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October 31, 2023
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PRESENTED BY
THE TOP
Happy Tuesday and Happy Halloween.
Speaker Mike Johnson’s decision to seek spending cuts in exchange for $14 billion in new aid for Israel made it easy for Democrats to reject him out-of-hand. But it’s about to make Senate Minority Leader Mitch McConnell’s job even harder.
The Kentucky Republican — who doubled down Monday on a huge national-security funding package that addresses Israel, Ukraine, Taiwan and more — is seeing his rank-and-file grow even more bitterly divided over how to handle President Joe Biden’s $105 billion supplemental request.
Johnson is moving toward a Thursday vote in the House on the Israel funding alone. This would be paid for by cutting an equal amount from the Inflation Reduction Act’s IRS enforcement. The House GOP leadership team considered a host of bipartisan pay-fors, but opted to cut IRS money with hopes of dividing Democrats and solidifying GOP support.
Johnson and House GOP leaders will have a tough time passing this bill through their chamber in the face of what’s expected to be near-unified Democratic opposition and skittishness by some conservative hardliners.
But McConnell has made clear he doesn’t want to address Israel funding without Ukraine. He and Senate Majority Leader Chuck Schumer — as well as Biden — insist that both should be part of a broader national-security spending package.
So the fight to approve any of this funding will center on Republicans clashing with each other over complex issues that have long inflamed tensions within the Senate GOP Conference — foreign policy, budget deficits, Ukraine and the southern border.
In the Senate, conservatives are urging McConnell to use his leverage — the 60-vote threshold to pass legislation — to demand policy wins in exchange for helping Biden and Democrats pass the larger measure.
“If Democrats want [Ukraine aid] so badly, then shouldn’t Republicans get one of our priorities in a trade?” Sen. J.D. Vance (R-Ohio), who vehemently opposes new Ukraine aid, told us. “We shouldn’t just roll over and give Democrats everything they want, especially when it divides our conference so starkly.”
Vance said McConnell should force Democrats to accept policy changes at the southern border, before giving them enough GOP votes to pass a massive aid package for Israel, Ukraine and the Indo-Pacific. Many other Republicans agree with Vance. The White House’s request asks for more border security funding, but Republicans see this as a ruse. And Democrats say policy changes are a non-starter.
Sen. Rand Paul (R-Ky.), who has long called to offset new federal spending, praised the House’s approach to Israel aid and said anything else is “dead on arrival” in the Senate. Paul also called out McConnell by name, saying his fellow Kentucky Republican should simply accede to the House’s proposal.
“If Sen. McConnell thinks he’s going to pass a $100 billion conglomeration — what Biden wants — there’s no way it passes the House. Sen. McConnell’s not unaware of the way the House works,” Paul told us. “It’s a very precarious position the speaker is in. I think that’s all he can get through.”
There are some practical challenges tied to what Vance and Paul are pushing for. For one, a standalone Israel bill with offsets is a no-go for the Democratic-led Senate.
For McConnell, who has consistently been Ukraine’s top supporter in Congress, this could be a legacy-defining moment. He wouldn’t want to do anything that could jeopardize that. In his view, why would you pick this fight with Democrats when you agree with them on Ukraine funding? McConnell has few, if any, incentives to give in to the Republicans who want to de-link Israel and Ukraine — a minority of the Senate minority party.
There are many other Senate Republicans who agree with McConnell on Ukraine — at least half the conference. And these GOP lawmakers see the next few weeks as Congress’ last chance to pass a big aid package before the conflict could spiral into a war requiring U.S. troop deployments to defend NATO allies in Eastern Europe.
Here’s what Senate Minority Whip John Thune told us:
The reality is that the Senate simply doesn’t have enough time to process these tranches of foreign aid separately — not to mention the CR that’ll be needed to fund the federal government past the Nov. 17 shutdown deadline. Plus, Schumer still controls what gets considered on the Senate floor.
“Moving them separately is an invitation to hand Ukraine to Putin,” warned Sen. Chris Murphy (D-Conn.), a senior appropriator. “I do not see how we have the time between now and the end of November to do a CR, Ukraine aid and Israel aid separately. So you have to package these two together.”
Republicans will discuss the matter at their weekly policy lunch later today, and McConnell is likely to address it when he faces the cameras this afternoon.
As of now, however, the House and Senate GOP leadership remain on completely different wavelengths about how to address the Biden supplemental and its centerpiece — Israel funding.
“We need to be working this with the House,” said Sen. Joni Ernst (R-Iowa), a member of McConnell’s leadership team who backs both Israel and Ukraine aid.
