It's decision time for House Republican mods

IN THIS EDITION

GOP moderates make or break moment

Defense world braces for Trump EO

Wittman, Spanberger clash over redistricting in Va. delegation meeting

Tech: Here are a16z’s ideas for Congress on AI

THE TOP

GOP moderates’ make or break moment

Happy Wednesday morning.

There are just three days left for legislating before the House leaves town for the December recess.

With unemployment rising, prices still stubbornly high and health care costs about to soar through the roof for millions of Americans, House Republican moderates are at a crossroads with their own leadership.

House Republicans’ most vulnerable members — several of whom represent districts that President Donald Trump lost in 2024 — view extending the expiring Obamacare enhanced premium tax credits as an absolute political imperative.

But they’re getting nowhere with senior Republicans, especially Speaker Mike Johnson. And conservative hardliners have concerns ranging from cost to limits on abortion coverage.

Here are two things to remember today:

1) Johnson doesn’t want to extend the ACA enhanced premium tax credits. At all. He’s very much opposed to them. In fact, the entire House Republican leadership would like these subsidies to expire, believing that Democrats are to blame for everything wrong with health care. GOP leaders say their bill, a relatively limited package, should absolve rank-and-file Republicans of any blame for the rising cost of health care.

2) House Republican moderates feel like they need to do something drastic to ensure that the chamber holds a vote on extending the tax credits.

The House Rules Committee, which Johnson nominally controls, rejected a trio of amendments from moderates to the GOP health care bill Tuesday night. These amendments would have, in different ways, extended the Obamacare subsidies.

This came after a days long back-and-forth between Johnson and Reps. Brian Fitzpatrick (R-Pa.), Mike Lawler (R-N.Y.), Jen Kiggans (R-Va.) and David Valadao (R-Calif.). Johnson and other senior House Republicans pushed for the moderates to offset the cost of proposals, but they balked at this idea. In private meetings, Johnson also relayed concern about moving forward without abortion funding restrictions.

What’s abundantly clear is that there’s no way for the GOP leadership to bridge its differences with the moderate Republicans. This leaves the moderates on the brink of a major decision. They appear to have just two options left.

These centrist members can sign onto House Minority Leader Hakeem Jeffries’ discharge petition for a three-year clean extension of the subsidies. Or they can return home empty-handed as the Dec. 31 deadline approaches and health care premiums spike for millions of Americans. They don’t feel like they have any good choices.

“The only thing worse than a clean extension without any income limits and any reforms — because it’s not a perfect system — the only thing worse than that would be expiration,” Fitzpatrick said at the Rules Committee meeting Tuesday night. “And I would make that decision.”

After a group of the moderates left Rules — where their amendments were ruled out of order — a handful of them told Fitzpatrick they’ll likely follow his lead in deciding what to do next. Fitzpatrick had a conversation with the House GOP leadership Tuesday night and will make his decision this morning.

It would take only four House Republicans to put Jeffries’ discharge petition over the 218-signature threshold and guarantee a January floor vote.

The Republicans to watch include Fitzpatrick, Lawler, Valadao, Kiggans, Pennsylvania Reps. Rob Bresnahan and Ryan Mackenzie, and Rep. Marjorie Taylor Greene (Ga.). Greene is leaving Congress in early January and is hammering Johnson on her way out the door.

The fallout. In many respects, the GOP moderates feel as if they’ve been knocked around by their own leadership all year. All of them except Fitzpatrick voted for the One Big Beautiful Bill, which included hundreds of billions of dollars in cuts to Medicaid that they staunchly opposed.

Moderates have been forced to vote on an endless parade of hardline conservative messaging bills. And now when these members need a policy win, they aren’t able to secure one from Johnson and party leaders.

The negotiations have only further escalated frustrations inside the GOP conference, which was clear from a tense closed-door lunch with Johnson and Republican Governance Group members Tuesday.

Following the RG2 lunch, there was an attempt to circumvent the core group of moderates. Several other Republicans floated taking over an amendment with Fitzpatrick’s text and newly-added offsets. The House GOP leadership was ready to support these efforts and accept them as a deal. Fitzpatrick objected.

The big picture. Since the end of the government shutdown last month — including Johnson’s stunning decision to keep the House out of session for nearly two months — the chamber has been in a wild, chaotic state.

