Rail Strike Risks Stoking Inflation; Biden Touts EVs in Detroit

The looming US rail strike threatens to push inflation even higher across the country after prices jumped more than expected last month.

About 125,000 workers could walk off the job if a deal isn’t reached by Friday’s deadline, with talks between rail companies and unions not showing signs of progress. The stoppage would be the largest of its kind since 1992, and it would snarl a wide range of goods transported by rail, from food to metal and auto parts. The White House is considering an emergency decree to keep key goods flowing.

A strike would place new strains on US supply chains and add to price pressures that aren’t easing as much as forecasters had hoped. A government report on Tuesday showed consumer prices unexpectedly climbed in August, with annual inflation at 8.3%. Food prices, which are vulnerable to a holdup in rail deliveries, were one of the main contributors to the headline rate, while prices for clothing and new cars also advanced from the previous month.

The railway work stoppage would cost $2 billion a day, depending on how long it lasts, according to the Association of American Railroads. That could be a setback for US supply chains that are only now recovering from the global turmoil caused by the pandemic, a key driver of the past year’s wave of inflation as companies scrambled to get their goods to factories and consumers.

The economic effects of a potential strike would also spread beyond the rail industry—which carries more than a quarter of goods transported within the US—to upend other modes of freight transport. The American Trucking Association has already called on Congress to help resolve the dispute, warning that the stoppage would require nearly half a million more trucks and 80,000 more drivers—which aren’t available—to fill the gap. Read more.

Amtrak Canceling All Long Distance Trains Starting Tomorrow

Amtrak canceled all long-distance trains starting as White House-led talks between freight-rail companies and unions continued. “Such an interruption could significantly impact intercity passenger rail service, as Amtrak operates almost all of our 21,000 route miles outside the Northeast Corridor on track owned, maintained, and dispatched by freight railroads,” the company said in a statement.

MORE ON THE LOOMING STRIKE

Walsh Leads Talks: Talks between freight rail companies and unions continued under Labor Secretary Marty Walsh’s leadership as the deadline to avert a strike nears. Read more.
Pelosi Cites Involvement: Speaker Nancy Pelosi (D-Calif.) said she’s “been engaged in conversations with the White House and the unions involved” in the labor dispute. Read more.
Travel Disruptions Seen: Several cities are bracing for travel disruptions as the strike against freight rail threatens ripple effects on passenger service, everywhere from Washington to Chicago to Los Angeles. Read more.
Machinists Reject Proposal: Nearly 5,000 workers affiliated with the International Association of Machinists have rejected a contract with rail carriers and authorized a strike, throwing a wrench in efforts to avoid a shutdown. Read more.
Crops in Peril: US railroads are poised to stop shipments of farm products and other key goods starting Thursday as the industry braces for the possible strike. Read more.

Also on Lawmakers’ Radars

Senators Grill Biden’s Highway Nominee Over Infrastructure Law

Republicans grilled President Joe Biden’s nominee to lead the highway agency about how it is carrying out the infrastructure law. The Federal Highway Administration has been one of several agencies within the Transportation Department without a Senate-confirmed head under Biden, which several senators criticized as far too long.

Biden Sets Record for Public Defenders on Bench With Sixth Judge

The Senate confirmed Rhode Island Public Defender Lara Montecalvo to the US Court of Appeals for the First Circuit, marking Biden’s sixth confirmed circuit judge with a public defense background.

Senate Panel Set to Take Up Taiwan Bill That Makes Biden Uneasy

The Senate Foreign Relations Committee was set to take up a bill today to boost ties with Taiwan and give it more military hardware to deter a Chinese invasion, though the final measure will need to address White House objections if it has any chance of becoming law.

Standalone Homeland Security Health Office Backed by House Panel

A House panel endorsed the Department of Homeland Security’s reorganization of its health functions and work on countering weapons of mass destruction.

Labor, Civil Rights Agency Officials to Get Senate Panel Markup

A Senate labor panel will consider two labor nominees next week for roles that have lacked confirmed officials for the entirety of the Biden administration.

