October 6, 2022

The coming political battle over when a recession is recession

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correction

An earlier version of this newsletter misstated the agency that will release preliminary gross domestic product numbers on Thursday. It is the Bureau of Economic Analysis, not the Bureau of Labor Statistics.

Good morning, Early Birds. We live in the time of Joni Mitchell. Thanks for waking up with us. Tips: earlytips@washpost.com.

In today’s edition Post scoop: Justice Department investigating Trump’s actions in Jan. 6 criminal probe … Nearing the end on the chips bill … Republicans unveil access to contraception billChristina Pushaw — ‘The Dennis Rodman of Florida politics’ … but first …

What is a recession, really?

As the economy slowed in early 2008, President George W. Bush insisted the country had not fallen into recession.

“I don’t think there will be a recession,” Bush told ABC News Radio in February 2008. He refused to use the word for months, even as Democratic lawmakers laid into his administration over what they called the “Bush recession.”

A decade and a half later, President Biden is in a similar predicament.

The Bureau of Economic Analysis will release its preliminary estimate Thursday of how much gross domestic product grew — or shrank — in the second quarter. The number is important because GDP fell in the first three months of the year, and GDP contracting two quarters in a row is viewed as a signal that the economy is in recession.

The administration has mounted a campaign in recent days to convince Americans that the economy is too strong to be in recession no matter what Thursday’s data shows. “We’re not going to be in a recession,” Biden told reporters on Monday.

Republicans aren’t having it.

Sen. Rick Scott (R-Fla.), the chairman of the National Republican Campaign Committee, castigated the administration on Tuesday for trying to evade calling a recession a recession, armed with a poster board with the definition on it. His source: Google.

“The Biden administration must be really worried because they are trying to change the definition,” Scott told reporters. “So I assume they are going to call Google to see if they can hurry up [and] get this number changed so that when people go onto the internet and look this up it won’t say if you have two negative quarters it won’t be a recession anymore.”

Even some economists who’ve sometimes been critical of the Biden administration say they’re in the right this time.

“Everything they’ve said is correct,” said Jason Furman, who served as director of the National Economic Council in the Obama administration. “And if anyone goes out and says this is a recession if there’s a negative number on Thursday, they’re just wrong and don’t understand how recessions are defined.”

Douglas Holtz-Eakin, a former Congressional Budget Office director who now runs American Action Forum, a conservative think tank, said he didn’t think much of Biden’s handling of the economy but that two quarters of negative economic growth doesn’t necessarily augur a recession.

“I think it’s a terrible thing to argue that we’re in a recession for political damage,” Holtz-Eakin said. “That’s rooting against the American people. No one should make that argument until it’s definitively true.”

But with polls showing Americans are already sour on the economy, a big public fight over whether the economy is technically in a recession is probably not a good place for Democrats and the Biden administration to be heading into the midterm elections.

“They’ll lose that argument — even if they’re right,” Holtz-Eakin said. “I’m just saying. They’ll lose. Bush lost. That’s the way it works.”

The White House has been making the case that this time is different than previous recessions. Private sector investment and demand remain strong. The economy has been adding hundreds of thousands of jobs a month.

“That’s in contrast to what we see typically during recessions,” National Economic Council Director Brian Deese said in the White House press briefing on Tuesday.

Americans are more pessimistic.

A CNN poll last week found that 64 percent of Americans believe the country is already in a recession.

Still, that’s no worse than Americans felt in early 2008, when Bush insisted the economy wasn’t in recession. (The National Bureau of Economic Research’s business cycle dating committee, which makes the ultimate determination as to when the economy enters and exits recession, later ruled that it was. Our colleague Jeff Stein is out with a story this morning taking a close look at the committee.)

Tony Fratto, who as deputy White House press secretary during the last years of Bush’s administration tried to convince reporters the economy hadn’t gone into recession, said Biden’s team’s team had a better case because jobs remained so plentiful.

