Government shutdown looms: House GOP taking an 'extremist stance,' WH adviser says

Lawmakers have until September 30 to pass new spending bills or the U.S. government will shut down again. National Economic Council Deputy Director Bharat Ramamurti says that House Republicans are essentially "walking away" from agreements made during the debt ceiling fight earlier this year. "House Republicans have a history of pushing for government shutdowns," Ramamurti says, adding that a shutdown disrupts not only government workers, but things like disaster relief and funding for Ukraine. Ramamurti says President Biden and the Senate are "basically in alignment" about what is needed to avoid a shutdown, but that "House Republicans... are taking an extremist stance that's jeopardizing the basic functioning of government."

Video Transcript

RACHELLE AKUFFO: Well, President Biden is to deliver a major economic address in Maryland today. During the address, the president looks to hit on the impact of federal budget cuts. This coming as a government shutdown continues to hang overhead for the US. Here to discuss, we have the White House National Economic Council Deputy Director Bharat Ramamurti. Bharat, thank you so much for joining us this morning. So I want to first talk about some of these budget cuts that the GOP is proposing and how far away they are from what the White House is looking at.

BHARAT RAMAMURTI: Yeah, if you recall, there was a set of agreements that were reached in the context of the debt ceiling earlier this year, where the President and the Speaker agreed to a certain level of government funding going forward. What we now see is that, essentially, the House Republican caucus is walking away from the agreement that was reached earlier this year and proposing levels of funding that are far below what were agreed to. So we think that that is both in contravention of the agreement that was reached before, but also, if enacted into law, would do real harm to programs that middle class families and working families rely upon.

RACHELLE AKUFFO: So, then, how much incentive is there, then, to reach an agreement before a government shutdown, given everything that's transpired, especially with lawsuits against former President Trump? Are people really digging their heels in there, or are we actually going to be able to find an agreement at this point?

BHARAT RAMAMURTI: Well, unfortunately, the House Republicans have a history of pushing for government shutdowns. It's happened multiple times. And when you've had this kind of alignment before with a Democratic president and House Republicans, the incentive to avoid a shutdown should be clear. It was highly disruptive to the functioning of the government. It jeopardizes things like disaster relief for areas that need government support right now. And it jeopardizes support for things like cracking down on fentanyl trafficking. It jeopardizes support for funding for Ukraine, which is badly in need of that right now.

So in addition to all of that, it causes disruptions for all the tens of thousands of government employees that live in the area and across the country. It leads to disruptions to things like national parks that American families rely upon. So there's all sorts of good reason to avoid a government shutdown. The President and the Senate, frankly, are all basically in alignment about what's necessary to avoid a shutdown. The issue is that, as has happened multiple times in the past, House Republicans are taking an extremist stance that's jeopardizing the basic functioning of government.

RACHELLE AKUFFO: And obviously, as the President prepares to speak this afternoon, it comes against this backdrop of still stubbornly high inflation ticking back up, mostly fueled by gas prices, which is really something that hits home for a lot of people. How tough of a sell does that make-- does that backdrop make it when the President is trying to tout, really, the benefits of Bidenomics here?

BHARAT RAMAMURTI: I think if you take a step back, the story on inflation is actually very positive. We've seen an enormous decrease in inflation over the last year. It's been cut by roughly 2/3. Even in yesterday's report, which saw that headline inflation ticked back up slightly, the story on core inflation, which is, of course, what the Fed tends to look at was actually very strong. We've seen that core is running at about 2.4% over the last three-month period, which is roughly in line, obviously, slightly higher, than the 2% target that the Fed has in mind.

So, overall, I think the story over the last year has been extremely positive. We've seen a rapid decrease in inflation. At the same time as we've gained millions of jobs, we've seen wages adjusted for inflation go up over that same period of time. Wages adjusted for inflation are higher than they were pre-pandemic. And of course, at the very highest level, the US has seen the highest economic growth of any of the G7 countries since the pandemic. And at the same time, it currently has the lowest level of inflation.

So, obviously, there has been a very stubborn global inflation problem that the US has had to tackle alongside our peers. I think the bottom line is that the US has done a better job of addressing that global problem than any of our competitors.

RACHELLE AKUFFO: And do you think the American public is really more focused on the good that President Biden has done, versus the things that hit home for them with the 3-foot price of gas really standing out to them? Is the administration doing a good enough job really selling the economic benefits of the plan at the moment?

BHARAT RAMAMURTI: Well, look, I think that the American public has been through a lot over the last few years. We've been through once-in-a-generation, multiple-generation, pandemic. We've seen a global economic disruptions as we've come out of COVID. We've seen Russia's invasion of Ukraine, which has disrupted global oil and food markets. It's a lot for people to get through. And I'm completely sympathetic with the fact that people may be struggling to view the positives in the economy right now.

Our job, number one, is to make sure that we continue to steer the economy in a positive direction, as we've done over the last 2 and 1/2 years. I think the United States is in a much better position than its competitors, thanks to the bills and the leadership that the president has shown over the last 2 and 1/2 years. And I think we will remain optimistic that the American public will absorb some of these benefits over time, especially if inflation continues to recede. And it's not going to happen overnight, but I think at the end of the day, I think we'll be rewarded for the stewardship of the economy that we've seen over the last 2 and 1/2 years.

RACHELLE AKUFFO: And Bharat, I did want to ask you because you mentioned some of the other international stories. You have to, of course, talk about the US-China dynamic, especially as the US is really tamping down on some of these US investments the companies are making in some of these technologies that are surrounding national security. How do you think that message should really be conveyed in terms of the fact that these are two economies, two biggest economies in the world, that still need each other?

BHARAT RAMAMURTI: I think it's exactly what you've described, which is these are two economies that are going to have to coexist in the world. I think we've seen both with Secretary Raimondo and comments from Secretary Yellen and others, a desire to maintain some ties with China, while at the same time, making sure that our national interests and our national security are protected. That's what you've seen with the executive orders, making sure that our investment in China is not leading to them getting access to certain types of technology. It's what you've seen with our approach to really boosting American manufacturing.

And one of the lessons that we took away from the pandemic and, frankly, of the last 20 or 30 years, is that there are real benefits to making sure that we make more things here in the United States. That's something that the president believes strongly in. It's going to lead to better national security. It's going to make us less vulnerable to disruptions to supply chain disruptions going forward. And so the president has made a commitment to making more things in the United States, to manufacturing more, especially when it comes to things like semiconductors and clean energy that are going to be vital to economic growth in the future.

So we are focused on making sure that American workers and the American economy are doing well. And we're going to also make sure that our national security is protected in terms of our relationship with China. But we are not seeking to walk away from our relationship with China, as you noted. We're going to need each other, that we're the two biggest economies in the world.

RACHELLE AKUFFO: Well, I appreciate you taking the time to join us this morning. National Economic Council Deputy Director Bharat Ramamurti, thank you so much.

BHARAT RAMAMURTI: Thank you.