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Biden highlights economy, spars with Republicans in State of the Union speech

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U.S. President Joe Biden sought to overcome pessimism about the country’s direction — and his own political prospects as he stares down a re-election bid next year — in his second State of the Union address to Congress and the nation Tuesday night.

But his optimistic vision faces stiff headwinds from Republicans in control of the House of Representatives, who the president called on to help him “finish the job” of rebuilding the economy from the COVID-19 pandemic and record inflation at home and abroad.

“The people sent us a clear message. Fighting for the sake of fighting, power for the sake of power, conflict for the sake of conflict, gets us nowhere,” Biden said. “That’s always been my vision for the country: to restore the soul of the nation, to rebuild the backbone of America — the middle class — to unite the country.

“There is no reason we can’t work together in this new Congress.”

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House Speaker Kevin McCarthy, sitting behind the president for the first time since he took on the role, appeared unmoved by Biden’s pitch for bipartisanship and the listing of his administration’s accomplishments during two years of Democratic control of Congress.

McCarthy — who vowed to be “respectful” during the speech earlier Tuesday — is leading negotiations with Biden and Democratic leaders on raising the nation’s debt ceiling, which Republicans say must be tied to significant government spending cuts. Biden has pushed for a “clean” debt ceiling increase without cuts to future spending or existing programs like Social Security and Medicaid, longtime targets of fiscal conservatives.

Biden faced boos and shouts of “liar” during his speech when he mentioned some Republicans were eying changes to those programs. That led to what appeared to be an ad-libbed response from Biden, and led to a seemingly vocal pledge from members of both parties that the programs would remain untouched.

“I tell you, I enjoy consensus,” he said with a grin.

U.S. hitting debt ceiling could destabilize global economy

The president on Tuesday made the case that targeted government spending found in major bills he has signed like the US$1-trillion infrastructure act will achieve results in the coming months and years.

“Jobs are coming back, pride is coming back because of the choices we made in the last two years,” he said.

The speech showed Biden has shifted his focus from pushing for a flurry of major legislative victories to accepting more limited action with a divided Congress. House Republicans have vowed to undo many of those achievements while prioritizing investigations into allegations against Biden’s family and administration.

Biden promised he would veto any bill that would raise the cost of living for average Americans.

Click to play video: 'State of the Union: Biden talks shootdown of Chinese spy balloon, says it’s not good to ‘bet against America’'

More Buy American policies

Biden has walked a delicate tightrope over the past two years, balancing the need to work with Republicans on some matters while criticizing the party’s positions. He began his term two weeks after rioters stormed the U.S. Capitol to disrupt the certification of his victory over Donald Trump, who remains a force within the Republican party.

Although he celebrated on Tuesday that democracy remained “unbowed and unbroken” two years after that Jan. 6, 2021, attack, Biden’s address showed his continued efforts to appeal to “America First” conservatives aligned with Trump’s policies while continuing to pursue Democratic priorities.

He announced new standards that will require all construction materials used in federal infrastructure projects to be made in the U.S., an expansion of his Buy American policy that has alarmed key trading partners like Canada.

“On my watch, American roads, bridges, and American highways are going to be made with American products as well,” he said.

A request for comment from Canadian Trade Minister Mary Ng’s office was not immediately returned Tuesday night.

Biden’s focus on the U.S. economy came after an unexpectedly strong jobs report last week that found unemployment fell to a 53-year low of 3.4 per cent, and over 517,000 jobs were added in January.

Click to play video: 'U.S. Inflation Reduction Act ‘changed playing field’ in terms of global competition: Freeland'

U.S. Inflation Reduction Act ‘changed playing field’ in terms of global competition: Freeland

The White House is using those numbers and other signs of economic improvement, including falling gas prices, to counter Republican attacks and recent polling that found a majority of Americans are unsatisfied with the country’s direction and don’t want Biden to run for re-election.

Biden has not officially announced his re-election bid for 2024, which could pit him against Trump once again.

Crime and policing

Among Biden’s guests for the State of the Union was the mother and stepfather of Tyre Nichols, a Black man who died last month after being beaten by five police officers who are now charged with second-degree murder and other crimes.

Biden called for more action on national policing standards in response — a slim prospect in the divided Congress, although both parties rose to their feet to applaud the president’s remarks and Nichols’ family.

Click to play video: '‘Do something’: Biden pushes for action from Congress on police reform'

‘Do something’: Biden pushes for action from Congress on police reform

He also urged lawmakers to pursue meaningful immigration reform that would tighten border security, offer a path to citizenship for migrants who cross into the U.S. legally, and crack down on fentanyl trafficking that has led to a surge in fatal opioid overdoses.

Another guest, former House speaker Nancy Pelosi’s husband Paul Pelosi — who was brutally attacked inside the couple’s San Francisco home last year — was introduced by Biden as an example of the need to reign in domestic extremism and political violence.

“We must give hate and extremism in any form no safe harbour,” he said. “Democracy must not be a partisan issue. It’s an American issue.”

Arkansas Gov. Sarah Huckabee Sanders, who gained a national profile as Trump’s press secretary, delivered the Republican response to Biden’s speech, which he alleged was full of falsehoods.

She focused much of her remarks on social issues, including race in business and education, and alleged big-tech censorship of conservatives.

“While you reap the consequences of their failures, the Biden administration seems more interested in woke fantasies than the hard reality Americans face every day,” she said. “Most Americans simply want to live their lives in freedom and peace, but we are under attack in a left-wing culture war we didn’t start and never wanted to fight.”

Sanders also criticized Biden’s foreign policy that she alleged has made America less safe from threats posed by China and other hostile actors.