“There is no such thing as a recession with 3.6 percent unemployment,” Fratto said — a line that he suggested the White House start using.

‘You’ve got to be careful’

Still, there are dangers to insisting the economy isn’t in recession when Americans are hurting economically.

Former senator Phil Gramm (R-Texas) played down the economic slowdown while serving as an economic adviser to Sen. John McCain’s 2008 presidential campaign, calling it “a mental recession.” The United States, he added, was “a nation of whiners.”

McCain immediately disavowed Gramm’s comments, saying he didn’t speak for him.

In an interview on Tuesday, Gramm said he isn’t convinced that the country isn’t in a recession — and that the White House should be wary of protesting too much.

“By saying it’s not a recession, what do you get?” Gramm said. “I don’t know that changes anybody’s mind. You’ve got to be careful, because you can be accused of denying reality.”

Correction: An earlier version of this newsletter misstated that agency that will release preliminary gross domestic product numbers on Thursday. It is the Bureau of Economic Analysis, not the Bureau of Labor Statistics.

DOJ investigating Trump’s actions in Jan. 6 criminal probe

All eyes on Donald Trump: “The Justice Department is investigating President Donald Trump’s actions as part of its criminal probe of efforts to overturn the 2020 election results,” our colleagues Carol D. Leonnig, Devlin Barrett, Josh Dawsey and Spencer S. Hsu scooped.

  • “Prosecutors who are questioning witnesses before a grand jury — including two top aides to Vice President Mike Pence — have asked in recent days about conversations with Trump, his lawyers, and others in his inner circle who sought to substitute Trump allies for certified electors from some states Joe Biden won.”
  • “The prosecutors have asked hours of detailed questions about meetings Trump led in December 2020 and January 2021; his pressure campaign on Pence to overturn the election; and what instructions Trump gave his lawyers and advisers about fake electors and sending electors back to the states … Some of the questions focused directly on the extent of Trump’s involvement in the fake-elector effort led by his outside lawyers, including John Eastman and Rudy Giuliani.”
  • “In addition, Justice Department investigators in April received phone records of key officials and aides in the Trump administration, including his former chief of staff, Mark Meadows.”

Meanwhile, Trump was in Washington Tuesday for the first time since leaving office to deliver a “dystopian speech that encouraged ‘tough,’ ‘nasty’ and ‘mean’ responses to violent crime and the forcible relocation of homeless people to quickly-built tent cities in the suburbs,” per our colleagues Michael Scherer and Josh Dawsey.

Nearing the end on Chips — and hopefully the bill’s constant renaming

The Senate will vote on final passage of the chips manufacturing and technology bill today, sending the measure to the House, where it is expected to be voted on later this week.

It’s expected to pass the House, likely with bipartisan support.

House Speaker Nancy Pelosi has praised the bill but some Democrats could to vote against it, in part, because the Senate dropped some of the trade and climate provisions.

House Minority Leader Kevin McCarthy (R-Calif.) is opposing the measure, but leadership isn’t actively whipping against the bill. Rep. Michael McCaul (R-Texas), ranking member of the House Foreign Affairs Committee, is encouraging his colleagues to support the legislation.

The multibillion-dollar bill, which has had almost as many name changes as dollars it costs, includes $52 billion in subsidies for semiconductor manufacturing as well as tens of billions for the National Science Foundation and 10 technology hubs around the country.

Leigh Ann spoke with Sen. Todd Young (R-Ind.), who was an original co-sponsor of the bill with Senate Majority Leader Chuck Schumer (D-N.Y.), and Sen. Kyrsten Sinema (D-Ariz.) on Tuesday during Across the Aisle on Washington Post Live. Here are some interesting threads of the conversation:

On criticism from the left that it’s a corporate handout and too expensive:

  • Young: “I follow Ronald Reagan‘s adage, and this is a national security investment, as we’ve already established, and Ronald Reagan used to say often that defense is not a budgetary issue. You spend what you need, and if this economy during the course of the pandemic until the present day has demonstrated anything, it’s that we need an economy that is more resilient.”

