Aurelia Butler

WASHINGTON (Reuters) – U.S. Senator Joe Manchin, a moderate Democrat who is key to President Joe Biden’s hopes of passing a $1.75 trillion domestic investment bill, said on Sunday he would not support the package, drawing a sharp rebuke from the White House.Manchin appeared to deal a fatal blow to Biden’s signature domestic policy bill, which is known as Build Back Better and aims to expand the social safety net and tackle climate change. “I cannot vote to continue with this piece of legislation,” Manchin said during an interview with the “Fox News Sunday” program, citing concerns about inflation. “I just can’t. I have tried everything humanly possible.”He then released a statement accusing his party of pushing for an increase in the debt load that would “drastically hinder” the United States’ ability to respond to the coronavirus pandemic and geopolitical threats.”My Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face,” Manchin said in a statement.The White House responded angrily, accusing him of breaking his promise to find common ground and get the bill passed. White House press secretary Jen Psaki said Manchin’s comments “represent a sudden and inexplicable reversal in his position.” Biden’s administration would find a way to move forward with the legislation in 2022, she said.Many Democrats feel passage of the bill is essential to the party’s chances of maintaining control of Congress in next year’s elections.The White House had hoped to keep negotiations cordial and private to avoid alienating Manchin, who represents West Virginia, a state that Biden lost to former President Donald Trump by almost 40 percentage points in the 2020 election. But many top Biden allies believe Manchin is damaging the Democratic president’s political future, and Psaki’s public rebuke of the senator suggested a new phase in Biden’s push for legislation he regards as essential to his legacy.Manchin’s comments also drew outrage from liberal Democrats.”Let’s be clear: Manchin’s excuse is bullshit,” U.S. Representative Ilhan Omar, a Democrat from Minnesota, said on Twitter (NYSE:TWTR). Senator Bernie Sanders, who helped shape the bill, called for a vote to be held on the package of measures anyway.The bill would raise taxes on the wealthy and corporations to pay for a host of programs to thwart climate change, boost healthcare subsidies and provide free childcare.Biden has argued that lowering such costs is critical at a time of rising inflation and as the economy recovers from the fallout of the coronavirus pandemic. Republicans say the proposed legislation would increase the federal deficit https://www.reuters.com/world/us/republicans-argue-bidens-175-trillion-social-plan-would-add-deficit-2021-12-10, fuel inflation and hurt the economy.UPHILL STRUGGLE Manchin’s support is crucial in a chamber where the Democrats have the slimmest margin of control and Republicans are united in their opposition to the bill. Even if Manchin were somehow convinced to back the bill, the White House would still have to win over Senator Kyrsten Sinema, another moderate Democrat who has not committed to supporting it. Though talks with Manchin had been going poorly, Biden’s aides had expressed confidence in recent days that they would eventually secure a deal.Sanders, a democratic socialist who is aligned with Democrats in the Senate, told CNN on Sunday that he thinks there should still be a vote on the proposed legislation, despite Manchin’s opposition.”If he doesn’t have the courage to do the right thing for the working families of West Virginia and America, let him vote no in front of the whole world,” Sanders told CNN. Biden last month signed into law a $1 trillion infrastructure bill designed to create jobs by dispersing money to state and local governments to fix crumbling bridges and roads and by expanding broadband internet access.Liberal Democrats in Congress had pushed for the coupling of the Build Back Better legislation with the infrastructure bill in the hope of ensuring the passage of the former. U.S. House of Representatives Speaker Nancy Pelosi, a Democrat, led an effort in September to decouple the two bills.”This is exactly what we warned would happen if we separated Build Back Better from infrastructure,” Omar said on Twitter. More

