News brief: primary results, Fed is likely to hike rates, NATO to discuss Ukraine
A MARTÍNEZ, HOST:
If a candidate had former President Trump's endorsement, they may well have come out on top in some key primary races yesterday. His picks did particularly well in Nevada and saw a split on two races in South Carolina.
RACHEL MARTIN, HOST:
The races were the latest test of Donald Trump's influence in the Republican Party and could be crucial indicators for midterm elections in November.
MARTÍNEZ: Senior political editor and correspondent Domenico Montanaro joins us now to break it all down. All right, let's begin in South Carolina. Trump endorsed challengers to a pair of GOP members of Congress, Tom Rice and Nancy Mace. Rice lost. Mace won. What happened?
DOMENICO MONTANARO, BYLINE: Trump targeted Rice because he voted for Trump's impeachment stemming from January 6. He was one of just 10 Republicans to do so. Rice lost handily to State Representative Russell Fry. Mace was critical of Trump's conduct on January 6, but she didn't vote for his impeachment, and she survived her race. Rice and Mace, we should say, ran pretty different races in dealing with Trump. Mace tried to tow a line, saying she agreed with Trump on policy and expressed affinity for him. Rice, on the other hand, said it'd be a badge of honor to lose to a Trump-backed candidate. I guess he got it. Now, we should note that Rice's district is more conservative than Mace's, which made his path from the start much more difficult.
MARTÍNEZ: All right. Now let's move west to Nevada, where there's a key Senate race now. Tell us what happened there.
MONTANARO: Former state Attorney General Adam Laxalt prevailed there by a fairly wide margin. He had Trump's endorsement, but to get it, he went pretty far to the right, backing Trump's election lies and about how the 2020 presidential election, he said, was stolen and conducted in the state. But, of course, those weren't true. This really sets up a big race this fall between Laxalt and Democratic incumbent Senator Catherine Cortez Masto. Republicans believe Masto is pretty vulnerable. They see this as perhaps their best pickup opportunity. Democrats are confident in their own ability to organize in this state, though, and think that she should hold on. But this should be circled on everyone's list as a real key Senate race to watch.
Also, we don't talk a lot about state secretary of state races, but in Nevada, an election-denier won the GOP nomination last night, Jim Marchant. He said his No. 1 priority will be to overhaul the fraudulent election system in Nevada. And the system was proven not to be fraudulent, of course. But it's a pretty big deal because we've seen election-deniers running for secretary of state in a bunch of other places, and one was just installed in Florida by Governor Ron DeSantis. So that means there's a potential that in 2024 we could have election-deniers in charge of the machinations of close elections in two pretty swing states.
MARTÍNEZ: You know, Trump has endorsed dozens of candidates, so here's a slice of my sports brain at work here, Domenico. His won-loss record - I mean, what's it looking like, and what could it say about his influence on the GOP?
MONTANARO: Yeah, it's a little more complicated because of incumbencies here. But it's pretty mixed. He's had more success in open races rather than against incumbents, but he's given everyone a run for their money and made them work for it. And as for his influence, it's still - you know, he's still the most important person in the Republican Party. But there appears to be at least some daylight in his grip on the GOP. Republicans still like him a lot but maybe not quite as intensely as when he was in office. And other Republicans are looking to test the waters in 2024. Arkansas Senator Tom Cotton, for example, reportedly gathering donors to take the temperature and see what it would be like for him. Others are making plans for talks in early states. And I do wonder, you know, with the January 6 hearings going on and Trump's conduct in the spotlight, all these Republicans who tried to get him reelected, testifying to his conduct, it's hard to see that not taking some kind of toll on Trump in 2024.
MARTÍNEZ: NPR's Domenico Montanaro. Thanks a lot.
MONTANARO: You're welcome.
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MARTÍNEZ: Concerns about inflation are increasing right along with the prices of gas and food - you know, the stuff most of us need each and every single day.
MARTIN: Yeah. And the Federal Reserve Board is trying to do what it can to fight off a recession, and the No. 1 tool that it has at its disposal is to raise interest rates. The Fed is expected to announce another sharp jump in borrowing costs later today.
MARTÍNEZ: NPR's Scott Horsley is here now. Scott, the Fed's attitude toward interest rates hikes, to me, felt like that proverb - slow and steady wins the race. But now it could be less tortoise, more hare?
SCOTT HORSLEY, BYLINE: A week ago, it seemed like a foregone conclusion that the Fed was going to raise interest rates by another half-percentage point today, just as it did last month and just as it telegraphed it would likely do next month. But now a lot of forecasters are betting the Fed will go bigger than that and raise interest rates by three-quarters of a percent this afternoon. If so, that would be the largest increase since 1994. And of course, it would mean higher borrowing costs for anyone with a credit card balance or looking for a car loan or a new home mortgage.
MARTÍNEZ: Yeah. What's changed, though? I mean, why are we likely to see bigger rate increases?
HORSLEY: A big part of it's that ugly inflation report we got last week. It showed consumer prices up 8.6% in May compared to a year ago. Soaring gasoline prices were a big part of that. But the increase was really broad-based. You know, rents are up. Airfares are climbing. Used car prices are on the rise again. Chief economist Jay Bryson at Wells Fargo says the report dispelled any notion that inflation is going to go quietly without a fight.
