Current Affairs Of Pakistan & World: Inflation keeps squeezing GOP

Inflation keeps squeezing GOP

Sep 11, 2026

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THE CATCH-UP

Kevin Hassett, director of the White House National Economic Council, speaks to reporters outside the White House, Friday, Aug. 7, 2026, in Washington. (AP Photo/Mark Schiefelbein)

“I’m not gonna second-guess the move that they may or may not make,” National Economic Council Director Kevin Hassett said of the Fed. | Mark Schiefelbein/AP

INFLATION NATION: The economic picture for Americans — and Republicans’ political prospects — keeps looking cloudy.

Today’s Consumer Price Index report showed prices in August rose 3.4 percent year over year, coming in roughly in line with economists’ predictions but staying stubbornly elevated during the Iran war. Prices were up 0.4 percent from July, including a higher-than-expected boost in “core inflation.”

The upshot is that two months out from an election in which the economy and cost of living consistently top voters’ list of priorities, the pressure on many working- and middle-class Americans hasn’t abated. (NYT’s Ben Casselman and Edison Wu have a useful clicker on the impact of sticker shock in recent years.)

Higher inflation was fueled in part by rising gas prices, one of the most visible manifestations of the war’s economic impact. But it’s also more broad-based, as high costs filter down through many other sectors of the economy.

Crucially, wage growth in August came in at 3.1 percent — the fifth-consecutive month that inflation rose faster than salaries and Americans effectively saw their real income diminished.

And inflation isn’t today’s only downbeat headline number. The latest consumer sentiment gauge from the University of Michigan dropped to one of its lowest levels ever, as consumers sour on gas prices, tariffs and the expectation that inflation will keep ticking up. And national diesel prices hit a record high, pushing past the $6-a-gallon mark. Nonetheless, oil prices eased a bit today, as the U.S. steadily works to pry more exports out of the Persian Gulf, AP’s Joseph Krauss reports.

As the last big indicator to come in ahead of the Fed meeting Tuesday and Wednesday, the CPI report makes it likelier the central bank will spring for the action President Donald Trump adamantly opposes: raising interest rates for the first time since 2023. The markets reacted accordingly, judging the odds of a rate hike to have risen from about 70 percent to 85 percent, especially as the labor market looks stronger lately.

The need to rein in inflation could spur the Fed to crank rates higher — but if so, policymakers would do so despite Trump’s desire for Chair Kevin Warsh to lower rates, POLITICO’s Victoria Guida writes. What’s more, the Fed is often loath to make changes so close to an election for fear of looking political. It’s a consequential moment for Warsh.

For now, the administration is giving the chair some breathing room, even while reiterating that Trump would like lower rates.

“I’m not gonna second-guess the move that they may or may not make,” National Economic Council Director Kevin Hassett told Bloomberg.

And in the meantime, Trump officials are pressing ahead with economic ideas of their own — chiefly the new idea to send $5,000 checks to every American if Republicans win the midterms, which Hassett insisted is “a serious proposal” and can be achieved “in a fiscally responsible way,” perhaps through reconciliation.

What could pay for the trillion-dollar expenditure? Hassett didn’t get into specifics. Commerce Secretary Howard Lutnick told NBC it wouldn’t come from taxpayers, instead floating revenue from the Trump Platinum Card for wealthy foreigners and the U.S. investment in Intel.

Good Friday afternoon. Thanks for reading Playbook PM. Drop me a line at eokun@politico.com.

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7 THINGS YOU NEED TO KNOW

1. 25 YEARS LATER: The nation and its leaders today commemorated a quarter-century since the Sept. 11 terrorist attacks, with ceremonies in NYC and Virginia. At the Pentagon, Trump and Defense Secretary Pete Hegseth kept many of their remarks fairly somber, with the president recalling both that day’s “terrible power of hate” and “the even greater power of the American spirit to endure and prevail and to win.” Trump told stories of the victims’ families.

Trump and Hegseth did also get a little political, drawing a direct line from 9/11 to their Iran war, which they cast as an existential fight to prevent Tehran from getting a nuclear weapon, per POLITICO’s Ben Johansen. “The struggle against evil continued and it continues now,” Hegseth said.

“We will never ever forget,” Trump added. “That’s why we fight today.”

The policy fallout: The Office of the Director of National Intelligence was created in the wake of Sept. 11, but these days, some former officials and experts question whether it’s still meeting its goals or oriented correctly toward modern threats, NBC’s Dan De Luce reports. Some raise the prospect that the agency should be scrapped altogether.

2. BIG MONEY: Republican super PACs are going all in on saving Texas AG Ken Paxton in the Senate race. The latest splash is a new group, the Texas PAC, formed by the Senate GOP-aligned Senate Leadership Fund, which kicks off a huge eight-figure ad spend for Paxton today, Fox News’ Alex Miller and Paul Steinhauser scooped. As Paxton trails state Rep. James Talarico in fundraising and polls, the outside air support could be pivotal: The new ads already total some $13.8 million in the media markets for the state’s three biggest cities. The PAC ultimately plans to shell out more than $50 million for Paxton, per Punchbowl’s Jake Sherman.

3. THE DATA CENTERS: The Interior Department is forging ahead with an effort to develop public lands for data centers, The Washington Sun’s Eric Katz and Mara Hoplamazian scooped. The Bureau of Land Management has put together lists of possible sites, though logistical hurdles remain (including the loss of tons of agency staff).

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4. COMING NEXT WEEK: The political backlash to data centers is brewing, of course, and House leadership has now tabbed Ratepayer Protection Act for a vote Tuesday, when it’ll need two-thirds support to pass, per POLITICO’s Kelsey Brugger and Nico Portuondo. The House will also take up the Russia sanctions bill next week, per POLITICO’s Gigi Ewing.

