The past week was highlighted by the President’s State of the Union (SOTU) address and the ramifications of the Chinese spy balloon that crossed the U.S.
I thought Biden’s SOTU address had surprising energy, but the speech was too long. The back and forth on Social Security showed President Biden putting a key political issue front and center. The heckling from some Republicans almost seemed to make the session sound like question time in the UK Parliament. Both Speaker McCarthy and Senate Republican Leader Mitch McConnell have made clear that they are staying away from any discussion of Social Security or Medicare.
As I often say, little changes in the basic tenets of American politics. Social Security has often been called the third rail of American politics, and the back and forth at the SOTU put this on display once again.
Social Security is but one aspect of the much bigger debate about increasing the debt ceiling. The politics of increasing the ceiling is the top issue for markets in the coming weeks and months. The President has said he will put forward the Administration’s budget on March 9. That should begin a serious debate on spending priorities and the debt ceiling.
The President was largely silent on the diplomatic dilemma that has been created for the Administration by the Chinese spy balloon that traversed the U.S. The fact of the matter is that the economies of our two nations are intertwined, and the building tensions pose serious problems. This was highlighted when Secretary of State Blinken canceled his planned trip to Beijing.
The spy balloon has done one thing that at times has seemed impossible: uniting Republicans and Democrats in the House. This past week the House considered a resolution condemning China’s “brazen violation of US sovereignty.” In the highly partisan House, the anti-China resolution passed on a vote of 419 to 0! In the Senate, Defense officials face tough bipartisan questioning on the balloon, what intelligence the Chinese may have gained, and why the President waited so long to take down the balloon. Much more to come in the weeks ahead as more evidence is gathered from the remnants of the balloon.