Afternoon summary
Here’s a quick summary of everything that’s happened today:
The Federal Reserve increased interest rates by a quarter point, bringing rates up to 5% to 5.25%. Fed chair Jerome Powell said that Fed officials no longer anticipate more hikes, but will monitor economic data to see if they are necessary in coming months. The stock market dipped slightly after the Fed’s announcement.
The debate over the debt ceiling continued today, with news that Senate majority leader Mitch McConnell will keep himself out of the specific of negotiating talks and hints that senators Joe Manchin and Kyrsten Sinema are breaking from Dems and looking to take Senate negotiations seriously.
2024 is already gearing up: Joe Biden released his second TV ad since launching his campaign last week, while US rep. Colin Allred of Texas announced his bid to unseat Texas senator Ted Cruz. In Nevada, Jim Marchant, an election denier and staunch supporter of Donald Trump, also announced a Senate big.
We’ll be closing this blog for today. Thanks for reading.
Democratic senator Raphael Warnock from Georgia said that his two young kids were on lockdown at school because of the shooting in midtown Atlanta.
“They’re there. I’m here, hoping and praying they’re safe,” he said on the Senate floor. “Thoughts and prayers are not enough.”
Georgia Sen Raphael Warnock shares that his two young kids were on lockdown today in Atlanta after the shooting.
— Julie Tsirkin (@JulieNBCNews) May 3, 2023
"They're there. I'm here. Hoping and praying they're safe," he says from the Senate floor.
One person has been confirmed dead and at least four injured after a gunman opened fire in a building in midtown around 12.30pm ET. Police said they are still searching for a suspect.
Updated
The Washington Post just published a cheery report that the White House and lawmakers on Capitol Hill technically have just six working days together before the US government potentially defaults on its debt on 1 June.
With the House and Senate in session on different days, and Biden making international trips for the G7 summit in Japan and another “Quad” meeting with Australia, Japan and India in Australia, the legislative and executive branches are scheduled to have just six more days together to figure out the debt ceiling.
Of course, negotiations can take place even when a chamber is not in session, but the precariousness of negotiations and the closeness of default makes the timing a tad inconvenient.
Updated
Talking about the fallout of the collapse of Silicon Valley Bank in March, Federal Reserve chair Jerome Powell said that it seems the worst of the crisis is over.
“The severe period of stress, those have now all been resolved and all the depositors have been protected,” he said, adding that JPMorgan’s acquisition of First Republic bank marked the end of the worst of it all.
Asked about lessons that he learned from the crisis, he noted that there needs to be stronger regulation and supervision, but declined to offer any specifics as he has tasked Fed vice chair Michael Barr with drafting specific policy proposals.
“I am not aware of anybody thinking [the collapse] could happen so quickly,” Powell said. “Now that we know that was possible… it will be up to vice chair Barr to design ways to address that.”
Today’s Federal Reserve interest rate hike is its second quarter-point hike in a row, after a series of half- and three-quarter point hikes over the last year. Fed chair Jerome Powell said at his press conference this afternoon that “slowing down was the right move”.
“I think it’s enabled us to see more data and it will continue to do so. We have to always balance the risk of not doing enough and not getting inflation under control against the risk of maybe slowing down economic activity too much,” he said. “We thought that this rate hike, along with the meaningful change in our policy statement, was the right way to balance that.
Asked about the possibility of a recession, Powell seemed optimistic that the Fed could achieve a “soft landing” – keeping interest rates high without seeing huge impacts on unemployment. He noted that even as rates have hit 5% over the last 14 months, the unemployment rate stands at 3.5%.
“It’s possible that we can continue to have a cooling in the labor market without having the big increases in unemployment that have gone with many prior episodes,” he said.
Of course, Powell noted earlier in the press conference that the full impacts of the interest rate increases have yet to be seen, acknowledging uncertainty about the full economic impact of rate hikes.
Federal Reserve chair Jerome Powell emphasized the importance of raising the debt ceiling, though noted that the debt limit is “fiscal policy matters”.
“It’s essential that the debt ceiling be raised in a timely way so that the US government can pay all of its bills when they’re due. Failure to do that would be unprecedented,” he said. “We’d be in uncharted territory.
