SCOTT SIMON, HOST:
President Biden recovered from COVID this week, and he got another kind of boost from Senator Joe Manchin - support for a new spending bill.
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PRESIDENT JOE BIDEN: The work of the government can be slow and frustrating and sometimes even infuriating. Then the hard work of hours and days and months from people who refuse to give up pays off.
SIMON: Meanwhile, the true health of the U.S. economy continues to be confusing. NPR's Ron Elving joins us. Ron, thanks so much for being with us.
RON ELVING, BYLINE: Good to be with you, Scott.
SIMON: And let's begin with the economy. A new report shows this week that the economy contracted for two consecutive quarters. Is this or is this not a recession, in your judgment?
ELVING: It is a recession on the numbers, if you use the common definition - two consecutive quarters of contraction in the gross domestic product. But that's not the only standard. There is another that looks at more data and more criteria. It comes from the American Council of Economic Research, which is the official arbiter on when recessions begin and end. And the Federal Reserve Board chairman, Jerome Powell, said last week he did not see a recession happening yet. It is intriguing that after the Fed raised rates this week and we got some scary numbers about inflation and those economic growth numbers, the stock market took off. All three major indices had a robust three-day rally, best they'd had in months. The Standard and Poor's had its best month since 2020. So not everyone reads the economic signals the same way.
SIMON: The semiconductor bill made it through both chambers this week with bipartisan support. I don't think I've said that in a while. How significant is that?
ELVING: It's hard to say. It shows it can be done. So it's a positive development for both parties. Now, we should not the Republican support was certainly not universal. House Republican Leader Kevin McCarthy voted no. But enough Republicans came aboard in the Senate to get this done. And that was a recognition that it's important for the United States to meet the challenge of China in the world of high-tech innovation and production, specifically here in terms of semiconductor chips. And we expect President Biden, who has been a strong proponent of this bill, to sign it into law next week.
SIMON: Also, big reveal this week - secret talks had been going on between Chuck Schumer and West Virginia Senator Joe Manchin, and they have a result. Tell us about the Inflation Reduction Act of 2022.
ELVING: This is back from the grave. It's an effort to rescue remnants of the Democrats' overall agenda from last year. It's got a brand-new title, of course, now about reducing inflation. A big shopping list last year went nowhere because Joe Manchin, as you've mentioned - that's the senator from West Virginia - he said no, and he deprived his party of its minimal majority. This week, the Democrats unveiled a much reduced but still recognizable version of that long-suffering legislation. It includes far more money for addressing climate change than advocates on that issue thought they could get even a few weeks ago - does not go nearly as far as they would like to go, but it is a significant start. It also gives the government more power to hold down price increases for drugs, and it includes some higher taxes for the wealthy.
SIMON: And Republicans seem to be completely off guard by this agreement.
ELVING: They were caught off guard like the rest of us. They assumed that the big Biden package from last year was dead. And negotiations this year seemed to have fallen apart just a matter of days ago. That's why Manchin's turnaround this week was so important. This is not a finished product. We do not know for certain that all 50 Democrats will be on board, and they will need every one of them. And that has proven too high a hurdle several times in this Congress.
SIMON: Well, as you note, there is not a vote to spare. Could this boost Democrats heading into the midterms?
ELVING: There remains the prospect that if all goes well and many things fall into place and the winds are in their favor, the Democrats could avoid the sort of 2010-style disaster that's been widely predicted for this November. There are polls this summer that show the Democrats running even with Republicans, even now with all that's gone wrong. So the Democrats are seeing some opportunity to hope.
SIMON: Of course, let me ask you about the controversy over the intention of Speaker Pelosi to travel to Taiwan. President Xi of China had some strong words in a two-hour conversation with President Biden this week, including whoever plays with fire will get burned. How serious is this?
ELVING: It is an irritant at a minimum, at a time when our relations with China are particularly sensitive. There's been a lot of saber-rattling. But it's also a critical moment in our longtime support for Taiwan, which sits right across that narrow strait from mainland China, where the Beijing regime seems to regard Taiwan the way Vladimir Putin regards Ukraine. The speaker has been a longtime critic of the Beijing regime and a great advocate for Taiwan. She has her own timetable for doing this now as speaker, and she has seemed determined to do so, despite discouragement from the White House.
SIMON: NPR's Ron Elving, thanks so much.
ELVING: Thank you, Scott.
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