Middleboro Review 2: POLITICO NIGHTLY: Biden holds onto stock market strategy

Monday, May 9, 2022

POLITICO NIGHTLY: Biden holds onto stock market strategy

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People walk by the New York Stock Exchange in New York City. | Spencer Platt/Getty Images

DON’T POKE THE BEAR — President Donald Trump and his aides in the White House watched and gabbed about markets constantly, even obsessively. CNBC and Fox Business shared time with Fox News on Trump’s very full TV-watching schedule. The Biden White House doesn’t do any of that.

Biden himself almost never mentions the stock market unless asked. And for very good reason at the moment. Stocks are on a massive slide for the year, driven down by fear of inflation, rate hikes and Russia’s war in Ukraine.

The tech-dominated Nasdaq has lost more than a quarter of its value this year (27 percent). The S&P is down close to 17 percent, and the Dow nearly 12 percent.

The major indices all tanked again today, with the Dow off another 2 percent, the S&P 3.2 percent and the Nasdaq a miserable 4.3 percent.

“Your 401k misses President Trump,” Rep. Jim Jordan (R-Ohio) tweeted this morning.

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So should Biden just come out and talk about it? It seems untenable for Biden or some other senior official not to come out and say something significant about the state of the stock market.

It would be easy enough to cheerlead the low unemployment rate and suggest that market turbulence, while unsettling, is to be expected as the global economy adjusts following the worst of the pandemic and that people should maybe chill a little.

But market commentary is just not in the Democratic Party’s DNA. That goes back at least to the Clinton White House and admonishments from senior officials like top economic adviser and later Treasury Secretary Bob Rubin who warned staffers to never, ever talk about stock market moves.

“It was drilled into us pretty early at the time and a lot of people with Biden now were around then like Gene Sperling, Steve Richetti, Ron Klain and even Janet Yellen,” a former senior Clinton White House official told Nightly on condition they not be named talking about a sensitive issue within the party.

“The message was, ‘You shouldn’t talk about markets because in essence you have no control over them and they go down as well as up,’” the former staffer said. “The key was to get the economic fundamentals right and in the long-term the market would follow the fundamentals.”

Even so, having a strong stock market in addition to a good economy is clearly a recipe for winning. And Biden’s numbers on inflation and the economy are in the tank. All the talk of “transitory” inflation seems like mostly bunk now. And the stock market just keeps bleeding.

Trump Treasury Secretary Steven Mnuchin told CNBC in 2017 that the stock market was “absolutely” a good report card on that administration’s economic record. Markets generally went higher under Trump. But trade wars and then Covid also caused giant whipsaws in the market.

And Trump wound up with a lower annual return on the Dow (11.8 percent) than did Presidents Bill Clinton (15.9 percent) and Barack Obama (12.1 percent).

A White House official told Nightly of Biden and the stock market: “As the president has said, we don’t judge the economy by the daily movement of the stock market. And while the stock market is volatile, since President Biden took office the market is up considerably, which is good for the millions of Americans who have stocks or mutual funds in their retirement accounts.”

There’s another way for Democrats to counter GOP arguments about stocks: Say you’re on the side of labor, not capital. Forget about the big losses for all those Wall Street fat cats.

“IT'S THE TWO ECONOMIES,” Bloomberg’s Joe Weisenthal (@thestalwart) recently tweeted. “American workers are experiencing the tightest labor market in a generation, with unemployment at 3.6% … Meanwhile, the world’s 500 richest people have already lost $1 trillion this year.”

The problem with this approach is that while a small group does own a vast majority of stocks, millions more — around 56 percent of Americans — have exposure to the market through individual holdings, 401(k) and other retirement accounts and pensions. They don’t like giant drops, either financially or often mentally.

And even those not invested at all can get depressed by headlines of Wall Street chaos, darkening their view of the economy. Thelatest CNN poll found that only 23 percent of Americans view the economy as “at least somewhat good,” despite a tight jobs market and decent if much slower growth than earlier in the pandemic recovery.

So maybe Biden is right to keep quiet on the slump in the markets. At this point the risks could outweigh any benefits. Wall Street might take it as a panic move. And Biden’s record in economic forecasting is not that great.

“They kind of broke the mold a little with the president coming out and calling inflation ‘transitory,’ which obviously it hasn’t been,” the former Clinton aide said. “So I don’t know why they’d suddenly start talking about stocks given their terrible experience with inflation.”

Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com. Or contact tonight’s author at bwhite@politico.com, or on Twitter at @morningmoneyben.

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— Hill leaders strike deal on nearly $40B in Ukraine aid: Congressional Democratic leaders have reached a bipartisan accord to send $39.7 billion to Ukraine to bolster its months-long battle to stave off a brutal Russian assault. And that deal is now expected to move swiftly to Biden’s desk, after Democrats agreed to drop another one of their top priorities — billions of dollars in pandemic aid that has stalled on the Hill. The Ukraine aid could come to the House floor for a vote as soon as Tuesday, according to a person familiar with the discussions who spoke candidly on condition of anonymity.

