BTRTN: Not the End of Biden's Beginning

Tom with the BTRTN October 2021 Month in Review.

Winston Churchill was on a losing streak in 1942.  Sure, he had notably transformed the UK from a country that cheered the appeasement strategy of his predecessor to a spine-stiffened nation that would “fight on the beaches” and anywhere else the Germans waged war.  But the war effort itself was proceeding miserably, the Germans rolling through France and North Africa, their U-boats destroying convoys carrying tons of desperately needed supplies across the Atlantic, an ill-conceived British adventure in Greece, the galling surrender of 130,000 British troops in Singapore after desultory and brief fighting, and more.  The rumblings against Churchill’s government began; while he remained personally popular, the critiques of his war-making capability, earned from disasters in Churchill-sponsored excursions in Gallipoli in 1915 to Norway in early 1940, began anew.

But finally, in June of 1942, British forces under the command of Generals Alexander and Montgomery defeated Erwin Rommel at El Alamein, a momentous event that brought forth another of Churchill’s most memorable quotes:  “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

 

Now Joe Biden is no Churchill in either his power of oratory or his ability to motivate a nation.  But he too faced challenges of epic proportion when he assumed office, directly related to the policies and practices of his predecessor:  the ongoing COVID crisis, and a challenge to the twin pillars of American democracy, the integrity of our voting process and the peaceful transfer of power.  And, like Churchill, who galvanized British fighting spirit in those early days, Biden too had early wins, notably in jumpstarting Trump’s anemic vaccine distribution program, the passing of the epic $1.9 trillion American Rescue Plan and, in general, the return of decency, honesty, empathy, an adherence to facts, a reliance on science, and a reversion to the norms of American political life, all of which won him plaudits.

 

But then came the losing streak – in part self-inflicted (the dismal exit from Afghanistan, the diplomatic flap in France, the mistaken assault on ISIS-K in Afghanistan that resulted in tragic civilian deaths) and in part not (the rise of the Delta vaccine, the resultant slowdown in the economy, the global supply chain crisis, the rise of inflation, the re-solidification of the GOP under Trump).  The verdict on his performance, while not completely disastrous as yet, has been clear, in both the decline in his approval rating (see below) and in the governor races yesterday that saw the defeat of Terry McAuliffe in Virginia, and a way-too-close victory in New Jersey by incumbent Phil Murphy – two blue states that Biden carried by double digits just a year ago.

 

Biden’s El Alamein – what he needs to end his losing streak -- are his two massive pieces of legislation, the $1.2 trillion “hard” infrastructure bill, and the $1.5 to $2 trillion “soft” infrastructure bill.  As of this date, the hard bill has passed the Senate in bi-partisan fashion with room to spare, and has majority support in the House.  The “soft” bill is still being negotiated.  Biden announced a $1.75 trillion framework for the soft bill that appears to have broad support. It received the endorsement, at long last, of the House’s progressive wing, but nailing down an agreement remains maddeningly elusive.

 

And so Biden is not having his El Alamein moment as yet.  The legislation has been waylaid on its tortuous path by the progressive’s insistence on passing the two bills simultaneously, the intransigence of Democratic centrist Senators Joe Manchin and Kyrsten Sinema, with occasional grenades lobbed in by both Bernie Sanders and even “Mod Squad” House centrists, usually a quiet bunch.  The two bills are certainly too big to fail, and odds on will be passed soon.

 

The mainstream media has not been Biden’s friend in the legislative process.  They are covering it as if it were a baseball game, with excruciating detail, as all of the infighters posture and preen.  This is a classic case, to use another metaphor, of the sausage-making becoming the story.  We forget – we have forgotten – what it takes to pass historic social legislation, which is precisely what Biden is after.  The 1964/65 Civil Rights legislation was a century in the making, complete with a weak predecessor in 1957 – and let’s not forget the 54-day filibuster in the Senate in the early months of 1964 after the House had passed the Civil Rights Act -- back when filibusters were “real.”  The most recent massive piece of social legislation, the Affordable Care Act in 2011, took 13 months, and Obama had 60 votes in the Senate (at least until Ted Kennedy died).  The easiest part of this one has turned out to be working with GOP Senators on the hard bill; the entire GOP congressional delegation is sitting out the soft bill, which is shameful, given its overall popularity with the majority of Americans.