Former Social Media Executives Urge Senate to Regulate Platforms

Former Twitter and Facebook executives on Wednesday told a Senate panel that the biggest social media companies can do more to rein in extremism and misinformation, but won’t unless forced to by regulation.

House Backs Bill to Speed Approvals by Private Medicare Plans

The House passed a bill requiring private Medicare Advantage plans to establish an electronic prior authorization process that provides faster and more standardized decisions for routinely requested items and services.

Democratic Treasurers Hit Back at Republicans’ Anti-ESG Stances

A group of 14 Democratic state and city public finance officials are resisting Republicans’ war with Wall Street over their environmental and social policies.

Elections, Politics & Probes

Biden Takes Detroit Victory Lap Surrounded by EVs With No Rebate

There’s a flashy electric car at seemingly every turn of the Detroit auto show. Much harder to find is a model that will actually qualify for new consumer incentives. Fewer than a dozen of the EV and plug-in hybrid models among the hundreds of vehicles on display at the industry confab Wednesday would be eligible for tax credits of as much as $7,500, according to an analysis by Bloomberg.

The perks, recently signed into law, are seen as essential to getting the average carbuyer to consider going electric. That isn’t stopping President Joe Biden and a parade of fellow politicians from swinging through town to celebrate the passage of the Inflation Reduction Act, a sweeping set of changes designed in part to spur investment in domestic EV production.

Senate Races to Watch in 2022 Midterm Elections: BGOV Webinar

In a webinar today, Bloomberg Government reporters Zach C. Cohen, Greg Giroux, and Emily Wilkins provided an overview of the midterm election dynamics and issues at play. They also reviewed the 10 most competitive races and other longer-shot contests that could help shape who runs the chamber starting next year.

Democrats Want Details on Threat ‘Surge’ Against Federal Workers

Two House Democrats want details of efforts to protect federal workers amid “a surge” of threats following the FBI’s search of former President Donald Trump’s Florida residence and recent passage of increased IRS funding.

US Candidates for Local Office Face Growing Harassment, Threats

The US midterm elections stand to be a tightly contested struggle for control of Congress, and analysts and election security experts expect some of that vitriol to trickle down to local races. Threats and harassment at elected officials have skyrocketed since 2020.

GOP Election-Denier Wins New Hampshire Primary to Take On Hassan

Retired Army Brigadier General Don Bolduc won the GOP Senate primary in New Hampshire, setting up a November general race between the far-right election denier and Democratic incumbent Maggie Hassan.

MORE IN ELECTIONS & POLITICS

New Hampshire Race: Robert Burns, a pro-Trump anti-abortion former treasurer of New Hampshire’s Hillsborough County, won the Republican primary for the state’s 2nd congressional district, The Associated Press reports. Read more.
Georgia Race Tight: The race between Georgia Gov. Brian Kemp (R) and Democratic challenger Stacey Abrams is “too close to call,” according to a Quinnipiac University poll. Read more.
Abbott Leads O’Rourke: Texas Gov. Greg Abbott (R) has a modest lead over Democrat Beto O’Rourke with eight weeks to go until the election, according to a new poll. Read more.

Defense & Foreign Affairs

Ukraine’s Successes Stir Once-Unthinkable Hope of Beating Russia

The extraordinary speed and success of Ukraine’s northern counteroffensive is raising possibilities that few entertained when Russia invaded Ukraine in February: That its military could be defeated, or that it might even collapse. A rapid meltdown remains unlikely; Russia still controls about a fifth of Ukrainian territory, dwarfing even the 3,000 square kilometers Ukraine says it retook this month.

Nonetheless, for Russian and western military observers alike there was little doubt that the latest offensive marks a turning point in the largest armed conflict Europe has seen since World War II, at a minimum disrupting President Vladimir Putin’s stated goal of capturing all of Ukraine’s eastern Donbas region.