— Russia marks WWII victory overshadowed by Ukraine: Russian President Vladimir Putin today sought to cast Moscow’s military action in Ukraine as a forced response to Western policies and a necessary move to ward off a potential aggression. Speaking at a military parade on Red Square marking the World War II victory over the Nazis, Putin drew parallels between the Red Army’s fighting against the Nazi troops and the Russian forces’ action in Ukraine.

— White House adviser Susan Rice tests positive for Covid: Rice said in a tweet she last saw Biden in person on Wednesday while masked, and “and under CDC guidance he is not considered a close contact.” Rice’s diagnosis comes just two weeks after Vice President Kamala Harris tested positive for Covid and five days after Secretary of State Antony Blinken announced he had contracted the virus.

— Jan. 6 coverage wins Pulitzer’s public service prize: The Washington Post won the Pulitzer Prize in public service journalism today for its coverage of the Jan. 6 insurrection at the U.S. Capitol, an attack on democracy that was a shocking start to a tumultuous year that also saw the end of the United States’ longest war, in Afghanistan. The Post’s extensive reporting, published in a sophisticated interactive series, found numerous problems and failures in political systems and security before, during and after the Jan. 6, 2021, riot in the newspaper’s own backyard.

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AROUND THE WORLD

HORROR UPON HORROR NEAR KYIV — It has been more than a month since Russian troops withdrew from their positions around Kyiv, yet bodies and mass graves are still turning up on a weekly if not daily basis, underscoring the scale of atrocities committed by Vladimir Putin’s forces during their monthlong occupation near Ukraine’s capital, Christopher Miller writes.

Putin has called the atrocities in Bucha “fake” and claimed they were staged by the West, despite overwhelming evidence that they were real.

POLITICO interviewed the families and friends of five men killed in three instances, just a few miles apart from each other in Kolonshchyna and Kalynivka in March. In each case, the men were unarmed. Two of the men found together were hastily buried in a shallow grave; two others were found shot to death in a burned-out car; the third man was discovered inside the trunk of his own sedan — his body boobytrapped with an antipersonnel mine. The information provided by the families about their loved ones was corroborated by local police and territorial defense forces.

The cases add to the mounting pile of evidence of alleged war crimes being logged by Ukrainian and international prosecutors that amount to what is likely the largest atrocities in Europe since World War II.

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NIGHTLY NUMBER

15 percent

The reported decrease in consumer spending on alcohol month-over-month in March, according to a new Morning Consult survey, as nonessential purchases declined with increased prices in necessities like groceries and gas.

STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today.

PARTING WORDS

NOTHING NEW ABOUT PROTESTS — Protesters flocked to the Chevy Chase, Md., homes of Supreme Court Justices John Roberts and Brett Kavanaugh over the weekend to protest a draft Supreme Court majority opinion, first reported by POLITICO, that would overturn Roe v. Wade. As Anthony Adragna reports in Congress Minutes, it’s just the most recent example of activists protesting at the private homes of prominent public figures.

Sen. Josh Hawley (R-Mo.): Protesters chanted outside his Vienna, Va., home in early 2021 after he joined objections to certification of Donald Trump's 2020 election loss. "Hawley, Hawley, shame on you! Biden Harris won through and through!" they chanted.

Speaker Nancy Pelosi: Protesters placed an “eviction” notice on Pelosi’s San Francisco home in July, amid the impending lapse of a federal eviction moratorium enacted during the pandemic. In January of last year, they vandalized her home by spray painting “we want everything!” after a failed vote on $2,000 stimulus checks during Covid failed.

Senate Minority Leader Mitch McConnell: At the same as the January 2021 incident at Pelosi’s home, vandals spray-painted McConnell’s Louisville, Ky., home with “Where’s my money?” — a reference to the failure of Congress to pass those $2,000 stimulus checks. Back in September 2020, a group with the Sunrise Movement protested outside his D.C. home with a go-go band, objecting to the GOP’s plan to fill Justice Ruth Bader Ginsburg’s vacant Supreme Court seat following her death.

Sen. Joe Manchin (D-W.Va.): A group of West Virginia kayakers protested outside the influential centrist’s houseboat in September, hoping to secure his vote for the Democrats-only climate change and tax package (so far, unsuccessfully).

Lawmakers in both parties and other public officials, such as judges, are facing heightened threats to their personal safety. Some members of Congress have even moved to spend campaign funds on personal security safeguards.

A message from Save American Solar Jobs:

The Biden administration’s Commerce Department is threatening to implement massive tariffs of up to 250% on solar panel components imported by American solar manufacturers for assembly in the U.S. This tariff threat is devastating the American solar industry, costing U.S. jobs, hurting domestic manufacturing, raising inflation and undermining efforts to address climate change.

There is a better solution already on the table. Congress should pass the clean energy tax credits and incentives that have been stalled since last year. These policies will drive the expansion of domestic solar panel component manufacturing and ensure we have the infrastructure needed to fight climate change and create jobs.

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