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July 12, 2023
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PRESENTED BY
THE TOP
Happy Wednesday morning.
VILNIUS, Lithuania — Republican defense hawks got rolled in the recent debt-limit deal. This week, they began to hit back.
The occasion of the annual NATO summit here gave GOP senators a prime opportunity to make the case for a bigger defense budget — one that seeks to meet President Joe Biden’s stated goal of a long-term security guarantee for Ukraine even as the brutal war with Russia continues.
“We provide arms to Ukraine’s soldiers so that they fight the Russians and we don’t have to. That’s a key message that we need to continue to get out to the American public,” freshman Sen. Pete Ricketts (R-Neb.) said in an interview here. “When people express skepticism about the money we’re spending… including some of my constituents… folks here on the other side of the Atlantic start to get nervous.”
Indeed, as NATO members are set to approve a historic commitment for Ukraine later today — albeit one that falls short of full membership — conservatives back home are ramping up calls to cut back on funding for Kyiv.
Rep. Marjorie Taylor Greene (R-Ga.) offered several amendments to the FY2024 defense authorization bill that would reduce or even cut off U.S. funding for Ukraine. Other Republicans want to impose additional oversight and restrictions on American aid.
Speaker Kevin McCarthy has voiced support for Ukraine but he’s also signaled that he won’t approve a standalone supplemental aid package just for the embattled country. McCarthy wants any new Ukraine money to go through the regular appropriations process, and he doesn’t support an increase in the topline defense number.
And a group of Senate conservatives, led by Sen. Josh Hawley (R-Mo.), wrote to Defense Secretary Lloyd Austin on Tuesday about the Pentagon’s $6 billion accounting error when valuing weapons transfers to Ukraine. The GOP senators accused the Biden administration of seeking to “bypass Congress for additional funds, while continuing to prioritize Ukraine over more vital U.S. interests, including deterring China in the Pacific.”
Yet the message on the other side of the Atlantic couldn’t be more different. The Republican side of the congressional delegation, led by Sen. Thom Tillis of North Carolina, was adamant that Congress will be able to continue funding Ukraine’s military for as long as it takes to expel Russia from its territory.
“The discussions we’ve had this week give me a lot of optimism that we’ll be able to go back, build a case and have strong bipartisan long-term support, which is something Putin can’t afford,” Tillis said. “This is a strategic opportunity for us to show that we’re invested in increasing NATO capabilities.”
For many Republicans, that starts with encouraging other members of NATO to meet the alliance’s defense spending requirement of 2% of GDP. Sen. Dan Sullivan (R-Alaska) told us that while the “most immediate priority” is maintaining U.S. aid for Ukraine, that effort could be “undermined” if the majority of NATO members continue to fall below the 2% threshold.
“There’s a growing view in the United States that we shouldn’t have new members until the current members all meet the commitment of the 2% target,” Sullivan said in an interview here, nodding to concerns about the United States bearing the brunt of the alliance’s defense capabilities.
Back in Washington, Senate Minority Leader Mitch McConnell bolstered that message.
“NATO is making progress toward rebuilding the hard power many allies allowed to atrophy,” McConnell said. “Our allies are making progress toward spending 2% of GDP on defense.”
NDAA Fight: After 11 hours of internal GOP clashes over controversial amendments to the annual defense authorization package, the House Rules Committee late Tuesday night approved a bifurcated rule that will give Republicans more time to figure out how to handle a number of controversial amendments.
Basically, McCarthy and GOP leaders have stalled until they can figure out what kind of deals are possible with their own rank-and-file. The scheduled floor vote today on the NDAA rule will only cover non-controversial amendments. Then Republicans will have to go back to the Rules Committee to pass a second NDAA rule for the more divisive amendments.
House Freedom Caucus members have threatened to take down any rule — and the must-pass NDAA package — unless they’re allowed to offer provisions on abortion, DEI (diversity, equity and inclusion) funding, critical race theory, climate change, transgender issues and drag shows, and Ukraine aid, among others.
Democrats mocked the GOP infighting, arguing that by pandering to conservatives on culture war issues, McCarthy and senior Republicans are costing themselves any chance of bipartisan support. It will also make negotiations with the Senate and White House more difficult.