 

If at some point Manchyma, Sanders, the Mod Squad and the House progressives stop playing musical chairs, and all sit down together with Biden, Pelosi and Schumer and pass both bills, Biden will have an historic win on his hands.  Biden’s framework features an extraordinary expenditure to fight climate change, money to subsidize child care and universal Pre-K education, a tax break for parents, hearing care for the elderly under Medicare, in home care, a fix for the Medicaid “gap,” some Obamacare fixes, job training, some immigration reforms, housing assistance, tuition aid, child nutrition funds and more.  And that’s just the “soft” bill.  Altogether the two packages, coupled with the American Rescue Plan, would in scope easily stand alongside the efforts of FDR and LBJ to reshape the life of ordinary Americans.

 

It is fair to say that the Democrats have, to date, vastly under-marketed the poorly named “Build Back Better” plan, which pales alongside the high concept simplicity of the New Deal and the Great Society.  Hardly anyone knows what is in these bills – the focus has been almost entirely on what they cost and what is being left out in the compromises -- and how it will help virtually everyone in America.  Biden’s challenge, once the bills are passed, is to sell the benefits, and ensure they are executed promptly.

 

The news of the rest of the month failed to penetrate the play-by-play of the bill, but there were many other notable items.

 

Job One for Biden remains getting COVID-19 under control, and by and large it was a good month.  New COVID cases dropped 40% in the month, from 3.6 million to 2.2 million, and deaths dropped by 22%, from 59K to 44K.  The unvaccinated continued to constitute the vast majority of both groups, yet vaccinations increased only marginally.  Only roughly 6 million more Americans were fully vaccinated in October, increasing the total to just over 191 million, anemic progress.  About 19 million of those who are vaccinated received a booster shot, and children aged 5 to 11 will soon be getting shots in their arms – if their parents let them.  These rates of change are simply too slow, leaving the country with very high new case levels and low vaccination rates, and no unified sense of purpose.

 

The economy finally took the expected bath associated with the rise of the Delta variant, with GDP growth slowing to 2% (annualized), inflation continuing at 5%, and a second straight month of anemic job growth (under 200K).  The term “stagflation” has begun to be bandied about, but it is a wild exaggeration.  Jimmy Carter would have killed for numbers like that; inflation hit 13% during his administration, and GDP growth ground to a halt entirely.

 

This month many Americans learned about the term “supply chain,” which refers to how goods get from the factory to either retail shelves or your doorstep.  This has been a hot business topic for decades, when “just-in-time inventory” became the rage, but has come into view as shortages have developed, much like an otherwise capable referee suddenly becomes the focus after making a terrible call.  Rising consumer demand in this semi-post-COVID economy, coupled with a labor shortage, have combined to leave alarming levels of goods still at sea, and now the Biden Administration is scrambling to fix a business problem for which it is being blamed.  We are learning exactly how vulnerable we are to the split second timing requirements that enable “just in time.” 

 

The Supreme Court turned down a second request to shut down the Texas anti-reproductive health bill, but the three liberals and John Roberts forced a consideration of the law onto the docket on an urgent basis.  The constitutionality of the law would not be reviewed at this time per se, but rather the nature of the law, which puts enforcement in the hands of citizens, not the state, will be reviewed – specifically, whether such a constructive precludes federal court review, and whether injunctive relief can be granted.  Oral arguments were heard earlier this week.  The Texas law has given real juice to Democratic electoral prospects, and the odds of the Supreme Court ultimately striking down the Texas law rose considerably when Brett Kavanaugh asked the right question immediately: if the law could be a model for similar laws that could limit gun rights and free speech.  The answer was “yes.”  But while the Texas debacle may be expunged, the fate of Roe v Wade remains front and center, as the court will also soon hear arguments that may result in the death or severe curtailment of Roe.

 

The House Select Committee to Investigate the January 6th Attack on the Capitol (as the committee is formally known) finally showed some fight by recommending to the full House (which approved) that Steve Bannon be prosecuted for contempt of Congress in failing to respond to a subpoena to appear before them.  Bannon is a key witness because he was clearly involved in the planning of the insurrection, and in close contact with Trump on that topic.  Bannon stated that he was yielding to Trump’s claims of executive privilege in declining to appear.  This is a specious claim, given (a) Trump has no authority to claim executive privilege, that is now solely in the province of Joe Biden, and (b) even if Trump had that authority, it surely could not be extended to a private citizen, one who had not worked in the White House for three years.  Now comes the wait for Merrick Garland to act on the House recommendation.  All of this buys time, because the Trump/GOP game is to lawyer the Committee to death, with machinations to delay any cooperation until after the midterms presumably flip the House to the GOP, so they can kill it.

