With a 36% overall approval rating, according to the latest ABC News/Washington Post poll, Joe Biden continues to stonewall Speaker Kevin McCarthy and the House Republican debt ceiling increase. By the way, Biden's approval on the economy is also at 36%.
That suggests we're heading for a pocketbook election that could favor Donald Trump over President Biden. In fact, the same poll shows Trump at 44% and Biden at 38%. It also shows DeSantis at 42% and Biden at 37%. They both beat him.
All this means that, at this point in time – which is what I think these polls really show, essentially snapshots of what people are thinking, but anyway – it all shows Biden's in a heap of pre-election political trouble.
Now, you would think, with rock bottom numbers on the '24 election and on the economy, that Joe Biden would want to make a deal regarding the debt ceiling and budget reform. But, apparently, he won't. Take a listen to what the president said in an interview last Friday.
PRESIDENT BIDEN: "And the idea someone for the first time is saying, unless you pass this ridiculous budget I have, which is the way I would characterize what the Republican MAGA budget is, unless you pass this budget, we're not going to increase the debt limit and we're going to go bankrupt. We're going to -- the United States of America is going to renege for the first time in history on its debt and this can't -- no one's ever tied them together before."
That sounds pretty hostile to me. I will let you decide, folks. Now, Janet Yellen says the Treasury will run out of money June 1st. That's 24 days from now. She may have inadvertently done a good thing by forcing the White House, the Senate Democrats and the House Republicans into a deal, but I will say that the Treasury can continue to borrow from various civil service, the Post Office, the thrift savings plan and continue to borrow almost forever. But, if the debt discussion comes to a head sooner, that's all to the good.
Kevin McCarthy and the House Republicans have a very good debt ceiling increase plan, no matter what Biden might say. Even Senate Majority Leader Mitch McConnell has signed onto a letter stating he and more than 40 members of the Senate GOP conference will not back any bill that raises the debt ceiling without substantive spending and budget reforms.
So, Speaker McCarthy has solid backing for his plan. Just to review the bidding, the plan would save roughly $130 billion for FY '23 and puts a 1% cap on discretionary spending cap for the 10-year budget window.
It also includes something like a $90 billion rescission for unspent COVID money, work requirements on key social welfare benefits, canceling the student loan cancellation, rescinding roughly $200 billion of greenie tax credits. (By the way, the misnamed Inflation Reduction Act is now being estimated at well over $1 trillion by the CBO and a number of outside analysts.) And the McCarthy bill also includes H.R. 1 permitting reform that would unlock oil and gas spigots and reduce the overall cost of energy.
So, there's a lot of good meat on the bones of this debt ceiling increase proposal and, also, this substantive Republican proposal opens the door to a good deal of negotiation on the proposals and perhaps the timing of proposals.
I don't want to negotiate with myself right now, but presumably Speaker McCarthy will lay this plan out at tomorrow's meeting in the White House with President Biden and the so-called "four corners," meaning the two leaders Schumer and McConnell in the Senate and McCarthy and Jeffries in the House.
They're going to meet and there's plenty to talk about, and it makes no sense for Joe Biden in advance of this meeting to badmouth it. And, by the way, although Fed Chair Jay Powell isn't talking, I think that a strong budget reform that estimates as much as $4.5 trillion in budget savings over the next 10 years would take the pressure off sticky inflation and the high interest rates that have been murdering the banking system.
The McCarthy plan is pro-growth and counter-inflation. It would boost King Dollar and add a lot of confidence to a sagging economy that grew at only 1.1% in the first quarter and over the past five quarters has grown at 0.9% with a 6.5% average inflation rate.
You would think that Joe Biden with his rock bottom 36% approval would want to get something done instead of blathering about "MAGA, MAGA, MAGA," which is nothing more than a divisive message. Save America. Pass the McCarthy bill.
This article is adapted from Larry Kudlow’s opening commentary on the May 8, 2023, edition of "Kudlow."