Democratic Fracture on Taxes and Drug Prices Emerges Ahead of Deadline

Tensions were rising within the party over how to pay for popular elements of the social policy bill. Follow updates from Washington.,

Daily Political Briefing

Sept. 14, 2021Updated Sept. 14, 2021, 5:37 p.m. ETSept. 14, 2021, 5:37 p.m. ET

ImageSenator Elizabeth Warren, Democrat of Massachusetts, argued for a wealth tax to pay for the Democrats' vast social policy bill.
Senator Elizabeth Warren, Democrat of Massachusetts, argued for a wealth tax to pay for the Democrats’ vast social policy bill.Credit…Al Drago for The New York Times

The day before the House Democrats’ self-imposed deadline for completing committee work on their vast social policy bill, tensions were rising in their ranks on Tuesday over how to pay for popular elements of it, such as child care access, universal prekindergarten, and expanded health insurance.

Progressive senators, led by Elizabeth Warren, Democrat of Massachusetts, and Bernie Sanders, independent of Vermont, pushed back hard on the decision by senior Democrats on the House Ways and Means Committee to focus a $2.1 trillion package of tax increases on income taxes, not levies on the vast fortunes of tycoons like Jeff Bezos and Elon Musk.

They vowed to continue their drive to tax, for the first time, billions of dollars in assets that grow each year and are not taxed if they are not sold.

“The wealth tax is not something that a bunch of politicians sit around and think, ‘Great idea.’ It’s something that the American people say we need for basic fairness,” said Ms. Warren, who has proposed an annual 2-percent tax on the value of household wealth over $50 million, rising to 6 percent above $1 billion.

Mr. Sanders said he, too, had not given up.

“The Ways and Means Committee has come up with their proposal; the Senate Finance Committee is working on their proposal,” said Mr. Sanders, the chairman of the Senate Budget Committee, which will draft that chamber’s version of the bill. “I think what is most important at this point is that at a time of massive income and wealth inequality, with a tax system, clearly, that benefits the wealthy, we begin to address” such inequities.

Facing the delicate politics of a narrowly divided Congress, senior House Democrats opted to be more mindful of moderate concerns in their party than of its progressive ambitions, focusing on traditional ways of raising revenue through income taxes.

Even liberals on the Ways and Means Committee were defending that approach on Tuesday. Representative Lloyd Doggett of Texas, the second-ranking Democrat on the panel and a veteran progressive, said swing-district Democrats simply could not be subjected to the Republican attacks that a broad tax on wealth would bring.

“People who aren’t wealthy think they will be,” he said, “and they don’t want to be punished for their success.”

But finding the revenue to pay for social spending will not be easy without some way to tap the huge stores of billionaire wealth that have gone untaxed year after year. House Democrats were hoping to raise $500 billion by holding down the cost of prescription drugs, in part by allowing Medicare to negotiate prices and by tying acceptable drug prices to those paid in other countries.

But if billionaires have powerful advocates in Washington, the pharmaceutical lobby is at least as powerful.

On Tuesday, two moderate Democrats, Representatives Scott Peters of California and Kurt Schrader of Oregon, came out against the Democratic leadership’s aggressive drug pricing plan, producing a more moderate version that would likely produce considerably less savings for the government.

Senator Joe Manchin III of West Virginia was the lone Democrat to oppose a broader voting rights bill.Credit…Al Drago for The New York Times

Senate Democrats on Tuesday proposed a pared-down voting rights bill that has the backing of both progressives and centrists in an effort to present a united front against deep Republican resistance to new legislation setting nationwide election standards.

The measure is the result of weeks of intraparty negotiations overseen by Senator Chuck Schumer, the New York Democrat and majority leader, and was built on principles put forward by Senator Joe Manchin III of West Virginia, the lone Democratic holdout against an earlier, much more sweeping piece of legislation called the For The People Act. Still, like that measure, it faces steep odds in the Senate, where it is unlikely to persuade Republicans to drop their opposition to legislation they have argued is an egregious overreach and an existential threat to their party.

The new bill, called the Freedom to Vote Act, drops some contentious elements of that initial bill such as restructuring the Federal Election Commission. It focuses heavily on guaranteeing access to the ballot following new voting restrictions being enacted around the country by Republican legislatures since the 2020 elections. And it would set a national voter identification standard — something that many Democrats have vehemently opposed — but one that would be far less onerous than some states have attempted to impose, allowing voters to meet the requirement with a variety of identification cards and documents in paper and digital form.

The revised measure would also require that states allow at minimum 15 consecutive days of early voting, including two weekends; ensure that all voters can request to vote by mail; establish new automatic voter registration programs, and make Election Day a national holiday. The legislation would mandate that states follow specific criteria when drawing new congressional districting lines and would force disclosure of donors to so-called dark money groups.