“I would be remiss if I didn’t say that we are here at 11 p.m. because once again, Republicans are fighting with Republicans in a back room about how to make what should have been a bipartisan bill into a hyper-partisan bill,” complained Rep. Jim McGovern (Mass.), the top Democrat on Rules, following the late-night vote.
McCarthy and the GOP leadership want to pass the NDAA by Friday. Yet Freedom Caucus Chair Scott Perry (R-Pa.) said it’s more important to get the bill right than to rush it through the House. That may even include extending the debate past the August recess.
“I want it to be right,” Perry told us. “I don’t care when it passes. It needs to pass timely, but we have until November or whatever. We don’t have to do it now. It needs to be correct.”
— Andrew Desiderio, John Bresnahan and Mica Soellner
Correction: We incorrectly reported in our PM edition that Rep. Ronny Jackson (R-Texas) is a member of the House Freedom Caucus.
Next week! Punchbowl News founder and CEO Anna Palmer will discuss the race to protect and modernize the national supply chain with leaders of the House China Select Committee, Reps. Mike Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.), on Thursday, July 20 at 12 p.m. ET. RSVP here! Please note, a lawmaker has been added to this panel discussion.
Republican bellwether mulls flipped vote on Fed nom
The last time the Senate considered the nomination of Lisa Cook to be a Federal Reserve governor, Democrats had to overcome total Republican opposition. Vice President Kamala Harris cast the deciding vote in May 2022 that made Cook the first Black woman to serve on the Fed’s board.
Flash forward a little more than a year — as the Senate now considers Cook for a full 14-year term — and it appears the Republican wall is beginning to crack.
Sen. Mike Rounds (R-S.D.), a senior member of the Senate Banking Committee, told us this week he was “considering” a yes vote for Cook after voting against her just last year.
“[Cook] has proven that she has made some good decisions, so I think it’s worth a second look,” Rounds said.
The Senate Banking Committee meets this afternoon to vote on moving the nominations of Cook and two other Fed nominees to the floor — Philip Jefferson, originally nominated in 2022 and was renominated this year to serve as the Fed’s vice chair; and Adriana Kugler, a new nominee for the Fed’s board who currently serves as the U.S. executive director of the World Bank.
More from Rounds:
This isn’t a make-or-break development for Cook getting through the committee or confirmed on the floor. Senate Banking Committee Chair Sherrod Brown (D-Ohio) told us last night of the three Fed nominees: “We’re going to confirm them.”
But this is still the kind of bipartisan display plenty of folks in the Biden administration crave.
Rounds was already supportive of Jefferson, and he remains undecided on Kugler.
It’s not clear yet whether other Republicans could join Rounds and support Cook or even Kugler. Most Senate Banking Republicans we asked this week, including Sens. Mike Crapo (R-Idaho) and Steve Daines (R-Mont.), told us they were leaning toward a “no” vote. Others like Sens. J.D. Vance (R-Ohio) and John Kennedy (R-La.), said they were undecided.
A lack of hard opposition is probably as positive a sign as any for these nominees. That’s how Sen. Bob Mendendez (D-N.J.) is taking it, anyway, particularly for Kugler, whom he has championed to be the Fed’s first Hispanic governor.
“I’m hoping. I’ve spoken to a few of my colleagues,” Menendez told us. “They say they’re seriously considering. I hope they will do so.”
Meanwhile, in crypto news: Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) will reintroduce a major piece of crypto legislation today.
The Responsible Financial Innovation Act has undergone some meaty revisions since its introduction last summer, including bulked up consumer protections and a narrower definition of a “decentralized” crypto exchange. Here’s a document outlining the changes.
Of note: there are new anti-money laundering provisions partially inspired by an effort from Sens. Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.). The package would also create a self-regulatory organization for crypto similar to FINRA.
— Brendan Pedersen and John Bresnahan
OVERSIGHT WATCH
Wray prepares to enter the lion’s den
Republicans on the House Judiciary Committee will have ample opportunity today to grill one of their favorite targets, FBI Director Christopher Wray, as part of a regularly scheduled oversight hearing.
