. Rising antipathy toward China. The health care establishment, including Dr. Anthony Fauci, mocked speculation that the Coronavirus escaped from a lab in Wuhan, but that scenario suddenly looks plausible (and has become a huge political issue).
Sentiment against China (and, sadly, Asian people) is surging. Democrats are close to passing bipartisan legislation to fund technology and manufacturing in the U.S. to counter China, but the key issue persists — did Beijing cover up a virus escape in the lab?
3. The cost — and scarcity — of virtually everything. This is a red-hot issue, as Americans worry that their discretionary income will get gobbled up by gasoline, food, housing, etc. Young people are flocking to summer jobs, but the scarcity of workers is clear.
Many Americans worry that they’re being priced out of the housing market, as costs soar. Ultra-low interest rates are a factor, and we think Janet Yellen has a point — slightly higher interest rates may have benefits; they could reduce some of the housing froth and please the saver class, which is stuck with near-zero percent yields in their bank accounts.
THESE THREE ISSUES WORRY DEMOCRATIC STRATEGISTS, who concede in private that the House could flip. But Joe Biden is personally popular; the low-keyed president enjoys decent job approval numbers and has the good fortune to be compared to Donald Trump.
TRUMP’S ACT LOOKED STALE this weekend in North Carolina — his address largely focused on grievances, not an agenda for the future. A third of all Americans passionately support him, but that’s not enough to win elections in 2022 or 2024.
CAN BIDEN KEEP HIS PARTY TOGETHER? Sen. Joe Manchin has infuriated most Democrats because he could derail the party’s agenda. The party is starting to look divided, but issues change quickly — what’s next? The mind-boggling heat wave and drought that have engulfed much of the world? Another surge of illegal immigration?
OUR BOTTOM LINE: Let’s look at the forest, not the trees. We’re now entering the post-pandemic era, and it’s clear that the economy is rebounding, with the stock market close to all-time highs. There are new issues to worry about but we’ll stick with our same concern since early spring — fiscal and monetary policies are too aggressive; the economy could over-heat.
Related: The Fed Begins Asset Sales
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