Principals

1. Biden’s second-term priorities
2. U.S. floats toward soft landing
3. Americans angry over food prices
4. Israel’s postwar Gaza shift
5. Israelis oppose Palestinian state
6. W.H. questions U.S. Steel sale

PDB: Manchin in New Hampshire...what Senator Alex Padilla is reading

Biden will amp up campaign … Detroit News: Trump recorded pressuring canvassers … FT: Gaza strategy “feckless” … and 2023’s final edition of Semafor Principals!

— edited by Benjy Sarlin, Jordan Weissmann and Morgan Chalfant

Team Biden readies its pitch for a second-term agenda

Democrats may not have to wait too much longer for President Biden to start laying out his reelection platform. Bharat Ramamurti, the former deputy director of the White House’s National Economic Council, told Semafor he thought the annual State of the Union address would “probably be the main kickoff opportunity” for Biden to explain his future priorities. Some of it could include elements of his defunct Build Back Better plan, he said, listing affordable housing, cheaper childcare, and expanding the child tax credit as goals. Some Democratic allies are currently urging Biden to lay out a second-term agenda sooner rather than later, NBC News reported, particularly to shore up his flagging support among young voters, and Black and Latino voters.

Sen. Elizabeth Warren, D-Mass., whose own ideas and former staff helped influence the president’s first-term agenda, name-checked a few key areas she expected him to focus on this time around. They include further student loan cancellation, lowering the cost of healthcare, combating “price-gouging” by multinational corporations, and codifying Roe v. Wade if Democrats reclaim control of Congress. “He’s got a pretty clear path ahead that has the particular benefit of being popular among the American people, so that’s why he’s gonna win,” Warren told Semafor. For their part, Biden campaign officials are being vague about when they will start sketching out plans. “Still 11 months away from an election most Americans are not focused on, we look forward to scaling our efforts across the board next year to mobilize our coalition,” said Biden campaign spokesman Kevin Munoz.

— Joseph Zeballos-Roig

Key inflation measure hits the Fed’s target

For months, the world wondered whether the U.S. would be able to achieve a historic soft landing, bringing inflation back under control while avoiding a recession. Turns out, it might have already happened, Semafor’s Jordan Weissman reports. On Thursday, the Bureau of Economic Analysis released revised data showing that inflation rose at a 2% annualized rate in the third quarter of 2023 — smack dab on the Federal Reserve’s target, even as job and GDP growth remained robust. That’s based on the core Personal Consumption Expenditures Index, which excludes volatile food and energy costs, and is the central bank’s preferred measure of how fast prices are rising. It’s still possible, of course, that inflation could pick back up, or that the economy could weaken into a downturn, especially if growth slows and Fed officials hesitate to cut rates next year. But if the current trend holds, it will mark a rare economic turn of events: At least since the Korean War, there is arguably no real precedent for the U.S. beating the kind of inflation it experienced over the past two years without sinking into a recession.

It’s the grocery prices, stupid

If you want to understand why Americans spent 2023 feeling so gloomy about the economy, just look at your Safeway receipt. In November, a Navigator survey found that high food prices were the top complaint about the economy among battleground state voters. That finding was backed by a poll from The Atlantic on Thursday, which asked voters what factors they consider when deciding how the economy is faring. The price of groceries was the “runaway winner,” wrote Gilad Edelman. “And when we asked what people had in mind when they reported that their personal finances were getting worse, 81 percent chose groceries,” he added. Americans aren’t imagining the pain at the checkout line: Grocery costs shot up 19.5% between 2021 and 2023. But if there’s any consolation for the Biden administration, it’s that prices have been closer to flat since. Perhaps by Election Day, voters will have had time to digest the change.