“Following the 2020 elections in which more Americans voted than ever before, we have seen unprecedented attacks on our democracy in states across the country,” said Senator Amy Klobuchar, the Minnesota Democrat who leads the Rules Committee, which is responsible for election oversight. “These attacks demand an immediate federal response.”

Mr. Manchin had balked at the original legislation and offered elements of a voting bill he would back, prompting the negotiations between him, Ms. Klobuchar and fellow Democratic Senators Jeff Merkley of Oregon, Tim Kaine of Virginia, Jon Tester of Montana, Alex Padilla of California and Raphael Warnock of Georgia. Senator Angus King, independent of Maine, also participated.

While Democrats cheered the new version, they also recognized that they were very unlikely to attract sufficient Republican support to break a filibuster against any voting bill, meaning that they would have to unite to force a change to Senate rules governing the filibuster if the legislation was to have any chance of passage. Republicans have already blocked debate on a voting rights measure twice before.

“We must be honest about the facts,” Mr. Schumer said Monday as he said he would try to break the impasse again next week. “The Republican-led war on democracy has only worsened in the last few weeks.”

Despite his support for the legislation, Mr. Manchin has reiterated multiple times his refusal to abolish the filibuster, though he has also indicated a willingness to entertain some changes. Mr. Schumer noted Monday that Mr. Manchin had been reaching out to Republicans to persuade them to back the new version of the voting rights bill.

Democrats hope continuing Republican opposition to a measure Mr. Manchin is now invested in as one of the chief authors will soften his opposition to weakening the filibuster, allowing his party to advance a measure they see as crucial to countering new voting restrictions in Republican-led states.

The proposal prompted an immediate call from progressive activists for Democrats to move forward on voting rights and not let the filibuster or Senator Mitch McConnell, the Kentucky Republican and minority leader, stand in the way.

“President Biden and Senate Democrats must now move quickly to address the filibuster and prevent Senator McConnell from abusing Senate rules to prevent this bill from getting a fair up-or-down vote,” the anti-filibuster group Fix Our Senate said in a statement.

Mr. Manchin did not mention the filibuster in a statement strongly endorsing the new proposal.

“The right to vote is fundamental to our democracy and the Freedom to Vote Act is a step in the right direction towards protecting that right for every American,” Mr. Manchin said. “As elected officials, we also have an obligation to restore peoples’ faith in our democracy, and I believe that the common sense provisions in this bill — like flexible voter ID requirements — will do just that.”

Secretary of State Antony J. Blinken faced questions from the Senate Foreign Relations Committee, a day after appearing before a House panel.Credit…Michael Reynolds/EPA, via Shutterstock

Secretary of State Antony J. Blinken appeared again on Tuesday before lawmakers, defending the Biden administration’s decision to withdraw from Afghanistan and insisting that the State Department did its best to plan for the chaotic evacuation as American troops prepared to depart last month.

After more than five hours of virtual testimony to the House Foreign Affairs Committee on Monday, Mr. Blinken appeared in person before the Senate Foreign Relations Committee, making no new concessions of fault even as Republicans denounced President Biden’s troop withdrawal from the country as “disastrous,” in the words of Senator Rob Portman of Ohio.

As he did on Monday, Mr. Blinken argued that the State Department had added more staff earlier this year to rapidly expedite processing of Special Immigrant Visas for Afghans who had worked with U.S. forces in Afghanistan, and noted that the Trump administration had halted the processing of such visas for months.

But committee members focused on whether the Biden administration should have done more contingency planning to prepare for the possibility of the sudden fall of the Afghan government, which occurred last month, and if the administration should have delayed the exit of U.S. troops until more Americans and at-risk Afghans could be relocated from the country.

Mr. Blinken said that the administration’s worst-case planning began “in the spring and summer” with interagency meetings coordinated by the White House.

Senator Mitt Romney, Republican of Utah, challenged Mr. Blinken’s frequent refrain that the Biden administration was obliged to withdraw rapidly because of an agreement the Trump administration struck in 2020 with the Taliban, setting a May 1 exit date from the country. Mr. Biden ordered all troops to leave by Aug. 31 — after initially announcing a withdrawal by Sept. 11, the 20th anniversary of the terror attacks — and has said that staying longer would have invited attacks by the Taliban, which agreed under the deal with Mr. Trump not to attack withdrawing American forces.

Mr. Romney asked Mr. Blinken why, if the Biden administration was willing to break the May 1 exit deadline, it could not have stayed longer than Aug. 31 to ensure a more orderly evacuation.

“The date was May 1, and you pushed it to Aug. 31. Why didn’t you push it much later?” Mr. Romney asked.