Powell noted that the Fed doesn’t “give advice to either side” and also noted that “no one should assume that the Fed can protect the economy from the potential short- and long-term effects” upon default.
He also noted that debt limit standoff did not play a role in the Fed’s decision today to increase interest rates.
Updated
Federal Reserve chair Jerome Powell is holding a press conference after the central bank announced a quarter-point interest rate increase. Powell’s tone in the press conference has changed since he last addressed the press in March. The Fed is no longer anticipating needing more rate increases, but will monitor the economy in determining future interest rate changes.
While Powell is still reiterating the Fed’s inflation target of 2%, he acknowledged that the economy is “seeing the effects of our policy tightening on demand and the most interest-rate-sensitive sectors of the economy, particularly housing and investment”. In other words, the Fed sees its interest rate hikes taking effect in the slowing of the economy.
“There are some signs that supply and demand in the labor market are coming back into balance,” Powell said. He added that the “economy is likely to face further headwinds from tighter credit conditions”, meaning the full effects of the interest-rate hikes have yet to be seen.
Taking a question from a reporter on whether the Fed’s statement today should be taken as a hint that officials will pause rate hikes, Powell said the officials did not make a decision on a pause, but noted that they intentionally updated their stance in today’s press statement that removed a line suggesting more increases would be appropriate.
“Instead, we’re saying that in determining the extent to which [more hikes are needed], the Committee will take into account certain factors,” he said. “That’s a meaningful change that we are no longer saying we anticipate [changes] and we will be driven by incoming data meeting by meeting.”
The press statement that came with the Federal Reserve’s announcement of another interest rate hike is nearly identical to the one that was released at its last meeting on 22 March, with one key exception.
In its 22 March release, Fed officials in the Federal Open Market Committee (FOMC) hinted that more interest rates are to come, saying: “The Committee anticipates that some additional policy firming may be appropriate” in order to bring inflation down to the target of 2%.
In today’s statement, that line was cut.
The rest of the statement was in line with FOMC’s March meeting statement. They reiterated their stance that “inflation remains elevated” and the jobs market has been strong, with the unemployment rate low. They emphasized that “the US banking system is sound and resilient” and that they are “highly attentive to inflation risks”.
Analysts have been wondering whether this interest rate increase will be the Fed’s last, with pauses to come after as the interest rate is held steady at future meetings.
Any more hints about what is next for interest rates after this most recent hike will likely be made at Fed chair Jerome Powell’s press conference at 2.30pm ET.
Updated
Fed increases interest rate by a quarter point
The Federal Reserve just announced a quarter-point interest rate increase. This brings the interest rate to a 16-year high at 5% to 5.25%. The central bank has been on a year-long campaign to temper inflation, though it has had to delicately balance the potential of shaking the economy too much with stringent rate increases.
Fed chair Jerome Powell will lead a closely watched press conference, where he will discuss the Fed’s view on the state of the economy.
Updated
The United Auto Workers (UAW) union said in an internal memo that it is holding off on a Joe Biden endorsement due to the president’s electric vehicle policies.
UAW president Shawn Fain said in the memo that union leaders met with Biden last week and discussed “our concerns with the electric vehicle transition”, according to the New York Times. The union is concerned that auto workers will suffer during the transition to EV as less workers are needed to assemble EVs.
“The EV transition is at serious risk of becoming a race to the bottom,” the memo reads, referring to electric vehicles. “We want to see national leadership have our back on this before we make any commitments.”
The union has 400,000 members across the country, though members are primarily in auto-industry heavyweight Michigan, a key election battleground state.
The FBI arrested a man in Florida on Tuesday for his involvement in the January 6th Capitol riots, specifically for setting off an “explosive device” in the US Capitol tunnel that leads into the building.
Daniel Ball, 38, was first arrested last week by the Citrus County Sheriff’s Office for assaulting seven people, including law enforcement officers, in Florida. Ball’s probation officer, upon being shown photos and videos of the Capitol riot, identified Ball as the person throwing an explosive device in the tunnel, where law enforcement was blocking rioters.