Members are fed up with top-down decision-making, especially on the GOP side, as evidenced by the explosion in discharge petitions and intra-party brawls.

In fact, this is a pivotal moment for Trump and the GOP in the 2026 cycle.

Republicans were crushed in the November special elections, with the American people losing trust in Trump’s handling of the economy. Inflation and unemployment are slowly rising. It’s taking longer for Americans to find jobs when they’re out of work. Consumer confidence is tumbling.

Now factor in a bumbling, unpopular GOP-run Congress that’s doing nothing — even worse, voting to do nothing — while health-care premiums soar for millions of Americans. This has the makings of a very rough election year for the endangered House Republican majority.

— Jake Sherman, Laura Weiss and John Bresnahan

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DEFENSE

Defense world braces for Trump EO

The White House is prepping an executive order with potentially widespread implications for the defense contracting sector — and we’re getting our first sense of how it’s playing.

As we scooped, the evolving order could limit stock buybacks, dividends and executive compensation for military contractors, multiple sources told us.

The executive order is the latest effort by the Trump administration to challenge the generational dominance of the defense prime contractors, the biggest beneficiaries of nearly $1 trillion in annual defense spending.

But some worry that such an executive order could have a chilling effect on investments in the broader defense industrial base.

“The fear is the investors are going to leave the industry, the value of the companies is going to go down, and it’s going to be harder for them to get capital in the future,” an industry official told us. “It’s not clear how they do this.”

The push comes as the Trump administration and the Pentagon in particular have put public pressure on longstanding defense primes. DOD officials have also prompted those companies to invest more of their own internal dollars into research and development work before receiving money from the government.

On the Hill, lawmakers have set their sights on how the defense industry does business — most notably through the annual defense policy bill, which is slated to clear the Senate this week and then head to President Donald Trump’s desk.

More news. Sen. Elizabeth Warren (D-Mass.) and Rep. Chris Deluzio (D-Pa.) sent a letter to Treasury Secretary Scott Bessent late Tuesday asking whether he stands by his comments in October about limiting defense contractor stock buybacks. The two Democrats also questioned whether Bessent would support inclusion of that sort of language in national security contracts.

“Americans deserve a defense industry that prioritizes innovation and competition to help the U.S. military protect Americans, rather than one focused on shoveling more money out the door for shareholders and executives,” the Democrats wrote. The two added they “look forward to a potential partnership” with the Trump administration on the issue.

The NDAA includes language to overhaul the Pentagon’s onerous approach to buying weapons and encourages the use of faster-moving contracting tools to work with smaller companies.

Those changes, backers say, are provisions that could ultimately help improve the performance of defense businesses broadly, including the on-time and on-budget delivery of weapon systems.

“As you open the window for those companies, I think what we’ll find is that all the other issues of efficiency, performance on contracts, is going to get much better because the wider you open the aperture, the more people that you involve, the better off you are,” Rep. Rob Wittman (R-Va.) told us.

But in a setback for Hill advocates, the final NDAA didn’t include a bipartisan, bicameral provision that would have given service members the right to repair their own equipment. That language, included in both the original House and Senate versions of the bill, was rolled back amid staunch opposition.

– Briana Reilly and Anthony Adragna

REDISTRICTING WARS

Wittman, Spanberger clash over redistricting in Va. delegation meeting

News: Rep. Rob Wittman (R-Va.) confronted Virginia Democratic Gov.-elect Abigail Spanberger on Tuesday in a tense exchange over Virginia Democrats’ mid-decade redistricting plans, per multiple sources in the room. Democrats are hoping to pick up three or more House seats in Virginia next year to counter the GOP redistricting push nationally.

Wittman’s comments came during a monthly Virginia delegation meeting, which the governor-elect joined ahead of a statue unveiling ceremony of civil rights icon Barbara Johns in the Capitol. Wittman gave opening remarks and centered them on redistricting, declaring Virginia “was not” a 10D-1R state.

Wittman’s 1st District is a top target for Democrats, along with seats held by GOP Reps. Jen Kiggans and John McGuire. Democrats in the Virginia legislature are pushing to amend the state constitution to allow them to disregard the state’s independent redistricting commission and redraw the map.

At one point, Wittman read out loud Spanberger’s previous comments in support of the commission enacted in 2020. Wittman asked Spanberger if she still felt that way.