It’s been a rough stretch for the FBI. House Judiciary Committee Chair Jim Jordan (R-Ohio) has made the bureau a prime target in his vendetta against the “weaponized federal government.” Exhibit A is a letter Jordan sent to House Appropriations Committee Chair Kay Granger (R-Texas) on Tuesday.
In that missive, Jordan recommended “that the appropriations bills eliminate any funding for the FBI that is not absolutely essential for the agency to execute its mission.”
Jordan also proposed denying any funding for the FBI to build a new headquarters in the Washington, D.C., area. Instead, Jordan wants the FBI to study whether they could base their new headquarters in Huntsville, Ala.
These two proposals face very little chance of becoming law. But they’re a sign of just how hostile a Republican audience Wray will face today.
“This is the FBI that was investigating 25 parents that showed up to school board hearings as terrorists,” Jordan told us. “This is the FBI that put up a memorandum in the Richmond office saying that Catholics are extremists. This is the FBI that the judge found was censoring Americans. This is the FBI that’s retaliated against whistleblowers. And they want a new headquarters, they want FISA reauthorized.”
Judiciary Republicans are likely to deploy a wide range of rhetorical attacks against the FBI director. Here’s a taste of some of the flashpoints:
| → | The FBI’s handling of a confidential human source who reported an unverified tip that Joe Biden accepted a bribe when he was vice president. House Republicans came close to initiating contempt of Congress proceedings against Wray over the bureau’s unwillingness to hand over an internal document. |
| → | The FBI’s investigations into local Catholic churches and parents who threatened school board officials. |
| → | Allegations of political bias in the bureau as detailed in special counsel John Durham’s report. |
| → | The FBI’s treatment of whistleblowers. |
| → | The FBI’s raid on Mar-a-Lago and the federal indictment of former President Donald Trump over mishandling of classified documents and obstruction of justice. |
| → | Alleged abuses of the FISA program. |
And there’s much more which will likely be touched on. “I think a lot of people are going to talk about a lot of things that have caused the trust gap,” Rep. Andy Biggs (R-Ariz.), a Freedom Caucus member who sits on Judiciary told us.
How will Wray seek to respond? According to an excerpt of the director’s opening statement, Wray will aim to reframe the conversation “beyond the one or two investigations that seem to capture all the headlines.” Instead, Wray will laud the 38,000 FBI agents who work to combat violent gang crime, cartels trafficking fentanyl and the Chinese Communist Party.
Wray is also expected to make a case against Jordan’s push to cut funding for the bureau.
In ranking member Jerry Nadler’s (R-N.Y.) opening statement, the panel’s top Democrat will decry the hearing as “little more than performance art” to “protect Donald Trump from the consequences of his actions, and to return him to the White House in the next election.”
“We’ll keep pushing back and trying to make sure that the wrong message doesn’t go out,” Rep. Glenn Ivey (D-Md.) told us. “Because, you know, these international terrorists and foreign countries, they’re listening to what these Republicans are saying right now. And it’s just damaging for the country.”
— Max Cohen
THE CAMPAIGN
McCarthy raises a massive $21.7 million in Q2
Speaker Kevin McCarthy raised $21.7 million during the second quarter, bringing his total amount raised this cycle to more $62 million. McCarthy has transferred $17.6 million to the NRCC and sent $8.3 million to GOP incumbents.
These are seriously large numbers, but it’s what House Republicans have come to expect from McCarthy, an extremely strong fundraiser. McCarthy has been pulling in more than $2 million per week since he became speaker in January. The California Republican is also far ahead of his pace from last cycle, when he took in $51 million during the first six months of 2021.
West Virginia Gov. Jim Justice, who is seeking the Senate GOP nomination to take on Democratic Sen. Joe Manchin next year, has raised more than $935,000 since jumping into the race two months ago. Justice has more than $800,000 cash on hand.
Rep. Young Kim (R-Calif.) raised $1.1 million in Q2 2023. This is an impressive haul for a Republican in a district that President Joe Biden won in 2020.
Winning For Women Action Fund, the GOP initiative that aims to elect female candidates, raised $2.3 million in the second quarter along with its related groups.
— Max Cohen, Jake Sherman and John Bresnahan
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