Hello and welcome back to the working week.Excuse me if this letter has an element of bah humbug. Last week I was away — thank you to Maxine Kelly for filling in for me — and I managed to contract a nasty bout of flu. About my only joy — apart from a book I’d been meaning to read — was realising I did not have Covid-19, Omicron variant or otherwise. We live in strange times. Email me at [email protected] may well be preparing for the main event at the end of the week, but there are still a few items to get through in the coming few days.Emmanuel Macron turns 44 on Tuesday. Clearly wishing to avoid clashing with any personal birthday celebrations, he got the business of his re-election campaign started last week. Prepare for more of this activity, however, in the coming days and months.Did you hear that the Financial Times made Elon Musk its person of the year? This week his SpaceX business launches a supply mission to crew on the International Space Station. Not to be outdone, Nasa scientists will separately send up the James Webb Space Telescope, the world’s largest and most advanced cosmic observatory, which could lead to the discovery of life on distant planets. There is hope.Economic dataThe economics calendar has the air of a pre-Christmas wind down. There is US consumer confidence data, home-sales figures plus a run of surveys in the eurozone and UK, with a further setback likely next month. The inflation debate will have another moment after last week’s central bank committee meeting excitement, with the reporting of cost-of-living figures for France and Japan.CompaniesThis week has less diarised corporate news, but one or two significant earnings calls. Heineken, which reports full-year earnings on Wednesday, is hoping for better news than last quarter, when it reported a sales fall owing to a decline in Asian sales. Lockdowns across Europe do not bode well for the Dutch group. Nike reports second-quarter figures on Monday.Key economic and company reportsHere is a more complete list of what to expect in terms of company reports and economic data this week.MondayChina, policy rate decisionUK, Rightmove monthly house price index and CBI monthly industrial trends survey plus the Office for National Statistics publishes public sector finance statistics and 2020 foreign direct investment figuresResults: Nike Q2TuesdayCanada, monthly retail sales dataGermany, GfK consumer confidence surveyItaly, producer price index (PPI) figuresNorway, speech by deputy central bank governor Oystein Borsum about the Norwegian sovereign wealth fund and climate changeUK, revised Q3 GDP figure plus HMRC tax receipts dataUS, real Q3 GDP plus Conference Board consumer confidence figuresResults: BlackBerry Q3, General Mills Q2WednesdayFrance, PPI figuresJapan, central bank releases minutes of its October monetary policy meetingUK, ONS quarterly consumer trends report plus quarterly business investment, sector accounts and economic accountsResults: Heineken FY, PayChex Q2ThursdayCanada, monthly GDP figureJapan, consumer price index (CPI) dataPortugal, Q3 budget deficit dataUK, GfK consumer confidence survey and CBI monthly growth indicator reportFridayUK, London Stock Exchange closes early for ChristmasWorld eventsFinally, here is a rundown of other events and milestones this week. Monday50th anniversary of the founding of international aid organisation Médecins Sans Frontières by Bernard Kouchner and a group of journalists in Paris, FranceUK, home secretary Priti Patel is set to rule on whether tech entrepreneur Mike Lynch can be extradited to the US to face charges related to the sale of Autonomy, the software company he founded, to HPTuesdayAnniversary of the 1988 Lockerbie disaster when Pan Am flight 103 exploded over the Scottish town, resulting in the deaths of 270 peopleFrance, president Emmanuel Macron celebrates his 44th birthdayA SpaceX Falcon 9 rocket launches a Dragon cargo resupply mission to the International Space StationUS, Oscars preliminary shortlists announcedWinter solstice in northern hemisphere. Those marking the occasion include, in the UK, druids at Stonehenge and The Burning the Clocks parade in BrightonWednesdaySpain, El Gordo (The Fat One), Europe’s biggest and oldest lottery draw, takes place in MadridUS, Nasa’s James Webb Space Telescope, which will be the premier observatory of the next decade, is scheduled to be launchedThursdayRussia, President Vladimir Putin to hold his annual press conference with Russian mediaFridayIsrael, annual celebrations take place in Bethlehem, including a procession in Manger SquareLibya, general electionVatican City, Christmas mass at St Peter’s Basilica celebrated by Pope FrancisSaturdayChristmas DaySundayAustralia, start of the third of five Ashes tests in MelbourneUK, Boxing Day sales begin More