 

The month ended with Biden off in Europe in something that is amounting to an apology tour of a kind.  Biden met with the Pope in a warm greeting of the two most powerful Catholics in the world, and emerged with the Pope’s blessing of Biden’s receiving communion, despite his position on abortion, which conservative American bishops had been vocal in opposing.  Then he moved on to a private meeting with France’s Emmanuel Macron, essentially apologizing for undercutting France without warning on a submarine deal with the Australians.  After a day at the G20, Biden moved on to the 2021 U.N. Climate Change Conference (a.k.a, COP26), where he more or less apologized that Trump took the U.S. out of the Paris Accords.  Biden’s strength on the climate change issue was undercut by the failure of Congress to produce the “soft” infrastructure package in time for the COP26, but this miss was assuaged by the sheer enormity of the commitment outlined in his framework.  But all of these good intentions only matter through action, and only time can yield the opportunities for Biden to turn the words into action.

 

And he has that time.  While the Virginia and New Jersey election outcomes surely reinforced how far he has fallen in his 10 months on the job, he is still very popular with Democrats and has the table set for a good 2022, if he can get the dominoes to begin to fall.  He needs the two bills, first and foremost -- “the end of the beginning” -- and then a little luck, that no new variants as powerful as Delta emerge that wreck progress against COVID.  If those two dominoes fall into place, the economy should follow, and if he can act on a more sure-footed basis on foreign affairs – totally on him -- he will have a better story to tell next year at this time.  

It's not that simple, though.  Biden and the Democrats need to find a way to get to the daily issues faced by middle America, notably the culture wars in schools, the price of gas and inflation.  Youngkin may indeed have found a winning post-Trump formula, and the Democrats can hardly be dismissive.

And, of course, Biden will have to deal with all the surprises and challenges that will surely emerge in 2022.  After all, Churchill hardly rested with the end of his beginning.

 

 

MADNESS

 

In this “Madness” section, it is hard to avoid the insanity of Trump announcing to a group of supporters, without any prompting, that he is not actually a fan of “golden showers.”  He went on to say that this was the one part of the Steele report that Melania actually did not believe.  That implies, of course, that Melania believed the rest of it.

 

But we also focus on the least surprising headline ever (although it was rather under-reported in the mainstream media):  “Trump Deal May Have Skirted the Law”.  It went on to report that in creating his newly-hoped-for social media company/empire, Trump needed to secure $300 million in funding, and to do so he created a SPAC.  That is perfectly legal, but he also held discussions with another company that would merge with the SPAC into prior to the IPO, which is illegal.  SPACs are essentially empty vessels, but are allowed to merge with existing entities post-IPO, not before, nor can any discussions to that effect take place.  We can only hope the SEC shows more gusto and success in punishing him than so many other investigative bodies thus far.

 

 

BIDEN APPROVAL RATING

Joe Biden finally stopped the bleeding on his approval rating after consecutive months of three-point drops, as he remained at 45% and a net approval rating of -4.  This remains Biden’s low water mark for his presidency. 

HOW BIDEN IS HANDLING KEY ISSUES

While his approval rating held, Biden lost ground in the assessments on how he is managing various key issues, in particular foreign policy, where he took a beating, dropping in one month from 45% approval to 38%.  He also lost six points on immigration, and three to four points on the economy and COVID.  The only area where he stood ground was the overall “on the right track” number, which, while at a dismal 32%, is still light years ahead of where it was when Trump left office (20%).

He is also still substantially outperforming Trump’s ratings at the time he left office on COVID management, but now trails him in foreign policy and, in particular, the economy. 

BIDENOMETER

The “Bidenometer” dropped significantly in October, moving from +63 in September to +38.  The drop was driven by the latest GDP figures, which showed only 2% growth in Q3, down from 6%.  The price of gasoline also rose, but these measures were mitigated in part by a slight rise in consumer confidence, a drop in unemployment, and a rise in the stock market. 

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 +38, 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 +38 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 took office.  The indicators are the unemployment rate, the Dow-Jones Industrial Average, the Consumer Confidence Index, the price of gasoline and the GDP.