5. TACO BELL, REJOICE! “Feds declare record-setting cyclospora outbreak over,” by POLITICO’s Marcia Brown: “The CDC made the announcement in a food safety alert, citing a significant decline in the number of recent infections and noting the product linked to the outbreak — shredded iceberg lettuce imported from Mexico by Taylor Farms — is no longer available in stores and restaurants.”

6. DOWN-BALLOT DIGEST: Control of the Michigan state legislature is up for grabs in November, NYT’s David Chen reports. Democrats expect Trump will be a drag on GOP candidates, but Republicans hope Abdul El-Sayed will be the same for his fellow Democrats in swing districts. And even in what’s expected to be a blue year nationally, Michigan Dems have to contend with the fact that a frustrated electorate will see them as the local incumbents.

7. ON THE WORLD STAGE: Under pressure from the U.S., the International Criminal Court faces threats to its future from a number of recent departures, AP’s Molly Quell reports from The Hague, Netherlands. The latest decisions by Chad and Venezuela to quit the international body are the fourth and fifth withdrawals over the past year. The State Department is thrilled its pressure campaign is bearing fruit, as the Trump administration agitates against the court that prosecutes the world’s worst crimes.

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TALK OF THE TOWN

FIRST IN PLAYBOOK — HHS today cancelled two multimillion-dollar contracts it gave this year to Foley Hoag, which represents numerous clients suing the Trump administration, POLITICO’s Daniel Lippman reports.

In June, HHS awarded a contract worth up to $12 million to Foley Hoag for legal services for the Centers for Medicare and Medicaid Services, according to USASpending.gov. Contracting data shows that $5.9 million of that contract has already been “obligated,” or legally promised, to the firm. In May, HHS also awarded a contract worth up to $9.1 million to the firm for “legal support for CMS drug pricing initiatives” and $4.4 million has already been obligated.

HHS is the only Cabinet agency that has had contracts with the firm during the Trump administration during the Trump administration.

When asked about the contracts, an HHS spokesperson said in a statement to POLITICO: “HHS does not have any existing contracts with Foley Hoag.” A spokesperson for the firm didn’t immediately respond to a request for comment.

Foley Hoag is representing the National Trust for Historic Preservation as it sues the Trump administration over the White House ballroom and for a group of cultural organizations that is suing to prevent the Kennedy Center from being physically altered without a required public review. It also has represented Power Forward Communities to sue the EPA about canceling a $2 billion clean energy grant, worked to get bond hearings for immigrants arrested by ICE, and helped Human Rights Watch and other groups in suing the Trump administration over its efforts against the International Criminal Court.

IN MEMORIAM — “Remembering Roger Simon, a political journalist with toughness and wit,” by WaPo’s Dan Balz: “He scooped up dozens of awards and twice won the American Society of Newspaper Editors’ Distinguished Writing Award for commentary. … He wrote for several publications from Washington, among them the Chicago Tribune. … Roger was one of the first people to join Politico as it was starting up and was instrumental in giving that publication its voice and early validation. He became their chief political columnist and stayed there until he decided to retire in early 2017.”

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PLAYBOOK METRO SECTION — “As immigration status for Salvadorans remains in limbo, businesses begin layoffs,” by WaPo’s Lauren Kaori Gurley and Liam Bowman: “Salvadoran workers who clean and maintain federal buildings and grounds in the D.C. region, including the Pentagon and military bases, received notices not to show up for work on Thursday. Restaurants, hospitals and construction firms laid off workers, including on a data center project. And families listed their homes for sale, moved savings accounts out of the country and asked relatives to take in their children.”

OUT AND ABOUT — The Daily Wire took over the Hero sports bar this week at Republicans’ midterm convention in Dallas, dubbing it “BaRNC” for programming and drinks. Among their events, Clay Travis, whose new sports venture Sport and State will be syndicated by the Daily Wire, was interviewed by Ben Shapiro. And Agriculture Secretary Brooke Rollins and HHS Secretary Robert F. Kennedy Jr. joined for a health panel. Also SPOTTED: Rep. Mike Bost (R-Ill.), Scott Jennings, Ben Smith, Johanna Persing, Jessica Reed Kraus, Ben Domemech, Isabel Brown, Xaviaer DuRousseau, Nick Sortor, Matt Whitlock, Kara Voght, Jesús Rodríguez, Aidan McLaughlin, Cam Higby, Tim Rice, Alexa Henning, Roma Daravi, Matt Foldi, Colton Snedecor, Matt McDonald, Dana and Chris Loesch, Chloe Trapanotto, Jesse Binnall, Joe Mazzara, Dominique Yelinski, Jeanne Moran, Brecca Stoll, Brent and Cassie Scher, Benyam Capel, Billy Binion, Mary Margaret Olohan and Sean Spicer.

MEDIA MOVE — David Lim is now a health care reporter at Semafor. He previously worked at POLITICO.

TRANSITION — Isabelle Gwozdz is now VP at H/Advisors. She previously worked at Justworks and is a British Embassy and Kevin Brady alum.

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Send Playbookers tips to playbook@politico.com or text us on Signal here. Playbook couldn’t happen without our editor Giuseppe Macri and deputy editor Garrett Ross.

Correction: Yesterday’s Playbook PM misstated Paige Willey’s previous employment. She previously worked for National Economic Council Director Kevin Hassett.

Spencer Cox on America’s political divide

In the latest episode of On the Road, Jonathan Martin sits down with Utah Gov. Spencer Cox to discuss his new book, Off Ramp, the future of the Republican Party, immigration reform and what he says it will take to rebuild trust and community in American life.

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