There are quotes so good they become trite through overuse. So it might be thought of Jean Monnet’s line that Europe will be forged in crises and become the sum of the solutions it addresses them with. Cliché or not, the foresight of Monnet — one of the architects of the EU — has held up in this crisis as it has in past ones. The pandemic helped the EU cross the Rubicon of common borrowing for fiscal transfers. But another change also pushed the EU forward in this crisis, which didn’t involve finding new solutions but rediscovering something old. For two decades from the 1990s on, Europe’s governing parties — the centre-right but also the centre-left, notably under Gerhard Schröder in Germany — were seduced by a form of market fundamentalism-cum-redistribution: restrain the state, let markets work their magic, then compensate where necessary. That governing philosophy was already wearing thin after years of fiscal austerity, under-investment, and the growing threat of climate change. The pandemic put the nail in the coffin: the obvious imperative of smart state intervention, to manage the health crisis and to support livelihoods through lockdowns, allows Europe to embrace the social market economy again. The relish with which the European commission is running with this revaluation of the economy’s social aspects makes it near-unrecognisable from its own incarnation of just a decade ago. Then, it was the champion of fiscal consolidation, deregulation, and “competitiveness” in the form of lower unit labour costs, aka compressing the wage share of national income. And now?This month the commission launched an action plan for the “social economy” — the various types of entities that carry out economic but not-for-profit activities, from social enterprises to mutual societies and charities. In the same week, it published proposals to firm up and clarify gig workers’ rights — putting into legislation some of the developments that have been taking place in courts around the world or by individual EU governments to ensure that platform workers do not get short-changed by cracks in labour law.Meanwhile, its year-old push for an EU directive on adequate minimum wages is gathering pace. The Nordic countries, which don’t have legal minimum wages, have opposed it for fear it will undermine their model of collective bargaining. Now Sweden’s new social democratic prime minister, Magdalena Andersson, has accepted a compromise in the council of national governments. It is very possible the French council presidency will bring the process to a conclusion next year.Wind in the sails of Europe’s social market economy, then. But these winds are international. In the US, Joe Biden’s administration is explicitly making policy using a doctrine I describe as progressive supply-side economics, which sees social spending as investments into higher work participation and greater private sector productivity. The UK, barely a year after leaving the EU in a quest for divergence, adopted a European-style wage replacement scheme for those losing their livelihoods in the pandemic. Its conservative government is raising taxes to historically high levels to fund the public health service. And in Japan, a new prime minister rails against “neoliberalism” and promises a more redistributive economic policy.So the EU and its member states (in many of which the centre-left is ascendant) are riding the changing global currents of economic thinking. That was true in the previous phase, too: the uncritical infatuation with little-regulated markets was a worldwide phenomenon. The difference is that now, Europe is aligning with a global phenomenon that plays to its strengths. In a new paper, economists Thomas Blanchet, Lucas Chancel and Amory Gethin use the most comprehensive methodology of inequality to compare Europe and the US. Europe has more egalitarian incomes; no surprise there. But two other findings are far from obvious. Europe’s greater equality is not due to a more progressive tax and transfer system. In fact the US redistributes more to the poorest. Instead, the markets’ own rewards — before redistributive taxes and transfers — are much more equally shared in Europe. More, in fact, than in America after redistribution. That is the return from persistent social investments — even during the lean years. The global social turn caused by the pandemic allows Europe to reclaim its DNA. Former German chancellor Angela Merkel used to say Europe has 7 per cent of the world’s population, 25 per cent of its economy, but 50 per cent of its social spending. She meant to point out a problem. It looks increasingly like an example to [email protected] More