Mr. Blinken said that the military had told Mr. Biden that it needed three to four months to withdraw from the country “in a safe and orderly way,” and he added that the Biden administration had incurred some risk of Taliban attacks by staying as long as it did.

“We took some risk in terms of what the Taliban would do or not do after May 1,” he said.

Mr. Blinken also told Mr. Romney that he was open to a new congressional authorization for the use of military force to govern actions to combat a possible resurgence of international terrorist activity in Afghanistan.

Asked by Senator Marco Rubio, Republican of Florida, about longstanding ties between the Taliban and Al Qaeda, which U.S. officials said Tuesday could rebuild in Afghanistan within one to two years, Mr. Blinken conceded that “the relationship has not been severed, and it’s a very open question as to whether their views and the relationship has changed in any kind of definitive way.”

House Republicans hammered Mr. Blinken on Monday, calling for his resignation and accusing the Biden administration of incompetence and obfuscation. Mr. Blinken conceded little fault, saying the Trump administration had dealt the Biden team an impossible hand by striking the deal in 2020. “We inherited a deadline. We did not inherit a plan,” Mr. Blinken said.

The Taliban has long fought the Islamic State affiliate but they are established allies of Al Qaeda and have limited ability to control the borders to Afghanistan.Credit…Victor J. Blue for The New York Times

Al Qaeda could rebuild inside Afghanistan in one to two years, top intelligence officials said Tuesday, noting that some members of the terrorist group had already returned to the country.

Earlier in the year, top Pentagon officials said Al Qaeda could reconstitute in two years, then told lawmakers after the fall of the Afghanistan government they were revising that timeline.

The new timeline is not a drastic shift, but reflects the reality that the Taliban have a limited ability to control the borders of Afghanistan. While the Taliban have long fought the Islamic State affiliate, they are established allies of Al Qaeda. Though the Taliban pledged in the February 2020 peace agreement with the United States not to let Afghanistan be used by terrorist groups, analysts have said such promises ring hollow.

“The current assessment probably conservatively is one to two years for Al Qaeda to build some capability to at least threaten the homeland,” Lt. Gen. Scott D. Berrier, the director of the Defense Intelligence Agency said Tuesday at the annual Intelligence and National Security Summit.

David S. Cohen, the deputy director of the C.I.A., said the difficult part of the timeline question was to know when Al Qaeda or the Islamic State affiliate in Afghanistan would “have the capability to go to strike the homeland” before they could be detected.

The C.I.A. is keeping a keen watch of “some potential movement of Al Qaeda to Afghanistan,” Mr. Cohen said.

Mr. Cohen did not identify specific Qaeda members who have traveled back to Afghanistan since the fall of the American-backed government. But Osama bin Laden’s former security chief, Amin al Haq, who served with bin Laden during the battle of Tora Bora, was seen on video returning to the Afghan province of Nangarhar last month.

On Monday, speaking at the same conference, Avril D. Haines, the director of national intelligence, said that Afghanistan was not the greatest terrorist threat facing the United States. Yemen, Somalia, Syria and Iraq, she said, all posed more substantial threats.

The C.I.A. will have to increase its reliance on collecting intelligence from afar, in so-called over the horizon operations, Mr. Cohen said. He added the agency hoped to do its work — including rebuilding informant networks — closer to Afghanistan. “We will also look for ways to work from within the horizon, to the extent that is possible,” he said.

Ramping up that intelligence collection in Afghanistan will have to occur, General Berrier said, at the same time as agencies improve their ability to monitor China and Russia.

“We’re thinking about ways to gain access back into Afghanistan with all kinds of sources,” the general said. But he added, “We have to be careful to balance these very scarce resources with this pivot to China, and to Russia.”

Sgt. First Class Demetrius Roberson administered a Covid-19 vaccine to a soldier at Fort Knox, Ky., last week. The Army is the last branch of the U.S. military to issue guidelines for its vaccination mandate. Credit…Jon Cherry/Getty Images

The U.S. military’s largest service branch has announced an extensive timeline for troops to get vaccinated against the coronavirus, and what they can expect to have happen if they don’t.

Army officials said Tuesday that all active-duty units are expected to be fully vaccinated by Dec. 15, and Reserve and National Guard members by June 30. Those who refuse to be vaccinated and have not been given an exemption will face suspension, according to the guidelines.

“While soldiers who refuse the vaccine will first be counseled by their chain of command and medical providers,” the Army guidelines say, “continued failure to comply could result in administrative or nonjudicial punishment — to include relief of duties or discharge from the service.”