If concerns of a Chinese invasion of Taiwan was a national security argument made by the administration to pass this bill:

  • Sinema: “During that [classified] briefing, we learned about some of the geopolitical concerns and threats that we are facing, and it helped create a greater sense of urgency.”
  • Young: “We got in this classified briefing — was just how mission critical this is to our national security, to our weapons systems, to making sure that, you know, the Chinese government doesn’t make a march on Taiwan or otherwise try and distort the free market in this sector as they have others so that they would put any chip makers located here in the U.S. out of business.”

On if they worry about China retaliating for this legislation:

  • Young: “The Chinese embassy here in Washington sent letters out to American business executives indicating that they should lobby against this legislation because it could hurt their future business interest. So there have been some not‑too‑veiled business threats targeted at American businesses.”

Republicans unveil access-to-contraception bill

Sen. Joni Ernst (R-Iowa) and other members of the Iowa delegation are introducing a Republican version of an access-to-contraception bill by expanding access to birth control over the counter. To alleviate concerns of some conservatives, the bill excludes emergency contraception not already accessible over the counter and any medication the Food and Drug Administration has approved for inducing abortion.

The Republican proposal isn’t expected to go anywhere, but it’s an attempt to show that Republicans support contraception access. It comes after Democrats have put forward votes enshrining access to contraception pointing to Supreme Court Justice Clarence Thomas comments in his Dobbs concurrence that the right to contraception could be reconsidered by the court.

All but eight House Republicans voted against Democrats’ access-to-contraception bill last week, and Republicans are expected to block a Democratic attempt in the Senate to pass the measure today.

The Senate Commerce Committee is marking up legislation to create safeguards and guardrails for social media companies’ targeting of children. The bipartisan legislation by Sens. Richard Blumenthal (D-Conn.) and Marsha Blackburn (R-Tenn.) is the first major attempt at oversight in an area where lawmakers have been quick to criticize social media companies but slow to attempt a solution.

We’ll watch the vote tally in the committee and how much support it has. Sen. John Thune (R-S.D.), the No. 3 Senate Republican and a member of the committee, is “likely” to support the legislation, a big boost for the measure.

DeSantis spokeswoman Christina Pushaw, making sure reporters feel the burn

‘The Dennis Rodman of Florida politics’: “When Florida Republicans held their annual conference last week, party leaders decided to bar a large swath of the press corps from the event,” our colleague Paul Farhi writes. “While the hosts declined to discuss their reasoning, one unelected official applauded it.”

“The derisive tone was typical of Pushaw, 31, a state employee who earns $120,000 a year,” Farhi writes. “In the 14 months since joining DeSantis’s staff, she has transformed the typically buttoned-down role of gubernatorial press secretary into something like a running public brawl — with Twitter as her blunt-force weapon. Her usual targets: Democrats, the news media and anyone else she deems insufficiently supportive of DeSantis’s agenda and her own conservative politics.”

  • “She has also been credited — or blamed — for helping make the incendiary term ‘groomer’ mainstream in GOP circles. In early March, she used the word, once reserved to describe pedophile behavior, to characterize anyone who opposed a DeSantis-favored bill restricting discussions of sexual orientation and gender in schools.”
  • “Some think Pushaw’s aggressive persona is strategic, acting as a kind of heat shield for DeSantis. ‘She’s the Dennis Rodman of Florida politics,’ said Peter Schorsch, the publisher of FloridaPolitics.com, referring to the NBA player who taunted his opponents to throw them off their game.”
  • But Florida reporters say Pushaw’s hiring “signaled a change in tone, from relatively cordial to routinely caustic … ‘They view reporters as their enemies. They are more antagonistic to reporters just by default, and often without cause,’” Mary Ellen Klas, a reporter for the Miami Herald, told Farhi.

Burna Boy? Tems?? A man with taste.

Thanks for reading. You can also follow us on Twitter: @theodoricmeyer and @LACaldwellDC.





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