Israel bends on postwar plans for Gaza

For the first time, Israel is signaling that the Palestinian Authority could take over responsibility for Gaza after its military campaign, Semafor’s Jay Solomon reports. “Beyond ensuring the security of our citizens, which we will not compromise on, Israel has no interest in controlling civil affairs in Gaza, and there will need to be a moderate Palestinian governing body that enjoys broad support and legitimacy,” National Security Advisor Tzachi Hanegbi wrote in an op-ed. “It’s not for us to decide who this will be.” He added that the Palestinian Authority “in its current form” was not well-positioned to take over, but that it would be with help from “the international community and regional neighbors.” The placement of the editorial — in Elaph, a Saudi Arabia-owned Arabic language news site headquartered in London — was as notable as the content. While Israeli Prime Minister Benjamin Netanyahu has publicly derided a PA role in Gaza, which the U.S. strongly favors, Israel’s growing de facto alliance with the Gulf States against Iran may be too important to risk over the issue.

Israeli support for Palestinian state collapses

New research showed Israelis have largely given up hope in the two-state solution, and fewer Israelis than ever believe a lasting peace will be achieved with Palestinians. The Gallup poll mirrored a transformation in views among Palestinians, only a quarter of whom now support a two-state solution. Meanwhile, the U.N. Security Council finally appeared likely to vote on a heavily watered-down resolution over humanitarian aid to Gaza. Diplomats wrangled all week over the proposal, moving from pushing for a ceasefire to only calling for creating the conditions for a truce. The vote comes with Israel’s war against Hamas intensifying and the humanitarian situation worsening.

— Prashant Rao

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White House says U.S. Steel sale deserves ‘serious scrutiny’

The White House believes that the proposed purchase of U.S. Steel by a Japanese competitor deserves “serious scrutiny,” according to a letter released by National Economic Advisor Lael Brainard on Thursday. “This looks like the type of transaction that the interagency committee on foreign investment Congress empowered and the Biden Administration strengthened is set up to carefully investigate,” it states. “This administration will be ready to look carefully at the findings of any such investigation and act if appropriate.” Tokyo-based Nippon Steel’s $14.9 billion bid to buy its smaller, American counterpart has triggered a wave of backlash in Washington, including from Democratic senators like Pennsylvania’s John Fetterman, who called the deal “outrageous.” Labor unions are pushing back too, despite Nippon Steel’s vows to honor current contracts. But it’s unclear whether the White House would actually have grounds to stop the transaction. Meanwhile, Substacker Noah Smith offers an interesting look at why the U.S. steel industry has withered over time: It’s not unions, competition from imports, or bad management. The issue, he argues, is that the U.S. simply started using less steel to build things, leading production to decline.

Beltway Newsletters

Punchbowl News: Hakeem Jeffries had an “impressive” first year.

Playbook: A recording of Donald Trump pressuring Michigan canvassers could be another legally damaging “perfect phone call.”

The Early 202: Biden economic adviser Jared Bernstein sees ‘a glimmer of evidence’ that public opinion on the economy is getting better.

White House

President Joe Biden held a call with Mexican President Andrés Manuel López Obrador to discuss border security amid a new surge of migrant arrivals. They both agreed more enforcement was needed, per the White House’s readout.

Congress

Sen. Joe Manchin, D-W.Va. will give a speech touting his new “Americans Together” group at a “Politics and Eggs” breakfast event in New Hampshire — a longtime proving ground for presidential candidates. — Forbes

Outside the Beltway

The GOP head of Wisconsin’s state assembly said it was “super unlikely” that lawmakers would follow through on their threat to impeach recently elected Supreme Court Justice Janet Protasiewicz if she rules the state’s legislative maps are unconstitutional in an upcoming redistricting case.

Polls

• FiveThirtyEight looks back at 2023’s off-year elections and finds turnout was still massive overall, especially in the suburbs, which helped Democrats make up for their weaker performance in urban cores.
• President Biden’s approval rating stands at 39% in Gallup’s latest poll, a slight increase from 37% last month, driven in part by a 7-point increase among independents (from 27% to 24%). It’s lower than the approval ratings of any recent president at this point in their respective first terms: Donald Trump was at 45%, Barack Obama was at 43%, and George W. Bush was at 58%.