Ball faces multiple charges related to the riot, including assaulting police officers and entering a restricted area with a deadly weapon.
The justice department said in March that at least 1,000 people have been arrested on charges related to the riots, with 518 pleading guilty to federal crimes so far.
Election denier Jim Marchant announced that he will be running for the US Senate, challenging Democrat incumbent Jacky Rosen for the seat she won in 2018.
During his announcement speech on Tuesday, Marchant said that he is running to “protect Nevadans from the overbearing government, from Silicon Valley, from big media, from labor unions, from the radical gender-change advocates,” the Washington Post reported.
His election campaign was acknowledged by Rosen on Twitter, who replied to Marchant’s announcement:
Nevadans deserve a Senator who will fight for them, not a MAGA election denier who opposes abortion rights even in cases of rape and incest…
While far-right politicians like Jim Marchant spread baseless conspiracy theories, I’ve always focused on solving problems for Nevadans.
Nevadans deserve a Senator who will fight for them, not a MAGA election denier who opposes abortion rights even in cases of rape and incest. While far-right politicians like Jim Marchant spread baseless conspiracy theories, I've always focused on solving problems for Nevadans.
— Jacky Rosen (@RosenforNevada) May 3, 2023
Marchant has described himself as a “MAGA conservative”, the Post reports, and is an avid supporter of Donald Trump.
Updated
Jim Clyburn, a key Democratic House representative from South Carolina who served as House majority whip, endorsed fellow Democratic representative Barbara Lee in her three-way race for senator Dianne Feinstein’s seat in California. The endorsement shows the upcoming rifts in the Democratic party over the race: former House speaker Nancy Pelosi endorsed representative Adam Schiff, known for chairing the House’s key intelligence committee.
In a statement Wednesday, Clyburn said that Lee “is the voice Americans need now in the US Senate” and “she stands by what she believes in, and she doesn’t back down”.
Clyburn played an important role in the 2020 election, helping Biden clinch the nomination in South Carolina during the early Democratic primaries.
Rep. Jim Clyburn endorses Barbara Lee in the #CASen Dem primary. Notable since Clyburn is seen as more moderate/establishment while Lee is staunch lefty. But the Congressional Black Caucus solidarity is strong. pic.twitter.com/J201mMG2Fi
— Alex Seitz-Wald (@aseitzwald) May 3, 2023
Midday summary
Here’s a quick summary of everything that’s happened today so far:
The debate over the debt ceiling continued today, with news that Senate majority leader Mitch McConnell will keep himself out of the specific of negotiating talks and hints that senators Joe Manchin and Kyrsten Sinema are breaking from Dems and looking to take Senate negotiations seriously.
2024 is already gearing up: Joe Biden released his second TV ad since launching his campaign last week, while US rep. Colin Allred of Texas announced his bid to unseat Texas senator Ted Cruz.
The Federal Reserve is set to raise interest rates at 2 pm, likely by a quarter point. The rate hike, along with a press conference by Fed chair Jerome Powell at 2:30 pm, will be closely watched by Wall Street.
Stay tuned for more live updates.
Joe Biden’s presidential campaign has released its second television ad, focused on the president’s economic agenda and legislative accomplishments.
The ad boasts that 12m jobs have been created since Biden took office in 2021, and the president reiterates his oft-repeated commitment to “building an economy from the bottom up and the middle out where no one’s going to be left behind”.
“Too many people have been left behind and treated like they’re invisible,” Biden says in the video. “Folks, my economic plan is about investing in places and people that have been forgotten.”
The ad comes after some commentators expressed surprise that Biden’s campaign announcement video did not focus on economic issues, given widespread concerns over rising prices and the possibility of a recession.
However, Biden’s first public event following his announcement last week was at a union event in DC, where he emphasized the need to build upon the economic progress seen since he took office.
“Our economic plan is working,” Biden said at the event. “We now have to finish the job, but there’s more to do.”