Sen. Susan Collins of Maine, the top GOP appropriator, said Israel and Ukraine are both “extremely important priorities” that should not be separated from one another. She also criticized Johnson’s decision to seek further IRS cuts given that these were already included as part of the debt-limit agreement earlier this year.
And Collins hinted at concerns that pursuing budget cuts in tandem with emergency spending could set a precedent.
“The question is, where does it end here?” Collins said.
— Andrew Desiderio and John Bresnahan
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THE SPEAKER
Trump World warns House GOP: No Jeff Roe in Johnson’s orbit
Two top aides to former President Donald Trump have approached several House Republicans with a stark warning — top Republican political operative Jeff Roe cannot have a foothold in Speaker Mike Johnson’s orbit.
Roe, of course, is lead strategist for Never Back Down, the super PAC supporting Florida Gov. Ron DeSantis’ run for the GOP presidential nomination. Which makes him persona non grata in Trump world.
And why is this a concern for Johnson, the brand new speaker, as he seeks to up his fundraising game? Because everything is about Trump, even when it isn’t.
Chris LaCivita and Susie Wiles, two top Trump aides, have approached several GOP lawmakers to warn them of the speaker associating with Roe.
“There is a great deal of concern over any chance that Jeff Roe would be involved in a political operation for the speaker of the House,” said a senior figure in the Trump orbit.
Roe is the principal and owner of Axiom Strategies, which bills itself as “the nation’s largest full-service political consulting, public affairs, and public relations firm serving conservative candidates and causes.” Roe has ties to dozens of House and Senate Republicans, making him a very influential political operative.
But Roe has gotten crosswise with Trump over his work for Sen. Ted Cruz (R-Texas) in the 2016 GOP primary, as well as for DeSantis this year.
To Johnson’s allies, this is much ado about nothing. Johnson has told associates he is not sure he has met Roe and has no connection to him. (Johnson and Roe have met once, according to a source close to the matter).
But Johnson relies on Jason Hebert, whose political firm was purchased by Axiom. Hebert is a top Louisiana strategist who has worked for House Majority Leader Steve Scalise and Rep. Garret Graves (R-La.).
So the new speaker will have to deal with this Trump-Roe issue as the former president continues to lead the GOP field for the 2024 White House nomination.
— John Bresnahan and Jake Sherman
Senate push for crypto crackdown runs deeper than Hamas financing
The crypto industry has spent a lot of energy this month trying to dispute its sector’s role in financing global terrorism. So far, Washington isn’t listening.
The controversy has swirled around a widely-cited article in the Wall Street Journal published days after the deadly Oct. 7 attack on Israel detailing how Hamas may have used crypto to fund its terror operations.
Since then, that story has become a fixation for policymakers and crypto advocates alike. Lawmakers have cited the report in letters to the Treasury Department urging a broader crackdown on crypto. In turn, crypto boosters have strongly disputed the report’s findings. Trade group CEOs have requested corrections, and individual advocates have offered thousands of dollars in “bounties” to disprove the story.
The counter-campaign has yielded one small success — a narrow correction added to the Journal’s story last Friday.
But key policymakers pushing for tougher rules for crypto, particularly around stronger money laundering controls, haven’t been swayed by these efforts.
“It’s not about one report,” Sen. Elizabeth Warren (D-Mass.) told us Monday night. “It’s about the whole structure of crypto that attracts some of the worst people around the world to move value around in a way that they cannot do through the ordinary banking system.”
Senate Banking Committee Chair Sherrod Brown (D-Ohio) echoed Warren’s view, saying that crypto has “clearly had a role in terrorism. It clearly has a role in fentanyl, a role in all kinds of illicit criminal activity.”
And like many other lawmakers we talk to about digital assets, Brown pointed to the collapse of the crypto exchange FTX as the moment the sector’s benefit of the doubt evaporated in Washington.
Even crypto-friendly lawmakers like Sen. Cynthia Lummis (R-Wyo.) have said the sector has work to do in policing illicit activity, though they tend to focus on the role played by international firms, which include Binance and Tether.
That said, Lummis also told us on Monday that she was “concerned” about the impact the WSJ’s story has had on the crypto policy discussion being had by lawmakers right now. Lummis wants crypto to be appropriately regulated within the United States, rather than regulated out of existence or pushed offshore.
“I do think the Wall Street Journal article was debunked to the extent that it overstated the amount of cryptocurrency that was being used,” Lummis said. Lummis added later: “Those that were already predisposed in the Senate to believing that there’s no legitimate use case for digital assets — it sort of reinforces that view.”