The possible consequences vary somewhat by role. Army commanders, command sergeants major, first sergeants and officers on track for future command assignments who refuse to be vaccinated and are not given an exemption face suspension and relief from duty. Soldiers of all ranks who are not in command positions can receive a general order of reprimand, which may be removed from their file when they are next transferred or may be placed into their permanent file, affecting future assignments and promotions.

The Army is the last branch of the military to issue guidelines following the Pentagon’s announcement last month that active-duty military personnel would be required to be vaccinated.

The Navy and Marines have already informed their rank and file that the clock is ticking on their vaccinations.

All active-duty Air Force troops must be fully vaccinated by Nov. 2, and Air National Guard and Air Force Reserve members by Dec. 2. The directive has had immediate impact in the Air Force: 74.5 percent of active-duty members have now had at least one vaccine shot, up from 65.2 percent last month.

Active-duty sailors and Marines must be fully vaccinated within 90 days of Aug. 30, while reserve Navy service members have 120 days to comply. Refusal without an approved exemption may result in administrative action, according to the Navy plan.

All Navy coronavirus deaths have been among troops who were not fully immunized; one was partially vaccinated.

Vaccination rates in the military already outpace much of the rest of the country, but commanders are seeking nearly total compliance, as the military does with many other vaccines, fearing that failure to get everyone inoculated would imperil readiness.

Since the Pentagon mandated coronavirus vaccinations last month, the percentage of all service members with at least one shot has risen to 83 percent from 76 percent, according to Defense Department data.

“This is quite literally a matter of life and death for our soldiers, their families and the communities in which we live,” Lt. Gen. R. Scott Dingle, the Army Surgeon General, said in a news release. “Case counts and deaths continue to be concerning as the Delta variant spreads, which makes protecting the force through mandatory vaccination a health and readiness priority for the total Army.”

Proposed Democratic legislation would raise taxes on high earners to pay for social programs like child care.Credit…Audra Melton for The New York Times

A sweeping bill that Democrats are assembling to spend heavily on education, child care, low-carbon energy and health care would also amount to a much larger tax cut for the poor and the middle class in its early years than the $1.5 trillion tax overhaul that was President Donald J. Trump’s signature legislative accomplishment in office, according to estimates released by Congress’s tax scorekeeper on Tuesday.

The proposal, introduced by House Democrats this week, would spend up to $3.5 trillion on social policy and other programs that are at the center of President Biden’s economic agenda. To help pay for that spending, the bill would raise taxes on high earners. It would cut taxes for lower- and middle-income families, the analysis by the congressional Joint Committee on Taxation found.

Households with income below $75,000 a year would see a total of $90 billion in reduced tax liabilities in 2023 under the Democratic proposal, largely driven by the temporary extension of an expanded child tax credit that Mr. Biden has pitched as a boon to parents and a means to halve child poverty. Middle-income families would then see a slight increase in their tax liabilities in 2027, after the increased benefit is set to expire, the analysis projects.

Households earning less than $20,000 a year would typically have a negative tax rate — effectively, they would receive payments from the federal government worth at least 10 percent of their annual income, on average, in 2023.

The Democratic plan would also increase taxes by more than $100 billion in 2023 for households earning $500,000 a year or more. Almost all of that increase would fall on households earning $1 million or more. Their average tax rate would rise from 30.2 percent to 37.3 percent.

The tax overhaul would reverse many of Mr. Trump’s tax cuts, which totaled nearly $2 trillion over the course of a decade by many estimates. That included $260 billion worth of benefits for individuals in the law’s second year, 2019, according to 2017 estimates by the joint committee. Three-quarters of those benefits went to households earning $100,000 a year or more.

About $35 billion went to households earning $75,000 or less. Tax cuts for individuals passed under Mr. Trump are set to expire in 2025.

Democratic leaders and Biden administration officials have pitched the tax components of their package as a way to finance social spending programs and a weapon to fight poverty. They have also stressed that the proposed tax increases on the rich will make the tax code more progressive, even as liberal groups have pushed party leaders to do more to tax large fortunes and the growing wealth of billionaires.

Republicans have criticized the legislative proposals and have refused to support any package that rolls back the 2017 tax cuts. Democrats are attempting to pass their tax and spending plan along party lines, without any Republican support, using the fast-track budget reconciliation process. But given the thin majorities in both chambers, Democrats can afford to lose no more than three votes in the House and not a single vote in the Senate.

A political ad from Gov. Gavin Newsom’s operation opposing the effort to remove him from office.Credit…Stop the Republican Recall of Governor Newsom Committee

One of the most expensive ads in the California recall election has a pithy summation of the race: “It’s a matter of life and death.”

That is the message from Gov. Gavin Newsom’s anti-recall operation, the Stop the Republican Recall of Governor Newsom Committee, which has been the largest spender in the recall race.