The Virginia legislature was only working to sidestep the commission because Republicans were gerrymandering in red states, Spanberger countered, noting that voters — not her — will decide whether Virginia redistricts. Voters will have to OK the legislature’s push to redraw the map mid-decade under state law.

After Wittman claimed Virginia is best represented by its current 6D-5R delegation, Spanberger pointed out that she won eight of the state’s 11 districts during her blowout victory last month. Spanberger carried Wittman’s and Kiggans’ districts in addition to the six Democratic-held seats.

Democrats also said that prior to the commission, Republicans didn’t hesitate to gerrymander the map when they controlled the legislature.

“I did challenge Gov.-Elect Spanberger’s unconstitutional effort to revive partisan gerrymandering in Virginia,” Wittman said in a statement. “The people overwhelmingly adopted independent redistricting in 2020, and I firmly believe that is still what is best for our commonwealth.”

Moving forward. Virginia Democrats in D.C. and Richmond have been flirting with the idea of a 10D-1R map. Democrats have few states where they can offset Republican gerrymandering and they are counting on Virginia.

But not every Democrat in the state believes 10-1 is feasible. Some prefer a 9-2 split, which would still be a three-seat gain from the current makeup.

Spanberger cautioned that a 10-1 map might spread voters too thin and create swing districts that Democrats could lose.

The governor-elect also said it would be more transparent to present a proposed map to voters before they decide on the referendum, per sources in the room. This has been another point of discussion among Virginia Democrats.

The rest of the meeting was cordial and touched on other issues. While Rep. Ben Cline (R-Va.) expressed his opposition to redistricting, he also praised Spanberger for her pick of the state’s next agriculture secretary.

The state’s two Democratic senators attended, as well as the House Democrats in the delegation. Only Cline, Wittman and McGuire attended for Republicans.

– John Bresnahan and Ally Mutnick

Tech: Here are a16z’s ideas for Congress on AI

Andreessen Horowitz is laying out a framework on Wednesday that it wants Congress to take up for artificial intelligence, including ideas on protecting kids and preserving a role for states despite the federal approach.

The nine pillars come as Congress has failed twice this year to preempt state regulation of AI. President Donald Trump also signed an order last week that could yank broadband funding from states with “onerous” AI laws.

The AI and venture industries have been eager to avoid varying state regulations. The failures in Congress, however, have highlighted the political need to go beyond preemption and put in place national policies that address concerns around AI.

“We wanted to be able to crystallize this into one living document that I think could help lawmakers,” said Collin McCune, head of government affairs at a16z.

Kids and teens. The framework says kids under 13 shouldn’t be able to use AI without their parents’ say-so, but the document warns against stopping 13 to 17 year olds from using all algorithmic tools.

Rather, if services know their users are in that latter age bracket, parents should use controls like “the ability to set privacy and content settings” or the power “to impose usage limits or blackout hours.” The teens should also get reminders that the AI isn’t human or a licensed professional.

AI tools should be required to have plans in place for when teens under 18 discuss wanting to harm or kill themselves. Those plans must include refusing to facilitate self-harm and referring users to crisis resources.

States and risks. The proposal from a16z suggests that, even with preemption, states should still be allowed to enforce their laws on harmful AI “in areas like consumer protection, civil rights, children’s safety and mental health.” That’s a wider lane for states than some Republicans hope to see.

The policy framework suggests AI models offer users visibility into who built the systems, their intended use and other information. States such as California and Colorado mandate further-reaching disclosures into areas like risk assessments.

Another pillar suggests testing to lessen AI’s “ability to evade human control” and to make sure AI doesn’t facilitate chemical, biological, radiological or nuclear attacks.

Other pillars of the framework involve supporting workers, using AI “to modernize government service delivery” and investing in infrastructure and research.

In discussing the framework, McCune, one of its authors, rejected the wide perception that a16z wanted preemption without standards. He noted the firm had pushed out some of the ideas now in the framework starting almost a year ago.

“The thing that I think everyone agrees on is we need bills,” McCune said.

— Ben Brody

DOWNTOWN DOWNLOAD

Megan Hannigan is heading to FS Vector to serve as managing principal. Hannigan previously served as deputy chief of staff to Rep. Greg Meeks (D-N.Y.) and worked for PayPal.

— Brendan Pedersen

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