—With files from the Associated Press

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Economy

IMF Sees OPEC+ Oil Output Lift From July in Saudi Economic Boost – BNN Bloomberg

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(Bloomberg) — The International Monetary Fund expects OPEC and its partners to start increasing oil output gradually from July, a transition that’s set to catapult Saudi Arabia back into the ranks of the world’s fastest-growing economies next year. 

“We are assuming the full reversal of cuts is happening at the beginning of 2025,” Amine Mati, the lender’s mission chief to the kingdom, said in an interview in Washington, where the IMF and the World Bank are holding their spring meetings.

The view explains why the IMF is turning more upbeat on Saudi Arabia, whose economy contracted last year as it led the OPEC+ alliance alongside Russia in production cuts that squeezed supplies and pushed up crude prices. In 2022, record crude output propelled Saudi Arabia to the fastest expansion in the Group of 20.

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Under the latest outlook unveiled this week, the IMF improved next year’s growth estimate for the world’s biggest crude exporter from 5.5% to 6% — second only to India among major economies in an upswing that would be among the kingdom’s fastest spurts over the past decade. 

The fund projects Saudi oil output will reach 10 million barrels per day in early 2025, from what’s now a near three-year low of 9 million barrels. Saudi Arabia says its production capacity is around 12 million barrels a day and it’s rarely pumped as low as today’s levels in the past decade.

Mati said the IMF slightly lowered its forecast for Saudi economic growth this year to 2.6% from 2.7% based on actual figures for 2023 and the extension of production curbs to June. Bloomberg Economics predicts an expansion of 1.1% in 2024 and assumes the output cuts will stay until the end of this year.

Worsening hostilities in the Middle East provide the backdrop to a possible policy shift after oil prices topped $90 a barrel for the first time in months. The Organization of Petroleum Exporting Countries and its allies will gather on June 1 and some analysts expect the group may start to unwind the curbs.

After sacrificing sales volumes to support the oil market, Saudi Arabia may instead opt to pump more as it faces years of fiscal deficits and with crude prices still below what it needs to balance the budget.

Saudi Arabia is spending hundreds of billions of dollars to diversify an economy that still relies on oil and its close derivatives — petrochemicals and plastics — for more than 90% of its exports.

Restrictive US monetary policy won’t necessarily be a drag on Saudi Arabia, which usually moves in lockstep with the Federal Reserve to protect its currency peg to the dollar. 

Mati sees a “negligible” impact from potentially slower interest-rate cuts by the Fed, given the structure of the Saudi banks’ balance sheets and the plentiful liquidity in the kingdom thanks to elevated oil prices.

The IMF also expects the “non-oil sector growth momentum to remain strong” for at least the next couple of years, Mati said, driven by the kingdom’s plans to develop industries from manufacturing to logistics.

The kingdom “has undertaken many transformative reforms and is doing a lot of the right actions in terms of the regulatory environment,” Mati said. “But I think it takes time for some of those reforms to materialize.”

©2024 Bloomberg L.P.

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IMF Boss Says ‘All Eyes’ on US Amid Risks to Global Economy – BNN Bloomberg

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(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency. 

“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday. 

The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”

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The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last. 

“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”

Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry. 

Read More: A Resilient Global Economy Masks Growing Debt and Inequality

Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year. 

“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”

The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.

China Overcapacity

“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.

“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.

A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.

US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.

Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.

(Updates with additional Georgieva comments from eighth paragraph.)

©2024 Bloomberg L.P.

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IMF Boss Says 'All Eyes' on US Amid Risks to Global Economy – Financial Post

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The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency.

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(Bloomberg) — The head of the International Monetary Fund warned the US that the global economy is closely watching interest rates and industrial policies given the potential spillovers from the world’s biggest economy and reserve currency. 

“All eyes are on the US,” Kristalina Georgieva said in an interview on Bloomberg’s Surveillance on Thursday. 

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The two biggest issues, she said, are “what is going to happen with inflation and interest rates” and “how is the US going to navigate this world of more intrusive government policies.”

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The sustained strength of the US dollar is “concerning” for other currencies, particularly the lack of clarity on how long that may last. 

“That’s what I hear from countries,” said the leader of the fund, which has about 190 members. “How long will the Fed be stuck with higher interest rates?”

Georgieva was speaking on the sidelines of the IMF and World Bank’s spring meetings in Washington, where policymakers have been debating the impacts of Washington and Beijing’s policies and their geopolitical rivalry. 

Read More: A Resilient Global Economy Masks Growing Debt and Inequality

Georgieva said the IMF is optimistic that the conditions will be right for the Federal Reserve to start cutting rates this year. 

“The Fed is not yet prepared, and rightly so, to cut,” she said. “How fast? I don’t think we should gear up for a rapid decline in interest rates.”

The IMF chief also repeated her concerns about China devoting too much capital and labor toward export-oriented manufacturing, causing other countries, including the US, to retaliate with protectionist policies.

China Overcapacity

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“If China builds overcapacity and pushes exports that create reciprocity of action, then we are in a world of more fragmentation not less, and that ultimately is not good for China,” Georgieva said.

“What I want to see China doing is get serious about reforms, get serious about demand and consumption,” she added.

A number of countries have recently criticized China for what they see as excessive state subsidies for manufacturers, particularly in clean energy sectors, that might flood global markets with cheap goods and threaten competing firms.

US Treasury Secretary Janet Yellen hammered at the theme during a recent trip to China, repeatedly calling on Beijing to shift its economic policy toward stimulating domestic demand.

Chinese officials have acknowledged the risk of overcapacity in some areas, but have largely portrayed the criticism as overblown and hypocritical, coming from countries that are also ramping up clean energy subsidies.

(Updates with additional Georgieva comments from eighth paragraph.)

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