US midterms countdown: Republicans bank on inflation

This is an audio transcript of the FT News Briefing podcast episode: ‘US midterms countdown: Republicans bank on inflation’

Marc Filippino
Good morning from the Financial Times. Today is Thursday, October 20th, and this is your FT News Briefing.

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The UK government wants to make it harder for railworkers to strike. And not a lot of China’s private entrepreneurs were invited to this week’s Communist party congress. Plus, in the US, the Republican party wants to win back control of the House and Senate, and they’re trying to convince voters that inflation is all the Democrats’ fault. We’ll explore if that argument is working. I’m Marc Filippino, and here’s the news you need to start your day.

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UK lawmakers are set to introduce new legislation today, and it would make it harder for transportation workers to go on strike. If it’s approved the new system would take effect next year. Train operators would have to provide enough workers to meet “an adequate service level during strikes”. The national transportation trade union called the bill draconian. The unions staged several strikes this year while negotiating for better pay. More strikes are planned for the rest of the year.

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China’s ruling Communist party is holding its big party congress in Beijing this week. And if you want an invite, you have to fulfil six criteria. The FT’s Sun Yu describes a few of them.

Sun Yu
The number one is spiritual pureness. The second one is loyalty to the party. And the sixth one is strong work performance. So here you can see, right, is the loyal to the party, loyal to Xi Jinping that matters the most.

Marc Filippino
This year, many delegates from the private sector, business owners, were not invited. In fact, the number of private sector delegates has fallen by half since Xi Jinping took power nearly a decade ago. It’s not that Xi doesn’t like business. In his opening speech, he said he encourages entrepreneurship.

Sun Yu
But he also talked about the crackdown on the disorderly expansion of capital, which mainly refers to the private sector. And we’ve seen a lot of crackdowns, right? On the internet sector, on the private tutoring sector and also on the real estate where private companies dominate. So basically, Xi Jinping himself has a deep distrust of the private sector, and he also has suspect that private bosses may have political ambitions that may undermine the party’s leadership of the country.

Marc Filippino
As fewer private businesspeople attend the party congress, more party committees are being set up inside private companies. Sun Yu says Xi Jinping made this mandatory.

Sun Yu
He’s giving a much smaller, sort of, say, authority to these private companies. The main goal or mission of these private companies is simply to follow the guidance of the party instead of promoting their own agenda.

Marc Filippino
That’s the FT’s China economics reporter Sun Yu.

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We’re a few weeks away from the US midterm elections, and one thing to know about this election is that it’s kind of a referendum on the incumbent. That’s President Joe Biden and the Democrats who hold a slim majority in the House and Senate. So Republicans could take control of Congress if they win enough seats. There’s one huge issue working in the Republicans’ favour — inflation. Polls show it’s the top issue for voters. Today in our series, the FT’s Lauren Fedor travels to Virginia. It’s a state where voters have ping-ponged between the two parties over the past few years. She looks at how inflation will play out in a nail-biter of a congressional race.

Lauren Fedor
(Muffled sound of people talking) We’re in a parking lot in Prince William County, Virginia. It’s a leafy, affluent suburban area, about an hour’s drive south of Washington, DC. It’s a crisp autumn day. The leaves are changing colour. People have come to this government building to cast ballots early before election day on November 8. Volunteers are handing out flyers for political candidates outside. There’s a blue tent for Democrats and next to it, a red one for Republicans. That’s where we meet 88-year-old Terry Barrett wearing a bright red T-shirt. She says the most important issue for her right now is inflation.

Terry Barrett
My expenses have just gone up and up. Every month I need to take a little bit more out of savings because every month it costs me more.

Lauren Fedor
She’s handing out leaflets in support of Yesli Vega, the local Republican candidate for the House of Representatives. Vega is a former police officer and her campaign has focused on crime and law and order. She also has a lot of TV ads about inflation.

Yesli Vega ad
As a working parent, I know the struggles families face. Groceries, gas, everything costs more. Yet politicians in Congress ignore the problem. I’m Yesli Vega, and I approve this message because in Congress I’ll work for a future we can all afford.

Lauren Fedor
Vega tells me why her campaign is focusing so much on the cost of living.

Yesli Vega
Every meet and greet that I have, every community event that we go to, that is the number one concern of folks. And the reality is, is that we’re all feeling the squeeze, whether it be at the grocery store, at the gas pump ...

Lauren Fedor
Vega is doing the same thing as other Republican candidates across the country. She’s blaming high inflation on the Democrats and the recent spending bills, familiar-sounding names and also her opponent in this race, Abigail Spanberger.

