MNI POLITICAL RISK ANALYSIS – US Daily Brief 29-03-22

Executive Summary:

Biden's Budget special: Inside a breakdown of President Joe Biden's budget for FY23.

• Biden believes that his budget will shrink the deficit by USD$1 trillion over 10 years. A bold claim which Biden says can be achieved by a progressive taxation scheme targeting billionaires and inherited wealth.
• The headache for the White House is that the war in Ukraine has compelled a dramatic increase in military spending, further hindering the Democrats' already stalled social spending agenda.
• The Biden administration’s ‘pivot to Asia’ in military spending is also complicated by Ukraine. There are mentions of countering threats posed by Iran and North Korea, and a major aim, as outlined in Biden's National Security Strategy, is responding to the rapid pace of China’s military development but it is unclear if sufficient defence spending can be diverted away from Europe.
• Another takeaway from Biden’s budget is a continued legislative approach to tackling inflation. The White House is adamant that triggers for rising inflation come from external forces which can be, at least partially, remedied by increased investment in critical areas like supply chains, domestic manufacturing, and social spending.
• The timing of the budget release couldn’t have been worse for Biden. Shortly after the budget announcement the president took questions dominated by his unscripted remark in Warsaw that 'Putin cannot remain in power.’
• Ceasefire talks between Russian and Ukrainian negotiators are underway in Turkey. There have been positive signs that both Moscow and Kyiv could be moving closer towards a deal although there is a concern amongst analysts that Russia may not be willing to engage in genuine peace talks.

MNI POLITICAL RISK ANALYSIS – US Daily Brief 29-03-22 .pdf