Courts

• Rudy Giuliani has filed for Chapter 11 bankruptcy after being ordered to pay a $150 million judgment in a defamation case brought by two Georgia election workers.
• A federal appeals court ordered Michigan to redraw 13 Detroit area state legislative districts, arguing that an independent commission had diluted the power of Black voters when it created the maps after the 2020 census. That redistricting process helped Democrats take back a trifecta in Michigan for the first time in decades.

2024

Asked if he regrets anything about his floundering presidential campaign, Ron DeSantis turned to complaining about his bad luck. “I would say if I could have one thing change, I wish Trump hadn’t been indicted on any of this stuff,” he told CBN News reporter David Brody, adding that “it distorted the primary.”

Foreign Policy

• The White House is increasingly considering using $300 billion in Russian central-bank assets held in the West towards Ukraine’s war effort. Senior U.S. and European officials said the administration’s shift — it had previously argued such a move was illegal — comes amid waning backing in Western capitals for Kyiv — New York Times.
• The U.S. and China resumed military communications for the first time since mid-2022, a thawing of relations agreed at a recent meeting of two countries’ leaders.
• Angola is leaving OPEC in a dispute over oil production quotas, a sign the cartel is losing its grip on the energy market.

Big Read

The Israel Policy Forum’s Michael Koplow suggests everyone invested in solving the Israeli-Palestinian conflict should aggressively rethink their priors after the 10/7 attack, which challenged prewar assumptions on the left, right, and center in many different ways. “There are no wins from October 7; if you had strong opinions about anything related to Gaza, Hamas, and the Palestinians before the attacks, there is a 99.9% certainty that you were badly wrong about something,” he writes.

All We Want For Christmas

...is Mariah Carey at the White House.

Blindspot

Stories that are being largely ignored by either left-leaning or right-leaning outlets, according to data from our partners at Ground News.

What the Left isn’t reading: The U.S. Border Patrol had more than 23,000 migrants in custody as of Tuesday and three border sectors, Del Rio, the Rio Grande Valley and Tucson, were exceeding their capacity.

What the Right isn’t reading: Two county-level officials in Arizona pleaded not guilty to felony charges for delaying the certification of the 2022 election results.

Principals Team

Editors: Benjy Sarlin, Jordan Weissmann, Morgan Chalfant

Editor-at-Large: Steve Clemons

Reporters: Kadia Goba, Joseph Zeballos-Roig, Shelby Talcott, David Weigel

Alex Padilla is a Democratic senator from California.

What are you focused on the most right now in your job?

Ensuring we’re living up to our values as a nation of immigrants and ensuring we continue to stand up for democracy, both at home and abroad.

You meet a genie that can make one single bill magically become law. What would it be?

Restoring the federal Voting Rights Act, including the preclearance requirement. When all eligible voters can vote without obstruction, the will of the people will prevail and we will combat climate change, enshrine reproductive rights, ensure equality for all Americans, and more.

What’s on your nightstand right now?

“Pappyland: A Story of Family, Fine Bourbon, and the Things That Last” by Wright Thompson.

Which song is at the top of your Spotify playlist?

This week? “Burrito Sabanero” by Marco Pastor Estelles.

What’s something about you people don’t know?

I bring fresh chiles and hot sauce to Senate Democratic lunch meetings.

• Despite starting his career in artificial intelligence and staying on top of the latest developments, Meta’s CTO says the latest generative AI craze still caught the company by surprise.
• The COP28 agreement says annual global greenhouse emissions need to peak by 2025 to stay within the global warming limit of 1.5 C. That means for the biggest emitters, 2024 will be a critical turning point for the energy transition.
• There’s no shortage of examples of how combining generative AI and journalism can go wrong — but how can it go right? The trick may be to make AI know less.