Updated
Fed poised to raise interest rates again
The Federal Reserve is set to raise interest rates this afternoon, with an announcement coming at 2pm ET from the central bank after its most recent board meeting. Analysts expect the Fed will raise rates by a quarter point, which will bring rates up to 5% to 5.25%. This would be the central bank’s 10th interest rate increase since March 2022, when rates were at zero.
The interest rate increase will come at what in hindsight may seem like an inflection point for the economy. Inflation is down, consumer spending has flattened and growth in the job market is starting to slow down, but Fed officials, especially Fed chair Jerome Powell, have been stringent on getting inflation down to their target of 2%. Inflation in March was 5%, the lowest it’s been since 2021, but still quite far from 2%.
Analysts and economists will be closely watching Powell’s press conference at 2.30pm, where he will discuss the direction Fed staff see the economy going, giving hints as to whether even more interest rate hikes are to come or whether the Fed will end its rate-hike campaign.
Updated
Senate minority leader Mitch McConnell will be at the meeting between Joe Biden and House speaker Kevin McCarthy about the debt ceiling next Tuesday, but McConnell said that he isn’t going to involve himself in the specifics of negotiations.
“The president and the speaker need to reach an agreement to get us past this impasse. That’s my message going to the White House meeting,” McConnell told reporters yesterday.
Along with Biden, McConnell was a key figure in negotiating the 2011 debt ceiling crisis and has spoken about needing to avoid default in previous debates.
But McConnell is walking a fine line between his chamber, which has a slim Democratic majority, and McCarthy’s, which has a slim Republican majority. McCarthy’s bill narrowly passed the House with a 217-215 party line vote. Until it passed, it wasn’t clear whether McCarthy would be able to rally House Republicans under a bill.
Roger Marshall, a Republican senator from Kansas, told NBC News that McConnell’s job is to “keep Republicans together”.
“One of the biggest concerns I hear from people back home is: Why can’t Republicans stick together?”
Updated
US rep launches campaign to unseat Ted Cruz
US Democratic representative and former NFL player Colin Allred announced a run for Ted Cruz’s Senate seat this morning, teeing up what will likely be a closely watched race in 2024. Allred ousted former Republican representative Pete Sessions during the 2018 midterms. Session had been in Congress since 1997 and was in key House committees.
In a campaign ad released this morning, Allred can be seen standing in a football field.
“When I left the NFL, I thought my days of putting people on the ground were over. Then January 6th happened,” he said. He recalled the smashing of the glass and the shouts. He texted his wife “I love you” and then “took off my jacket and got ready to take on anyone who came through that door”.
“And Ted Cruz? He cheered on the mob. He hid in a supply closet when they stormed the Capitol. That’s Ted Cruz for you – all hat, no cattle.”
I’m running for U.S. Senate because Texans deserve a Senator whose team is Texas. Ted Cruz only cares about himself.
— Colin Allred (@ColinAllredTX) May 3, 2023
Join our campaign today: https://t.co/2dROrrQrPV pic.twitter.com/9iz9yu1rFb
Cruz is a holdout from the Tea Party wave, coming into the Senate in 2012 and making himself known as a staunch conservative.
Allred will be the Democrats’ second big attempt to unseat Cruz. In 2018, former US representative Beto O’Rourke lost to Cruz by 2.6%.
“The political extremism that we are becoming increasingly known for is a real risk to our business community and our path forward,” Allred told the Dallas Morning News. “It’s making some folks say they don’t want to send their kids to school in our state. We can go in a different direction.”
Updated
A Politico analysis today points out that Democrat Joe Manchin and now-Independent Kyrsten Sinema have been angling themselves to be big players in the debt ceiling debate. While all of Manchin’s Democratic colleagues have been saying the party will refuse to negotiate budget cuts over the debt ceiling – Senate majority leader Chuck Schumer called the House Republicans’ debt ceiling bill “dead on arrival” – Manchin has been pushing for bipartisan talks, which would likely end up with some kind of budget cuts.
“I think there’s a better way to approach it,” Manchin said on Monday, adding that there are “a lot of things we can agree on” over McCarthy’s bill.
Meanwhile, Sinema got slack in February for having dinner with Republican House speaker Kevin McCarthy, when it was known, by that time, that there would likely be a debt ceiling debate coming in the spring.
