This week in Bidenomics: Downfall

Rick Newman on why the debacle in Afghanistan threatens President Biden's agenda stateside.

Video transcript

- Well, we want to turn now to politics, and specifically this week in Bidenomics with Yahoo Finance's own reporter Rick Newman. And Rick, with the Afghanistan crisis, this has been a trying week for the Biden administration. We've seen Biden's approval ratings plunge on the back of this. What's your assessment of how this has been handled and what it means for this administration now going forward?

RICK NEWMAN: It's the worst week of Joe Biden's presidency so far. His administration apparently just did not see it coming that when they withdrew US troops from Afghanistan, the Taliban would take over in record time. And Kabul fell. And Biden himself didn't see it coming. So he's been on the defensive all week. As you mentioned, his approval rating is down.

So I think the real question is, how does this affect what he's able to get done for the next several months? And from a financial perspective and economic, that includes legislation in Congress, the bipartisan infrastructure bill that's passed the Senate and now has to get through the House, then that big reconciliation bill with all kinds of democratic priorities in it, possibly $3 trillion in spending or more.

I've seen it both ways. I've seen some analysts arguing that Afghanistan has drained political capital from President Biden's account. And it's going to make him harder to get things done in Congress in part because we're going to have hearings going into the fall, what the heck happened? Was there an intelligence failure? Why did it turn out the way it did this withdrawal?

And then I've seen others say, we don't think anything has materially changed. We think there's a pretty reasonable chance that at least those two legislative priorities will happen. But I think it really depends on what happens during the next couple of weeks as we finish this withdrawal from Afghanistan. There are still things that could go wrong. There could be a terrorist incident, there could be something unforeseen, an accident, a plane crash. So I think it really depends what happens in the next few weeks. And that's going to matter.

- Will he lose his base? Will the democrats, and I'm talking the moderates, will they see their political fortunes in saying, no thank you, Mr. President?

RICK NEWMAN: Well let's say things go relatively smoothly from here on out. And Adam, let's say a month from now, US troops are all fully out. Yes, the Taliban has control but there are no Americans left there. And it really becomes a foreign problem instead of a domestic one. Then I think Biden stabilizes. We could see his approval rating go back over 50%. This type of thing does not necessarily drag down presidents as long as there's kind of a one time stumble and he recovers.

So if that's what happens, I think Biden holds his party together. And I think he gets the legislation passed. Let's also notice there have been a few wobbles in the economy this week. We saw retail sales unexpectedly go down. Consumer confidence is at the lowest level in 10 years. That's related to the Delta variant of the coronavirus. So that needs to get resolved too. I mean, that matters to everybody. And we just had some of the stock market analysts talking about why that matters for financial markets as well. We got to get over the Delta variant and any variants that come next.

- With regard to Afghanistan, what do you think are the main points of criticism and concern that Biden needs to be addressing in the coming days and weeks?

RICK NEWMAN: Americans support the withdrawal of US troops from Afghanistan after 20 years there. So Biden, in terms of the policy, Biden he's on the right side of voters. It's that he looked like he didn't know what he was doing this week. And I think that's the real political problem for Biden. I mean, remember, I think it was just barely a month ago he said he did not foresee a swift takeover by the Taliban. So he was dead wrong a month ago. And he looked ineffectual right now.

So Biden needs to over time reassure voters that his administration knows what's going on and that he himself has a grasp of what these issues are and that he's not going to get thrown for a total surprise on something that could be even more important relating to let's say China or Russia.

- All right, Yahoo Finance's Rick Newman. Thanks so much for breaking that down for us.