The committee’s money is largely drawn from the state Democratic Party, local labor unions and Reed Hastings, a founder of Netflix and a Democratic megadonor. More than half of the $58 million that has been spent on broadcast television advertising in the recall has come from that committee alone, according to AdImpact, an ad tracking firm.

The next closest political spender has been John Cox, a Republican candidate from Southern California who lost to Mr. Newsom in 2018 and is independently wealthy. Mr. Cox spent roughly $7 million on advertising, compared with $33 million by the Newsom-aligned group.

But to view the California recall election through the lens of the ad wars reveals not just two separate arguments over similar issues, but nearly two different races entirely.

From the Republican point of view, the ads cast Mr. Newsom as a failure at all levels. The pandemic barely warrants a mention in the ads, which focus instead on issues such as crime and taxes. For those supporting Mr. Newsom, the ads lean heavily into his stewardship of the country’s largest state during the coronavirus crisis and depict his leadership as crucial in keeping California residents safe.

“With Delta surging, Gavin Newsom is protecting California, requiring vaccination for health workers and school employees,” one ad says. As the ad pivots to Mr. Newsom’s opponents, a picture of former President Donald J. Trump and Larry Elder, the leading Republican candidate, appears on the screen. “The top Republican candidate? He peddled dangerous conspiracy theories, and would eliminate vaccine mandates on Day 1.”

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President Biden campaigned for Gov. Gavin Newsom of California, who is facing a recall election. The president compared Mr. Newsom’s leading opponent to a clone of former President Donald J. Trump.CreditCredit…Doug Mills/The New York Times

Yet ads from Mr. Cox and Mr. Elder make the case that the state’s crisis extends well beyond the pandemic. Numerous ads tick through a laundry list of perceived shortcomings of Mr. Newsom’s leadership, including homelessness and crime, while also attacking his spending policies. One ad from Mr. Elder, in which the candidate speaks directly to the camera at a rapid clip, focuses on Mr. Newsom’s record aside from the pandemic.

“The reason to recall Newsom is more than his gas-tax hike — it’s his incompetence,” Mr. Elder says in just under four seconds. But in closing, he recasts a line from another successful candidate in California — President Biden. “I’m Larry Elder, and this is a fight for the soul of California,” he says in the ad.

Notably, one of the biggest spenders in the election is not a partisan entity at all. It is the California secretary of state’s office.

The office has spent more than $7 million on a host of ads that began running last month and explain the state’s vote-by-mail process. Every active and eligible voter in California was mailed a ballot as part of the relatively new policy.

The ads from the secretary of state’s office also seek to combat the growing disinformation about the recall election. Conservative outlets and leading Republican candidates like Mr. Elder have made false claims about widespread voter fraud. “Vote-by-mail ballots: simple, safe, secure, counted,” the ad says in closing.

While nearly every ad from both sides has closely followed national political trends, some have hewed local and, in at least one ad, quite personal.

In an ad from the Elder campaign, a middle-age man is shown speaking directly to the camera. “You remind me of the guy in high school who took my girlfriend, then went on to the next girl,” the man says, presumably about Mr. Newsom, clearly exasperated. “You still think you’re better than everyone else.”

Increases in airfares, a key factor in inflation earlier this year, began to reverse in August amid a surge in Covid-19 cases.Credit…Joe Raedle/Getty Images

A recent run-up in consumer prices cooled slightly in August, signaling that although inflation is higher than normal, the White House and Federal Reserve may be beginning to see the slowdown in price gains they have been hoping for.

Policymakers have consistently argued that a surprisingly strong burst of inflation this year has been tied to pandemic-related quirks and should prove temporary, and most economists agree that prices will climb more slowly as businesses adjust and supply chains return to normal. The major question hanging over the economy’s future has been how much and how quickly the jump will fade.

Data released by the Labor Department on Tuesday suggested that a surge in Delta-variant coronavirus cases was weighing on airfares and hotel rates, but it also showed that price increases for key products — like cars — were beginning to moderate, helping to cool off overall inflation. The Consumer Price Index rose 5.3 percent in August from a year earlier, the data showed. That was a slightly slower annual pace than the 5.4 percent increase in July.

On a monthly basis, price gains moderated to a 0.3 percent increase between July and August, down from 0.5 percent the prior month and a bigger slowdown than economists in a Bloomberg survey had expected.

The news on core inflation, which strips out volatile food and fuel prices to try to get a cleaner read of underlying price trends, was even more encouraging for policymakers hoping to see signs that price increases are slowing. That index picked up 0.1 percent on the month and 4 percent over the past year, down from 0.3 percent and 4.3 percent in the July report.

