News brief: House budget vote, Fed navigates recovery, Latest COVID surge
NOEL KING, HOST:
Disappointing results for Democrats in this week's elections, like losing the governor's race in Virginia, may have lit a fire under them.
STEVE INSKEEP, HOST:
At least President Biden hopes so - he said yesterday that voters want Democrats to get things done.
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PRESIDENT JOE BIDEN: People need a little breathing room. They're overwhelmed. And what happened was, I think, we have to just produce results for them to change their standard of living and give them a little more breathing room.
INSKEEP: House Democrats say votes are possible today on a budget measure, which is something they've said before. They would like to pass legislation that commits resources to affordable child care, cheaper drugs and better infrastructure, as well as fighting climate change.
KING: NPR congressional correspondent Kelsey Snell is following this one. Good morning, Kelsey.
KELSEY SNELL, BYLINE: Good morning.
KING: OK. So Democrats in the House say the bill is ready for a vote. What's in this version?
SNELL: Well, they say it's ready for a vote as early as today, and it is a new version of this spending bill. It includes many of the policies that we've talked about before, things like, as Steve mentioned, you know, child care - making that more affordable, making it easier to access - more than $500 billion to address climate change and funding for universal pre-K and affordable housing. But this new version also includes four weeks of paid family and medical leave, which is a big addition that Democrats have been pushing for. It also has a new, much higher cap on state and local tax deductions and a deal to allow some negotiation of the cost of drugs for Medicare patients, including a $35 monthly cap on expenditures on insulin. You know, the paid leave portion and the prescription drug provisions had been left out of the earlier framework, but they do have a lot of support among Democrats in the House.
KING: In the House - will it pass in the Senate?
SNELL: (Laughter) Well, possibly not this exact version. Joe Manchin of West Virginia still has issues with paid leave portion. He wants to take it out and deal with it on a bipartisan basis. And Senators Bernie Sanders and Bob Menendez have a different way to deal with the state and local tax deduction, which many critics say is a tax cut that mostly helps the wealthy. Plus, there's a whole process of making sure the bill sticks to the Senate rules. And most Democrats say they think other elements, like funding for immigration reforms, could be stripped out of the bill that way. So a version of this bill, if it is able to pass the House, could go to the Senate, but it could change before it becomes final.
KING: And why is now the time, after all this time?
SNELL: Well, you know, a lot of Democrats think they lost that governor's race in Virginia in part because voters don't feel like the party is delivering on their promises. You know, there is an argument to be made that Republicans won there by turning that election into something about education, a local issue, and making that the motivating factor for many suburban voters who turned away from the GOP during Trump's presidency. But there is intense urgency among Democrats to prove that they can govern and that they can deliver on policies that improve people's lives.
You know, as Biden said, they want visceral, meaningful programs that people will feel immediately. But policy takes time to go into effect. And they need to start, you know, voting now and have it roll out very soon if they want people to feel that before their midterm elections next year.
KING: How are Republicans reacting to their wins this week? It's notable I haven't heard a ton about election fraud (unintelligible).
SNELL: That is true. They say that, you know, this is - this proves that the policies that they're pushing for are right. They say Democrats are pursuing spending that will make inflation worse. And they say all of the fighting and lack of action, you know, among Democrats gives GOP candidates plenty to run against. You know, either way, Republicans see a compelling narrative that they hope will win back voters who fled the party in 2020. They also see a chance to really make culture wars a focus in this election. You know, this is the kind of messaging that really got people excited, they say, and that's something Democrats are watching really, really closely.
KING: NPR congressional correspondent Kelsey Snell. Thank you, Kelsey.
SNELL: Thanks for having me.
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KING: OK. The Fed is getting ready to slowly scale back some of its pandemic-related assistance.
INSKEEP: Inflation is higher than the central bank wants and higher than a lot of people want. That clashes with one of the Fed's main goals. It is supposed to pump enough money into the economy to keep up employment, as it surely did when the pandemic hit, but not so much money that inflation goes up. So what does the Fed do now as the pandemic keeps jolting the economy in different ways?
KING: Here with some answers, NPR's chief economics correspondent Scott Horsley. Hey, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Noel.
KING: What is the Fed's plan?
HORSLEY: You know, you can think of the Fed kind of like a parent who is trying to teach his kid to ride a bicycle. And it's been running alongside propping the kid up. And at some point, the Fed has to take its hand off the back of the seat and let the kid pedal on its own. But it doesn't want to let go too soon and have the kid fall over. When the pandemic started, the central bank immediately cut interest rates to practically zero, and it did start buying a whole lot of bonds. That's the supportive hand on the bike seat trying to keep the economy upright. Yesterday, the Fed announced it's going to start scaling back those bond purchases gradually, probably phasing them out by next summer. But to get on the bike is still a little unsteady, so Fed Chairman Jerome Powell is not ready to let go of that seat altogether.
JEROME POWELL: We don't think it's time yet to raise interest rates. There is still ground to cover to reach maximum employment, both in terms of employment and in terms of participation.
HORSLEY: The economy is still about 5 million jobs short of where it was before the pandemic, and the central bank says it plans to keep interest rates close to zero until the U.S. is back to something like full employment.
