AGF Management : Inching Toward a Compromise on Infrastructure

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June 1, 2021

Inching Toward a Compromise on Infrastructure
June 1, 2021
AN INFRASTRUCTURE DEAL APPEARS POSSIBLE when Congress returns to town next week - it will take more compromises but President Biden can get a package costing a little more than $1 trillion for highways, bridges, dams, broadband, clean water, etc.

A BILL COSTING SOMETHING LIKE $1.3 TRILLION could win grudging support from Republicans but if Biden agrees to a huge haircut, the populist left surely would be angry. But as one source told us this weekend, if Biden can get $1.3 trillion, why not declare victory and take it, then come back for more?

BIDEN'S JOB APPROVAL NUMBERS - even from the conservative Rasmussen survey - are solidly positive, so he has political capital. Biden may need to spend some of it next week; he will have to lower his latest proposal, which would spend $1.7 trillion over eight years, down from his initial target of $2.25 trillion.

A DEAL WOULD GIVE THE WHITE HOUSE momentum for the next two bills - a huge package of social spending that could move via budget reconciliation, and a tax measure that will have to be scaled back dramatically. These latter two bills are months away from resolution, but an infrastructure package will either fail or pass this summer.

DISAPPOINTING THE LEFT: Biden will have to tone down his tax and spending proposals because at least two Democrats will resist - and in a 50-50 Senate, that would be fatal. The left won't succeed in killing the filibuster, packing the Supreme Court, making DC a state, etc. But Biden can get a compromise on infrastructure.

THE PRESIDENT FACES CHALLENGES THIS MONTH: His June 16 summit with Vladimir Putin will be contentious, a possible change in leadership looms in Israel, a police reform measure bill will require more dealing on Capitol Hill, and a voting reform bill probably won't move in Congress later this month.

AS CRITICISM MOUNTS FROM REPUBLICANS over surging crime, illegal immigration, inflation and shortages, Biden needs a good unemployment report this Friday. Was last month's disappointing 266,000 non-farms payroll rise a fluke, as some economists suspect? We'll get clues on Friday; analysts expect a job rise of 500,000 to 700,000.

IT COULD BE A TRICKY JOBS REPORT for Biden - another soft number would intensify criticism that generous unemployment benefits are a disincentive for job creation. But a blowout number could ramp up speculation that the Federal Reserve may have to begin considering a tapering of its asset purchases.

THE NEXT MONTH will be pivotal for Biden's job approval numbers after this
spring's mood swing. People are traveling, they're going to malls and restaurants, and the low-keyed Biden gets some credit in polls that also show his big spending is popular.

The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies.

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AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.

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