JAY BRYSON: The bottom line is it seems like inflation's becoming more entrenched for many people. I think that was the game-changer.
HORSLEY: There's also some survey data suggesting people's expectations of future inflation are creeping up, and that's worrisome because it can become a self-fulfilling prophecy. And finally, The Wall Street Journal and other news outlets published stories on Monday afternoon saying the Fed is likely to consider a larger rate hike. While those stories did not quote any Fed officials, a lot of people saw that as a kind of smoke signal designed to prepare the ground for a larger rate increase.
MARTÍNEZ: All right. Assuming the Fed is doubling down on higher interest rates, how does that help with inflation?
HORSLEY: Well, right now there's just a lot of demand in the U.S. and around the world. People want to buy more than businesses are producing right now, and that's driving up prices as a result. By making it more expensive to borrow money, the Fed hopes to tamp down demand and get prices back under control. Ordinarily, that takes time. But you are beginning to see the effects in the housing market, where mortgage rates have jumped sharply in anticipation of the Fed's moves. Mark Hamrick is a senior economic analyst at Bankrate. He says the average rate on a 30-year fixed loan is now close to 6%. That's double what it was a year ago.
MARK HAMRICK: We're going to see some of the highest mortgage rates that we have seen in many, many years. And along with the high home prices that have been seen all across the country, this housing affordability question is only going to sort of move from the yellow to the red zone.
HORSLEY: That's already starting to weigh on demand for houses, which should translate to lower demand for furniture and appliances and everything else. What's more, we expect the Fed to keep raising interest rates in the months to come.
MARTÍNEZ: Wow. All right. That sounds painful. Is this why a lot of people seem to be worried about a recession?
HORSLEY: Yeah, it's no fun. Businesses are going to find it's more expensive to borrow money and expand. The stock market's taking a hit, which makes people feel less wealthy and less likely to spend. Bryson doesn't think we're necessarily headed for a recession, but he does think the path to avoiding a downturn is pretty narrow.
BRYSON: I think best-case scenario is you're looking at a landing that may be quite bumpy. You're looking at a period of relatively slow growth next year.
HORSLEY: And we'll also get new forecasts from the Fed today about inflation, unemployment and economic growth.
MARTÍNEZ: NPR's Scott Horsley. Thanks a lot.
HORSLEY: You're welcome.
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MARTÍNEZ: As NATO countries begin talks in Brussels, Ukraine is sending a very clear message - more weapons and fast.
MARTIN: Ukraine's military is losing ground to Russia in the heavy fighting east in the country.
MARTÍNEZ: NPR's Greg Myre is in Ukraine's capital, Kyiv, and he discussed this issue with a top adviser to President Volodymyr Zelenskyy. Greg, so tell us why Ukraine says it needs weapons ASAP?
GREG MYRE, BYLINE: Well, the momentum in the war has shifted. Russia has this overwhelming advantage in heavy artillery. It's using this firepower to grind down Ukraine in the eastern part of the country. It's on the verge of capturing another key city, Severodonetsk. And to drive home this message, a senior presidential adviser, Mykhailo Polyak (ph), invited an NPR team into the heavily fortified presidential compound on a hill overlooking the city. And like a lot of people in President Zelenskyy's administration, Polyak is young and informal. He was wearing a black T-shirt that read, fight like Ukrainians. There were several pairs of sneakers next to his desk. So his appearance was very casual, but his message was very, very serious. Ukraine is in a tough spot in - on the battlefield right now.
MARTÍNEZ: All right. So what specifically then is Ukraine looking for?
MYRE: Well, they couldn't be more direct. Polyak himself tweeted out a wish list on Monday. He says Ukraine wants a thousand howitzers, a thousand drones, 500 tanks, and the list goes on from there. And in our talk, here's how he described the Russian advantage on the battlefield.
MYKHAILO POLYAK: (Through interpreter) Now we see that this is truly a war of artillery, and we see that they are shooting by a ratio of 10 or 15 to 1. Again, the math is clear. We will need parity of weapons if we're going to be effective in any sort of counter-offensive.
MARTÍNEZ: All right, so a thousand howitzers, a thousand drones. How doable is that?
MYRE: Well, the U.S. and NATO have been sending weapons that he's asking for, and more are on the way, but they're not coming in nearly these quantities, and there's little chance that they will. Now, Ukraine is speaking out loudly right now because NATO is starting a two-day meeting in Brussels today. U.S. Defense Secretary Lloyd Austin will be there. And this will provide a sense of whether NATO is able and willing to ramp up weapons shipments to Ukraine, above and beyond what member states have already done.
MARTÍNEZ: Any other options for Ukraine if that doesn't work out?
MYRE: Well, not really. Polyak explained that Ukraine is facing a growing problem. Many of its existing weapons, which date to the Soviet era, Ukraine is burning through the ammunition stockpiles. And Russia is pretty much the only country that still makes ammunition for these weapons. So as this war grinds on, Ukraine says that some of these weapons could essentially become useless, and that means they'll have to rely more and more on a modern NATO arsenal. And one final note - as we were about to leave Polyak's office, he stopped and offered us one final message. If you get anything out of this interview, he said, it's weapons, weapons, weapons.
MARTÍNEZ: OK. That's NPR's Greg Myre in Kyiv. Greg, thanks a lot.
MYRE: My pleasure. Transcript provided by NPR, Copyright NPR.