KING: What are the risks of keeping interest rates so low?
HORSLEY: Well, one risk is high inflation. We're already seeing that. Consumer prices in September were up almost 4.5% from a year ago, according to the Fed's preferred yardstick. That's the biggest jump in three decades. The central bank still believes that's largely a byproduct of the pandemic and that price pressures should ease on their own as more people go back to work and as supply chain bottlenecks get untangled. But that is taking longer than the Fed had hoped. Powell now says bottlenecks and the resulting inflation are likely to last well into next year, and he acknowledged that is taking a toll on a lot of families' pocketbooks.
POWELL: Particularly people who are living paycheck to paycheck who are seeing higher grocery costs; higher gasoline costs; when the winter comes, higher heating costs for their homes - we understand completely what they're going through. And you know, we will use our tools over time to make sure that that doesn't become a permanent feature of life.
HORSLEY: The biggest inflation-fighting tool in the Fed's toolkit, though, is raising interest rates, and the central bank doesn't want to do that just yet. Powell says raising rates probably wouldn't do much to untangle the kinks in the supply chain, but it would choke off job growth at this time when millions of Americans are still out of work.
KING: Jerome Powell's term as Fed chair expires early next year, just a couple of months away. Is President Biden going to reappoint him?
HORSLEY: The betting markets still say Powell is the odds-on favorite to keep his job. President Biden did say this week that he will be announcing his decision fairly quickly. So far, financial markets at least seem fairly satisfied with the Fed's performance and with Powell's own performance. You know, investors took news of the bond-buying taper in stride yesterday. All three of the major stock indexes hit new record highs.
KING: OK. NPR's Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome.
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KING: We learned this week that COVID-19 has killed 5 million people around the world.
INSKEEP: And still going because parts of Europe are experiencing another wave, even as COVID cases decline here in the United States. In Russia, deaths have hit record numbers, and health services can't keep up.
KING: NPR's Charles Maynes is in Moscow. Hey, Charles.
CHARLES MAYNES, BYLINE: Good morning.
KING: So it is worth noting, Russia produced one of the first COVID vaccines - very impressive at the time. What's going on there?
MAYNES: Well, we're really seeing this unrelenting wave of infections from the delta strain that's been building through the fall. Since October 20, we've had over a thousand deaths every day. Russia's got the highest number of fatalities in Europe from the coronavirus, closing in on 250,000, even as evidence would suggest those real numbers are much higher. Now, why it's happening, it comes down to vaccinations, as you noted. Despite the Sputnik V vaccine that was available starting at the beginning of the year, a little more than a third of Russians have fully vaccinated.
There's skepticism towards the way Sputnik was rolled out before trials were even complete. State media also fed a lot of doubts about the seriousness of the virus early on and questioned Western vaccines, and that's made it difficult to convince Russians to get the shot. And maybe good old-fashioned Russian fatalism plays a role here, too. Amid all these COVID deaths, a new poll found just 50% are - still aren't worried about actually dying from the virus.
KING: Oh, that's interesting. Is this new wave just a Russia problem, or is this an all-of-Eastern-Europe problem?
MAYNES: Vaccination rates are low throughout the former USSR and Eastern Europe as well. Let's take Ukraine. It's just 18% fully vaccinated. And what's curious here is Ukraine has access to Western vaccines like Pfizer and Moderna. And as to why they're not taking it, again, it's disinformation; it's distrust. Ukrainian President Volodymyr Zelenskyy recently pleaded with Ukrainians to, quote, "turn on their brains" and ignore conspiracies surrounding vaccinations. Some of those are coming out of Russia. But there's an additional problem here. Of those who are getting vaccinated, most are younger, healthier Ukrainians. So the government has really failed to convince older at-risk Ukrainians to get the shot, and they're the ones filling up hospitals.
It's a similar story, really, in a way in the Baltic states, also once part of the USSR, but of, now, course, EU member states. You know, they're reporting the highest COVID infection numbers in the EU, as well as lower rates of infection. So you take, say, Latvia, now back in lockdown - over half of adults there have been fully vaccinated, and that's well below the EU average of 74%. And again, it's older, unvaccinated people pushing the health care systems to the limit. You can add in here an ethnic component, too. The country's sizable Russian minority really tuning into Russian media has been slowest to get the shot. But it's - you know, it's not just Russia or Russians. There does seem to be a kind of Soviet shadow of distrust towards government health care throughout the former Soviet space.
KING: And so what are authorities doing in that region and in Russia to flatten the curve?
MAYNES: Well, if we talk about Russia, we're midway through what the Kremlin is calling a non-working week. It's not a lockdown. It's more like a national holiday while regional authorities are tasked with getting COVID numbers under control. Ukraine has also imposed additional restrictions and sort of QR code proof of vaccination. But the picture here in Russia is very confusing. Moscow's mayor says businesses that have been closed all week will now reopen Monday, that the situation has stabilized. Other governors are saying the opposite. There's really no way to know yet whether these decisions are driven by politics or science or some combination thereof. But we're about to find out.
KING: OK. Thanks, Charles.
MAYNES: Thank you.
KING: NPR's Charles Maynes in Moscow.
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