“We’re seeing the unwinding of a lot of factors that pushed inflation prints higher early in the summer,” said Guy Lebas, chief fixed-income strategist at Janney Capital Management. “We’ll see these rolling supply and demand imbalances gradually diminish into 2022.”

White House economists greeted the report as confirmation of their view that prices should stop climbing so quickly headed into 2022.

“We view the report as consistent with the story we, the Federal Reserve and the vast majority of forecasters have been talking about,” said Jared Bernstein, a member of the White House Council of Economic Advisers. “It’s one month, and we’re going to continue to vigilantly watch the data.”

Inflation has been running hot this year as the economy has reopened from the pandemic, causing airline fares and hotel room rates to bounce back from depressed levels. At the same time, supply chain snarls have pushed shipping costs higher, feeding into prices for all sorts of products, from lumber to toys. Labor costs have climbed for some companies, nudging inflation up around the edges, and rents are rising again as workers return to cities after fleeing during 2020.

But policymakers are betting that annual price gains will settle down toward the Fed’s 2 percent average target over time. Officials define their target using a different index from the data released on Tuesday, a measure known as the Personal Consumption Expenditures index. That gauge has also picked up this year, but by less, climbing 4.2 percent in the year through July.

“The rapid reopening of the economy has brought a sharp run-up in inflation,” Jerome H. Powell, the Fed chair, acknowledged in a speech last month. But “the baseline outlook is for continued progress toward maximum employment, with inflation returning to levels consistent with our goal of inflation averaging 2 percent over time.”

Central bankers are hoping that quick inflation will dissipate before consumers learn to expect steadily higher prices, which can become a self-fulfilling prophecy as shoppers accept loftier price tags and workers demand higher pay. A closely watched tracker of household inflation outlooks released by the Federal Reserve Bank of New York on Monday showed that expectations rocketed up to 5.2 percent in the short term and 4 percent in the medium term.

That data point is disquieting, but market-based inflation expectations have been relatively stable after moving up earlier this year, and real-world prices may begin to ease in important categories in the months ahead.

The price index for airline fares declined in August, the Labor Department report showed, which may have been partly because a virus surge affected travel and advance bookings.

But the price index for used cars also fell, a signal that inventories were returning to more normal levels, helping to restore some regularity to the pre-owned vehicle market. Cars have been in short supply this year amid a computer chip shortage tied to shipping snarls and factory shutdowns overseas, and a surge in prices for used vehicles has been a major contributor to overall inflation in the United States.

Prices are still picking up for new cars, and a measure of housing costs tied to local rental conditions — which makes up a big chunk of the overall price index — continued to climb at a steady pace.

Mr. Lebas said he thought those housing costs would help keep inflation slightly elevated into next year, perhaps in the mid-2 percent range.

That’s “higher than it’s been historically, but not scary high,” he said. “If that happens, it’s a win for the Fed.”

The central bank is closely watching inflation as it considers when and how to reduce the big bond purchases it has undertaken to help cushion the economy against the pandemic shock — a move that officials have repeatedly signaled could come this year. The report most likely confirmed expectations among key officials, keeping policy on its measured and heavily communicated course.

“At the margin, the recent data will dampen some of the more excitable inflation forecasts in the markets and at the Fed,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note after the release.

Gary Gensler is pushing for greater transparency, among many other things.Credit…Kayana Szymczak for The New York Times

Gary Gensler, the Securities and Exchange Commission chair, will testify before the Senate Banking Committee on Tuesday, after five months on the job. Based on his prepared remarks, he’ll make the case for additional resources to achieve a more expansive agenda than many of his predecessors at the commission.

Since his confirmation, Mr. Gensler’s public statements have generated much debate, many headlines and more than a few market movements, the DealBook newsletter reports. Here’s what to expect on Tuesday on some hot-button issues:

Mr. Gensler wants to “freshen up” the rules. To promote efficiency and competition, he’s considering structural issues, like whether there is too much concentration among market makers, and conflicts of interest, like those arising from payment for order flow. Speeding up transaction settlements, which now take about two business days, is also a goal he notes in his remarks, and one that Republican senators want him to pursue, a committee aide said.

When it comes to cryptocurrencies, buyers beware. Mr. Gensler will say that the new digital currency markets resemble a time before securities laws: He wants more investor protection in crypto finance, issuance, trading and lending.

Senator Elizabeth Warren, Democrat of Massachusetts, who has been outspoken about regulatory gaps in the crypto industry, will follow up on those concerns, an aide said. Senator Cynthia Lummis, Republican of Wyoming, will also press Mr. Gensler for regulation, but with an emphasis that reflects her support of the crypto industry. “We must have a balanced legal framework for digital assets that enables innovation and protects consumers,” she told DealBook in a statement.

