House Passes $610.5B Defense Bill; Congress Combats Zika; Jobless Claims Drop
May 19, 2016
The House passes $610.5B National Defense Authorization Act diverging from White House rhetoric; Both chambers of Congress passed legislation setting aside $622.1M-$1.1B to combat the spread of the Zika virus in the U.S.; The Philly Fed Business Outlook Survey worsened in May, albeit slightly, as the headline index for manufacturing activity in the Southeast Pennsylvania region fell; New jobless claims dropped in the week ending May 14 as unemployment continued to prove volatile in the first decline in claims in a month.
- The House voted 277-147 to pass the annual National Defense Authorization Act on Wednesday that sets aside $610.5 billion for the policy priorities of the military, though it diverges from White House rhetoric on a host of issues that include Pentagon funding, detainee policy, the U.S. military base network, and how to fight the Islamic State. Indeed, the Obama administration has said that the bill would leave U.S. war-fighting obligations underfunded, which would necessitate a mid-year appropriations measure for additional support. The Republican-endorsed legislation diverts $18 billion from the Defense Department’s war-fighting fund to pay for additional personnel and equipment. An underlying consequence of this funding shortage is that the next president would decide how military operations should be conducted, and funded, in the ongoing fight in the Middle East. The bill would allow the U.S. to directly support Kurdish fighters battling the Islamic State, instead of using the government of Iraq as the primary intermediary, a provision that would likely antagonize relations between Washington and Baghdad. Republican lawmakers also rejected Democratic amendments that would require women to register for the military draft and would repeal the 2001 Authorization for the Use of Military Force that is currently the legal basis for operations against the Islamic State. President Obama has said that he will veto the bill should it pass the Senate.[WSJ]
- Both chambers of Congress passed legislation on Wednesday to combat the spread of the Zika virus in the U.S., as the House voted 241-184 to approve $622.1 million in funding while the Senate voted 68-29 to advance a $1.1 billion spending measure. Both bills are below the White House’s requested $1.9 billion. The House’s measure far undercuts President Obama’s proposal because many Republican legislators refused to endorse any measure that would add to the federal budget deficit without spending cuts elsewhere in government. Furthermore, conservatives in the House argue that their legislation is sufficient considering the White House already diverted $589 million that was previously set aside to battle Ebola. The Senate, meanwhile, was more bipartisan in its approach and believes that $1.1 billion is adequate to fight Zika. The upper chamber’s bill would direct $361 million to the Centers for Disease Control and Prevention and $200 million to the National Institutes of Health to aid in vaccine research. The White House has called the approved legislation woefully inadequate to fight the virus that can cause birth defects in children carried by pregnant women.[Reuters]
Economic Indicators & News
- The Philadelphia Fed Business Outlook Survey worsened in May, albeit slightly, as the headline index for manufacturing activity in the Southeast Pennsylvania region fell 0.2% to minus 1.8. New orders, which have faced downward trajectory into negative territory since March, contracted while unfilled orders declined, too, indicating lower prospect for future work. Future conditions, marked by factory inventories and shipments, also eroded during the month. A highlight of the report was input prices, which rose to their highest level since October 2014 amid rising energy and commodity prices. The market consensus was for expansion in Philadelphia-area manufacturing activity with a headline reading of positive 3.0.[Federal Reserve Bank of Philadelphia]
- New jobless claims dropped by 16,000 to 278,000 in the week ending May 14 as unemployment continued to prove volatile in the first decline in claims in a month. Initial claims fell by the largest margin since early February following a week in which unemployment dangerously approached the critical threshold—300,000—that is indicative of strength in the labor market. Indeed, claims in the prior week had not reached as high a level since February 2015, though unusual circumstances instead of a weakening economy was likely the cause for the spike. The four-week moving average, which accounts for week-to-week volatility, gained 7,500 to reach 275,750 while the number of continuing claims, which lag by a week, fell by 13,000 to 2.152 million. The four-week moving average for continuing claims increased 4,250 to reach 2.143 million as the insured unemployment rate was unchanged at 1.6%. The market consensus was for 275,000 new claims last week.[DOL]