The waiting room for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership was crowded even before South Korea knocked on the door last week. Seoul will join China and Taiwan in seeking membership of the eleven-nation trade bloc, while the UK is a little further along, having already begun accession negotiations. For Seoul, it is a bold step towards multilateralism and adds to CPTPP’s momentum as a big success story for the international trade system.But the applications create a series of geopolitical dilemmas for the membership. Would admitting China extend Beijing’s influence at the expense of Washington? Can Taiwan be allowed to join if China is not? And can the membership look past tense bilateral relationships, such as Tokyo’s unfriendly dealings with Seoul, to allow new members into the club? The best approach is to go back to the one thing every country in Asia agrees on — the benefits of greater trade — and assess the candidates on their merits. In doing so, the questions will answer themselves.For many years, the original TPP was driven by the US, which regarded the deal as its vehicle to update the rules for economic governance. During the Obama administration, Washington negotiated the text with the other 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. TPP was designed as a “high-quality” agreement, with strong rules on investment, intellectual property and labour standards, as well as tariffs.The parties reached a deal in October 2015. But when the US elected Donald Trump as president the following year, he made withdrawal one of his first acts. After a renegotiation, in which certain US priorities such as pharmaceutical patent rights were thrown overboard, the remaining 11 countries brought the now CPTPP into force. The resulting deal very much resembles the original US vision: a highly liberalising trade pact that sets high standards. If Beijing, London, Seoul and Taipei are willing to meet those standards, existing members should welcome them on board.That condition is important. As part of the accession process, applicants need to lay out how they comply with the rules. A natural response to Beijing’s request for membership, therefore, is to ask it to do so. For example, the CPTPP has strict rules on state-owned enterprises, so the members will want details on the extent of government control and support at various Chinese companies. Canberra will, naturally, want to know how Beijing’s punitive duties on its beef, barley and wine comply with the rules. If Beijing does want to comply, and can demonstrate its sustained appetite to live by CPTPP principles, that would be a step forward for the global trading system. If not, as seems more probable, then China should not be admitted.With Seoul and Taipei, by contrast, the hurdles are not as high. Both have to accept compromises on agriculture and fisheries. Members such as Tokyo will be within their rights to raise all trading problems, such as bans on food imports from Fukushima because of the prefecture’s 2011 nuclear accident. By contrast, it would not be legitimate for Tokyo to block Korea because of disputes over wartime history.In Europe and the US, trade has become politicised — seen as a matter of sovereignty, or as a threat to workers’ wages. Asia is more pragmatic. Last year, it agreed to another regional trading pact, the Regional Comprehensive Economic Partnership. To let geopolitics shape CPTPP would be a mistake. Rather, the standards in the accord were intended to shape geopolitics. Apply them and let them do their work. More

The euro zone’s second-biggest economy is set to grow 6.7% this year, the Bank of France said in its latest long term outlook, raising its forecast up from 6.3% previously.The post-pandemic economy’s momentum would wane next year, with growth slowing to 3.6% and easing back further to 2.2% in 2023 and 1.4% in 2024, the central bank said.It also said that inflation, driven largely by high energy prices, would peak at the end this year at around 3.5% before returning to below 2% at the end of 2022.After that, the central bank expects inflation to settle at 1.7% in 2023-2024, a rate that would be above the low inflation seen in the years preceding the COVID pandemic and closer to rates seen before the 2007-2008 financial crisis, the central bank said.As current supply-chain difficulties subsided, prices of manufactured goods were seen peaking next year before returning to their long-term average close to zero.Meanwhile, prices for services would gradually pick up, reaching 2.7% in 2024 as a tighter labour market boosted workers’ salaries, painting an inflation scenario similar to what was seen in the years from 2002 to 2007, the central bank said.It forecast that unemployment would ease from 7.8% on average this year to 7.7% by the end of 2024. Meanwhile private sector wage gains would reach 4% next year before slipping back to 3% afterwards, which would still be higher than levels seen in the decade preceding the pandemic. More