Russian Envoy Pick: Biden plans to nominate Lynne Tracy as the next US ambassador to Russia, CNN reported, citing three people familiar with the matter. Read more.
Russia’s Financial Losses: Russia’s financial sector suffered hundreds of billions of dollars in “direct losses” from the sweeping sanctions imposed by the US and its allies over the war, according to an internal Finance Ministry analysis. Read more.
Zelenskiy Visits Izyum: Ukrainian President Volodymyr Zelenskiy visited the newly recaptured city of Izyum today, a trip that underlined the stunning success of a counteroffensive against Russia in the country’s northeast Read more.
China Help Unlikely: Even as Putin’s forces suffer humiliating losses on the battlefield, he shouldn’t expect much help at his first meeting with Xi Jinping since the war began. Read more.

US Seeks to Sidestep Taliban in $3.5 Billion Afghan Aid Plan

The US will put $3.5 billion in Afghanistan’s central bank reserves under the control of a Swiss-based oversight board to pay for limited financial services in the country while ensuring the Taliban regime doesn’t get access to the money, the Treasury said.

Biden Orders Federal Software Suppliers to Tighten Security

Software companies doing business with the US government such as Microsoft and Cisco will have to attest that their products comply with new national cybersecurity standards under White House rules published Wednesday.

MORE IN FOREIGN AFFAIRS

Nuclear Export Boost: The US should accelerate talks on how to support US nuclear reactor exports as Russia and China offer generous state-backed loans to gain the upper hand on the issue, an Energy Department official said. Read more.
Korean EV Spat: South Korea and the US are stepping up efforts to resolve a dispute over electric-vehicle subsidies, as they seek closer cooperation on Asia-Pacific supply chains, Seoul’s top trade negotiator said. Read more.
DOJ Charges Iranians: The US filed charges against Iranian nationals accused of conducting hacking attacks against hundreds of companies, accusing them of encrypting computers associated with critical infrastructure. Read more.
US Prods Mexico: The US has asked Mexico to find ways of offering incentives to bring chip-makers to North America, as both nations try to lure companies that are crucial to the world’s electronics. Read more.
India Faults US: India has voiced its “concern” over the resumption of a US deal to upgrade the F-16 fleet of rival and neighbor Pakistan. Read more.
Azerbaijan-Armenia Fighting: Armenia invoked a defense pact calling on Russian aid after saying 105 troops died in border clashes with Azerbaijan. The US pointed the finger at Azerbaijan for attacks on Armenian territory. Read more.

Around the Administration

Biden’s Student Loan Plan Risks Vexing Voters With Bureaucracy

Biden’s announcement that he will cancel up to $20,000 in federal student loans for qualified borrowers could help score him points with progressives and young voters while fulfilling a promise he made when running for office.

Biden Issues Offshore Drilling Rights Under Climate Mandate

The Biden administration on Wednesday issued oil and natural gas leases to companies that nabbed the Gulf of Mexico drilling rights in a government auction later invalidated by a federal court.

Biomedical Agency Head Pick Paves Way for Biden’s Cancer Goal

The biomedical innovation center envisioned by Biden can now move forward in building its scientific agenda, even as influential lawmakers continue to press for changes in the agency’s setup.

States Divvy Up Federal Covid Billions With More Equity In Mind

With years still left on the clock, states have allocated two-thirds of the $199.8 billion in federal pandemic relief aid from the White House’s landmark stimulus to fund a wide variety of their own priorities—from building homes and expanding broadband access.

WHAT ELSE TO KNOW TODAY

Crude Stockpiles Fall: Emergency crude stockpiles fell at a record pace as the Biden administration shapes a plan to refill the nation’s strategic petroleum reserves. Read more.
Clearinghouse Plan Advances: The SEC voted to proceed with a plan to give clearinghouses—which sit between buyers and sellers and ultimately backstop the transactions—a much bigger footprint in the $24 trillion dollar market for US government bonds. Read more.
Rare Disease Partnership: The Food and Drug Administration and the National Institutes of Health have launched a public-private partnership for rare neurodegenerative diseases, according to a release. Read more.

To contact the reporter on this story: Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Andrew Small at asmall@bgov.com; Giuseppe Macri at gmacri@bgov.com