US has a new Speaker but issues remain

The fractious Republicans in the House of Representatives, the lower house of the US Congress, have at last managed to elect a Speaker. It turns out that it is a little known Representative from Louisiana, Mike Johnson. He is the least experienced Congressman to hold the post of Speaker, but there is a sigh of relief all around because now the Congress can get back to pressing demand for passing financial legislation to avert a government shutdown which would happen if the two Houses do not pass the proposals made by Biden’s White House.

The election of Johnson has indeed raised eyebrows, but he is a Christian evangelist and a conservative, who is opposed to abortion. It is not known what his stand would be on budgetary spending though he is likely to oppose the spending proposals of President Joe Biden, which is what all hard Republican conservatives want to do. Johnson should be supporting the $106 billion aid that Biden has marked for Israel and Ukraine. The Republicans would support any aid to Israel, but many of them are reluctant to continue the support for Ukraine. The conservatives are coming round to the view that the Ukraine war has lasted too long and that the US cannot continue its aid to Ukraine. The Republicans are more generous when it comes to Israel. As a matter of fact, one of the first bills that the new Speaker, Johnson, wants to bring is one expressing support for Israel in its military action in Gaza in response to Hamas’ attack on October 7.

The more sticky issue between the Congress and White House is the approval of Biden’s spending plans, and Republicans are opposed to it tooth and nail. But given the complicated constitutional arrangement in the US, the Senate and the House of Representatives have to come to an agreement on spending approvals before it is sent to the White House for the President to sign. Whatever may be the conservatism of the House Republicans in matters of government spending, they cannot have their way because the Democrats have a narrow majority of two in the Senate.

So the two Houses would need to negotiate and arrive at a compromise. And this compromise has to be reached by November 17 because otherwise the government will shut down. There have been occasions when the government did go into a lockdown as the two parties in the Congress could not arrive at a compromise. But the gridlock between the two parties and the two Houses cannot continue. And the legislators in both the parties and in both Houses understand the imperatives of compromise.

Interestingly, even as the American government faces the prospect of a shutdown if the lawmakers do not pass the funding bill quickly enough, the American economy seems to be doing well going by the projections for the third quarter of 2023, clocking a GDP growth rate of 4 per cent and more riding increased consumer spending on hotels, travel, and buying more than the bare essentials. The inflation has not come down to the two per cent rate that the Fed Reserve wants, but there is a spending spree of sorts which is cheering up the markets though investments are yet to pick up. And there is a pick-up in the jobs as well, which means that businesses are hiring.

There is of course the alarm bell that there would be a dip in the fourth quarter growth rate. But there is a feel-good sentiment in the air that the economy has not gone into recession as was feared with the Fed increasing interest rates and making borrowing costly. It was feared that this would dampen economic expansion. The US has bucked the trend and there is talk among economists that there could be a “soft landing” for the economy fighting inflation.