“She’s trying to play a constructive role and try to get people to the table to understand that we can’t go over the brink on this,” Republican Senate minority whip John Thune told Politico. To be clear, he’s saying that Sinema believes that Democrats shouldn’t go over the brink with the debt ceiling over their fights against budget cuts.
Though neither has announced a 2024 run, both are up for re-election next year, meaning that, if they wanted to, they could use the debt ceiling against their own party (and former party) as bargaining chips for their own priorities.
Updated
Democrats focus on lessons from 2011 debt ceiling crisis
Democrats are now facing their biggest test since Republicans gained control of the House in the midterms. They still have the Senate and the White House, and the Republican majority in the House is slim. Comparisons have been made to the 2011 debt ceiling crisis, which ultimately led the Democrats to agree to spending cuts, but things are a bit different this time around. Mainly, Democrats, including Joe Biden, who was at the center of negotiations at the time, felt burned after 2011 and have learned not to treat the debt ceiling as a legitimate bargaining chip.
This is why you are seeing the discharge petition, which hasn’t helped the successful passage of a bill since 2002 but could allow House Democrats to circumvent Republican leadership and force a bill onto the House floor. It is a clear sign of desperation given the difficulty of getting enough signatures, but it also signals that Democrats are trying pretty hard not to step into negotiations like they did in 2011.
Biden agreed to meet with House speaker Kevin McCarthy on 9 May, but the White House has said that Biden will emphasize budget cuts should not be negotiated over something as precarious as the debt ceiling.
“We’ll continue to be very clear about that, as we have in the last several months,” White House press secretary Karine Jean-Pierre said yesterday. “He’s going to make it very clear in this meeting that they’re going to have next week how it is Congress’s constitutional duty to act. He is not going to negotiate on the debt ceiling. That is not going to change.”
Updated
A state judge in Utah on Tuesday ruled that four abortion clinics can continue to operate as a case in state courts is under review.
The ruling blocks a state law that allows abortions to be performed only by hospitals and some satellite clinics, which perform a small percentage of abortions in the state. Planned Parenthood sued the state over the law saying that it would “functionally eliminate” abortion. The state currently allows abortion up to 18 weeks of pregnancy.
Another law in the state that bans most non-emergency abortions is also waiting to be decided in state court.
Good morning, and welcome to the US politics live blog. While we’re still nearly a week away from Joe Biden’s meeting with House speaker Kevin McCarthy over the debt ceiling, the Democrats’ strategy – which so far has been to refuse budget cuts over the debt ceiling – is starting to come to light.
Democrats on Tuesday started the process of collecting signatures for a discharge petition that would force a bill that would raise the debt ceiling on to the House floor. The Democrats will need 218 signatures, which means all 213 Democrats in the chamber will need to sign on along with five Republicans – likely be a difficult task given that McCarthy got 217 for his bill tying a debt ceiling increase with budget cuts, and some Republicans voted against his bill because they wanted more cuts.
Reports yesterday also said that Biden aides have not ruled out a strategy that could put the debt ceiling against a constitutional test: ignoring it. Some legal scholars have pointed out that the 14th amendment says the “validity” of the public debt “shall not be questioned”, and the debt ceiling puts it into question. Though the White House has not publicly commented on this strategy, a New York Times report yesterday said there are internal debates over using this strategy. And the White House has not been afraid to mention the constitution when talking about Congress’s obligation to deal with the debt limit. “It is their constitutional duty – Congress’ constitutional duty to take action,” Karine Jean-Pierre said at a White House press conference yesterday.
We’ll be keeping an eye for updates on the debt ceiling today. Here’s what else we’re watching:
The Federal Reserve is announcing updates to the interest rates today and is expected to raise rates by a quarter-point today, a move that could shake markets.
Last night, Ayanna Pressley said she joins House Democrat Alexandria Ocasio-Cortez in calling for the resignation of longtime Democratic senator Dianne Feinstein as her absence from the Senate judiciary committee has slowed down the pace of crucial judicial confirmation. Lawmakers are likely to continue to weigh in on this intensifying internal fight.