House Republicans have said they’re keen to fit crypto legislation into year-end legislative packages. Senate Republicans, meanwhile, are focused on pressuring the Biden administration to use existing sanctions to hammer Hamas and Iran.
Sen. Katie Britt (R-Ala.) said the Biden administration needs to use “the tools we have with regards to sanctions right now” rather than pursue bigger changes. “I keep seeing people try to divert the conversation to different things right now,” she said.
— Brendan Pedersen
PRESENTED BY COMCAST
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Learn more about Ms. Jo’s story.
THE SENATE
Senate Judiciary to vote on subpoenas for Harlan Crow, others
The Senate Judiciary Committee will vote to authorize subpoenas as part of a Democratic-led investigation into the Supreme Court’s ethics guidelines, Chair Dick Durbin (D-Ill.) announced Monday evening.
The panel will vote as soon as next Thursday, Nov. 9, on subpoenas for three GOP activists linked to Justices Clarence Thomas and Samuel Alito, who stand accused of violating ethics rules governing financial disclosures.
All three subpoena targets — Harlan Crow, Leonard Leo and Robin Arkley II — have been in the crosshairs of the committee’s months-long probe centering on the justices’ failure to disclose gifts from individuals who could have interests before the Supreme Court.
The announcement Monday marks a significant acceleration of the panel’s efforts on judicial ethics reform.
“The Supreme Court is in an ethical crisis of its own making,” Durbin and Sen. Sheldon Whitehouse (D-R.I.) said in a joint statement announcing the upcoming subpoena votes.
“Thanks to investigative reporting,” the Democratic senators added, “we now know that for decades, some justices have been joining billionaires with business before the Court on their private planes and yachts or receiving gifts such as private school tuition for a family member.”
The Democrats’ efforts on judicial ethics, however, have received zero buy-in from Republicans, who see the probe as a way for Democrats to undermine and delegitimize the court’s conservative majority.
Democrats say it’s a necessary check on the high court. Earlier this year, the Judiciary Committee passed legislation forcing the Supreme Court to impose a code of conduct. The bill doesn’t have enough support to clear the 60-vote threshold on the floor.
“The Chief Justice could fix this problem today and adopt a binding code of conduct,” Durbin and Whitehouse added. “As long as he refuses to act, the Judiciary Committee will.”
With full Democratic attendance, the Judiciary Committee will be able to approve the subpoenas. Durbin and Whitehouse said it was imperative that senators learn “the full extent of how people with interests before the court are able to use undisclosed gifts to gain private access to the justices.”
According to Democrats, the three men haven’t provided sufficient information to the committee about their relationships with Thomas and Alito. Much of this was revealed publicly earlier this year by ProPublica and other media outlets.
Crow’s office sent us a statement late Monday night that called the subpoena efforts “unnecessary, partisan and politically motivated.”
“We offered extensive information responsive to the Committee’s requests despite the serious constitutional and privacy concerns presented to the Committee, which were ignored and remain unaddressed,” the statement reads. “Mr. Crow, a private citizen, won’t be bullied by threats from politicians. However, as previously conveyed to the Committee, we remain committed to respectful cooperation and a fair resolution.”
Leo, a longtime conservative activist involved in pushing conservative judicial nominations, said in a statement that “I will not bow to vile and disgusting liberal McCarthyism that seeks to destroy the Supreme Court because it follows the Constitution rather than their political agenda.”
Leo’s lawyers sent a letter to the Judiciary Committee on Oct. 19 objecting to Durbin’s requests for more information on Leo’s activities tied to the Supreme Court.
— Andrew Desiderio
THE CAMPAIGN
News: Former Speaker Nancy Pelosi is endorsing former Rep. Mondaire Jones’ (D-N.Y.) run for Congress in the 17th District.
“We need Mondaire Jones back in Congress to continue his pragmatic leadership, to extend his record of delivering for New Yorkers and to win back our Democratic Majority,” Pelosi said in an endorsement statement.
Pelosi also described Jones as a “stalwart supporter of Israel and champion of funding for law enforcement.” These are notably two areas that Jones’ opponents will seize on.
Jones is seeking to unseat freshman Rep. Mike Lawler (R-N.Y.) in a Democratic-leaning seat that President Joe Biden won by 10 points in 2020.
Jones, however, first has to contend with a competitive primary against Liz Whitmer Gereghty, a businesswoman and the sister of Michigan Gov. Gretchen Whitmer.
— Max Cohen
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