More required disclosures on climate risk, human capital and cybersecurity are in the works. Perhaps sensing the resistance he’ll face on this issue, Mr. Gensler will note that “these proposals will be informed by economic analysis and will be put out to public comment, so that we can have robust public discussion,” according to his prepared remarks. Patrick Toomey, Republican of Pennsylvania and the ranking committee member, has pushed back on added disclosures on environmental, social and governance issues before, and he’ll likely renew these criticisms at the hearing.

Other priorities include greater transparency on SPACs, China and insider info. The surge in special purpose acquisition companies that allow businesses to go public with fewer rules than traditional initial public offereings is cause for concern, Mr. Gensler will say, because of conflicts of interest that he believes are “inherent” in the structures.

He also wants the risks of Chinese companies that list on U.S. exchanges to be made more apparent. And he will discuss efforts to “modernize” a rule known as 10b5-1 on executive stock sales, which helps insulate insiders from accusations of trading on nonpublic information.

At the hearing, Mr. Gensler will get guidance from senators on what they think his priorities should be. How far he can advance his plans could depend, in part, on whether lawmakers give him more authority and resources.

Like Mr. Gensler, Sherrod Brown, Democrat of Ohio and the committee chairman, is keen on added transparency and stricter investor protections. According to his prepared remarks, Mr. Brown will open the hearing by saying that “the disconnect between the stock market and most Americans’ lives has never been more painfully clear,” and that, whatever the economic circumstances, “the hedge funds, the SPAC sponsors, the big banks, the brokers — the big guys seem to do just fine.”

Under the bill, undocumented immigrants would be eligible to become U.S. citizens if they passed requirements like background and health checks and paid a $1,500 fee.Credit…Kena Betancur/Agence France-Presse — Getty Images

House Democrats pushed forward on Monday with their plan to use their $3.5 trillion social policy bill to create a path to citizenship for an estimated 8 million undocumented immigrants, as the House Judiciary Committee prepared to approve a major immigration component for the package.

“The immigration provisions in this legislation serve as a vital investment in human infrastructure that reflects our commitment to a stronger U.S. economy and a vibrant future for all Americans,” said Representative Jerrold Nadler, Democrat of New York and chairman of the committee, as he urged adoption of the proposal over stiff Republican opposition.

Democrats are proposing to grant legal status to undocumented people brought to the United States as children, known as Dreamers; immigrants who were granted Temporary Protected Status for humanitarian reasons; close to one million farmworkers; and millions more whom are deemed “essential workers.”

Under the legislation, undocumented immigrants would be eligible to become U.S. citizens if they passed background and health checks and paid a $1,500 fee, among other requirements. The bill would also recapture at least 226,000 visas that went unused in previous years, because of “Covid-19 or bureaucratic delay,” Mr. Nadler said.

The House’s legislative push came as the Senate’s top rules enforcer weighed whether the immigration measures can be included in the Democrats’ sweeping legislation to expand the social safety net, which they plan to muscle through under a fast-track process known as reconciliation that shields it from a filibuster. That would test the bounds of the Senate’s rules, which require than any measure included in a reconciliation bill have a direct impact on federal spending and revenues.

On Friday, senior Democratic and Republican aides with expertise in immigration law and the budget met with Elizabeth MacDonough, the Senate parliamentarian, who serves as the chamber’s arbiter of its own rules. It was unclear how quickly Ms. MacDonough would make a ruling.

Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, told reporters Monday that the parliamentarian asked for additional information about the “legal theories” behind the Democrats’ argument and will hold another meeting this week to discuss them.

“We feel very strong about that position, and we hope it is persuasive,” Mr. Durbin said.

Ms. MacDonough’s decisions are merely advisory, but several Democratic senators have indicated they would be reluctant to overrule her. She did not respond to a request for comment.

The budgetary cost of the changes in immigration law — which affect health care benefits, Medicaid spending and tax credits — exceeds $139 billion over 10 years, according to preliminary figures from the Congressional Budget Office. Moreover, Democrats estimate the legalization push would add $1.5 trillion to the U.S. economy over the next decade, creating more than 400,000 jobs.

Republicans, however, are resisting the proposals, arguing that they are tangential to the budget and that Congress should focus on securing the southern border before trying to overhaul immigration law.

“We’re told we need to legalize those who defied our nation’s immigration and employment laws and illegally took Americans’ jobs as essential workers,” Representative Tom McClintock, Republican of California, said. He blasted the immigration overhaul as “amnesty for millions of foreign nationals who illegally entered our country and are demanding to stay all while our borders are kept wide open.”

Representative Zoe Lofgren, Democrat of California and chairwoman of the Administration Committee, pointed to research showing immigrants are net contributors to the United States.