Yesli Vega
And this is a direct result of Joe Biden, Nancy Pelosi and Abigail Spanberger failed policies we’ve seen over the last couple of years. You know, wasteful spending coming out of Washington are continuing to drive up inflation through the roof.

Lauren Fedor
Congress has passed trillions of dollars worth of spending bills in recent years. But most economists say that federal spending alone isn’t necessarily to blame for rising inflation. Other factors like the pandemic, supply chain disruptions and, more recently, the Russian invasion of Ukraine have all contributed to higher consumer costs. But Republicans across the country are keeping their message simple — costs are up, and Democrats are to blame. That puts the Democrats in a tough spot. They have to defend their record and try to give a more nuanced explanation of inflation.

Tucker Martin
These are real headwinds so if you’re a Democratic incumbent, you’re running in a historically bad time.

Lauren Fedor
Tucker Martin is a longtime Republican political consultant in Virginia.

Tucker Martin
I think Abigail Spanberger is doing the best she can in the face of that. But one of the cruel realities of politics is that environment matters, in my opinion, more than anything else. And environment is the thing you cannot control.

Lauren Fedor
Vega’s opponent, Spanberger, is a former CIA officer who was elected to Congress for the first time back in 2018. She was narrowly re-elected in 2022. (Muffled sound of people talking) To hear Spanberger’s message, we followed her here to a sprawling development of new homes, some of which are still under construction.

Abigail Spanberger
I want to thank you so much for welcoming me into the community . . . 

Lauren Fedor
The congresswoman is talking to local business owners about the Inflation Reduction Act. It’s the $700bn spending bill that Joe Biden recently signed into law. This is the kind of legislation Democrats are campaigning on to say they’re taking inflation seriously. Economists say that despite its name, the Democrat-led bill won’t reduce inflation in the short term. But Spanberger emphasises how it will cut specific costs for people like their healthcare.

Abigail Spanberger
The legislation also caps, and again this is speaking to seniors, caps out-of-pocket costs at $2,000 a year and caps insulin prices . . . 

Lauren Fedor
Later, she tells me that people understand inflation is complicated and that federal spending alone is not to blame.

Abigail Spanberger
Most people do live in the reality of understanding that there’s not some little button that like a Democrat could push, or more importantly, that if there was a Republican that they would be able to push, right? These problems weren’t created in a day, and they can’t be solved in a day. And most people, unless it’s sort of, you know, hanging on to a hyper-partisan talking point, understand that these questions are complicated and challenging. And this is where I say, like I have been working on these issues, right?

Lauren Fedor
Back at the parking lot where people are still casting their ballots, Democratic party volunteer Tracy Blake is holding his three-year-old daughter. He says he doesn’t blame Democrats and Congress for higher prices, and he doesn’t think Republicans will make things better.

Tracy Blake
Republican gets back in office and then they, they’re like supposed to be fiscally conservative, but then they spend like $1tn on whatever, you know, tax cuts or whatever, military. But . . . so I don’t really pay attention to their argument.

Lauren Fedor
Another voter here is 18-year-old Alison Portillo. She’s just old enough to vote and is casting a ballot for the first time. She tells me the economy was not front of mind when she voted for Spanberger.

What’s the most important issue would you say to you going into the election?

Alison Portillo
Women’s rights, definitely, women’s rights. All women’s rights.

Lauren Fedor
When the US Supreme Court overturned Roe vs Wade this summer, Democrats thought that fired up voters like Portillo could give them the edge. But the latest polls suggest it might not be enough. Here’s Tucker Martin, the Republican political consultant.

Tucker Martin
If the hope on the Democratic side was that abortion would emerge in the summer and stay front of mind and help change this environment, it just doesn’t look like that’s occurred. It looks like at the end of the day, to say the obvious comment everybody would make during an interview on this topic is: “It’s the economy, stupid”. But it probably is.

Lauren Fedor
And that’s the message I’m hearing when I talk to people, not just in Virginia but across the country. Democrats had hoped that other issues like healthcare, like abortion rights, would be enough to fire up their base and get them over the finish line in November. But now, with the economic situation not getting any better and opinion polls showing the economy is still the top issue for most voters, Democrats are increasingly worried that Republicans will have the edge heading into polling day.

Marc Filippino
That was the FT’s deputy Washington bureau chief Lauren Fedor. In the next instalment of our midterm series, we’re going to take you to Pennsylvania to see how Republicans are courting Hispanic voters.

Unknown
Gracias por la invitación. Es un placer estar aquí (laughter and people cheering)

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.