“The economic benefits of immigration to the United States are substantial and uncontroverted,” Lofgren said. “This investment is long overdue, and I cannot afford to miss this opportunity.”

Mr. Durbin said he only pushed for the immigration overhaul to be included in the budget package after talks he had organized with a bipartisan group of 15 senators fell apart.

Immigration advocates have readied some backup plans should the parliamentarian not rule in their favor, including updating the immigration registry.

Emily Cochrane contributed reporting.

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President Biden campaigned for Gov. Gavin Newsom of California, who is facing a recall election. The president compared Mr. Newsom’s leading opponent to a clone of former President Donald J. Trump.CreditCredit…Doug Mills/The New York Times

President Biden embraced Gov. Gavin Newsom’s go-to political tactic in this week’s recall election during a trip to California on Monday — tying the leading Republican contender, the right-wing talk radio host Larry Elder, to Donald Trump.

“All of you know in the last year I got to run against the real Donald Trump,” said Mr. Biden at a rally in Long Beach, sweeping a hand over his blue blazer and tieless dress shirt to outline the sign of the cross. “Well, this year the leading Republican running for governor is the closest thing to a Trump clone that I’ve ever seen in your state.”

Earlier in Mr. Biden’s term, when his approval ratings were high, he took pains to avoid even muttering his predecessor’s name, referring to him, comically, as the “former guy.” But now, after a slide in public approval following the messy withdrawal from Afghanistan, the president has returned to the unvarnished anti-Trump message that helped get him elected in 2020.

It is a message Democratic congressional candidates are expected to hammer in the 2022 midterms — that they, for all their flaws, are the only ones standing between a return of Trump and his acolytes.

“He’s the clone of Donald Trump,” Mr. Biden said of Mr. Elder. “Can you imagine him being governor of this state? You can’t let that happen.”

It didn’t take long for Mr. Trump to chime in; he issued a statement Tuesday that criticized Mr. Newsom’s water management policies and returned to a familiar theme: The election is rigged.

At the same time, though, he predicted a Newsom win.

“People don’t realize that, despite the Rigged voting in California (I call it the ‘Swarming Ballots’), I got 1.5 Million more votes in 2020 than I did in 2016,” Mr. Trump said. “The place is so Rigged, however, that a guy who can’t even bring water into their State, which I got federal approval to do (that is the hard part), will probably win.”

Opposition to recalling Mr. Newsom leads by 16 points, 57.3 to 41.5 percent, according to the FiveThirtyEight average.Credit…Allison Zaucha for The New York Times

After the polls overestimated Democratic candidates in 2016 and 2020, it is reasonable to wonder whether Gov. Gavin Newsom’s lead in the California recall election might prove as illusory as Hillary Clinton’s lead in Wisconsin or Joe Biden’s in Florida.

It’s not impossible. But Mr. Newsom’s lead now dwarfs the typical polling error and is large enough to withstand nearly every statewide polling miss in recent memory.

Opposition to recalling Mr. Newsom leads by 16 points, 57.3 to 41.5 percent, according to the FiveThirtyEight average. Polls in 2020 overestimated the Democrats by an average of about five percentage points.

There was no state in either the 2016 or 2020 presidential elections where the final polls missed by 16 percentage points. Perhaps the worst recent polling miss — Senator Susan Collins’s comfortable nine-point victory after trailing in the polls by three points — is in the ballpark, but would still fall five points short of erasing Mr. Newsom’s lead.

Many of the most embarrassing and high-profile misses for pollsters, such as the seven-point polling errors in Wisconsin in 2016 and 2020, might still leave Mr. Newsom with a double-digit victory.

It is hard to find many precedents for such a large polling error. According to Harry Enten, a writer at CNN, there are only four cases in the last 20 years where the polling average in a race for governor was off by at least 15 percentage points.

Mr. Newsom’s opponents can hope that the idiosyncrasies of a recall election might make it more challenging for pollsters than a typical general election. Special and primary elections often have larger polling errors.

But the polls were fairly accurate in the last California gubernatorial recall and dead-on in the high-profile effort to recall former Gov. Scott Walker of Wisconsin in 2012. The high turnout in early voting in California so far tends to reduce the risk that an unusual turnout would contribute to a particularly large polling error.

And California is not a state where the polls have missed badly in recent election cycles. The largest polling errors have been in Wisconsin, Maine and other states with large numbers of white working-class voters. That’s not California. Just 22 percent of California voters in 2020 were whites without a four-year college degree, the second lowest of any state, according to census data.

Perhaps as a result, statewide polling in California has generally been fairly accurate.

Joe Biden led the final California polls by 29.2 points, according to FiveThirtyEight.

He won by 29.2 points.

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