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November 15, 2023
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PRESENTED BY
THE TOP
Happy Wednesday morning.
If you listen to Speaker Mike Johnson, his bill to avert a government shutdown — which passed the House with mostly Democratic votes Tuesday evening — will finally give the GOP majority the leverage it needs to cut spending and force major policy changes.
But Johnson has a big problem — there’s no evidence at this point that the two-step CR will do anything of the sort.
When the initial Jan. 19 funding deadline comes along — just 21 legislative days away under the current House calendar — Johnson will likely be in largely the same position he’s in now.
He’ll have a House Republican Conference that disagrees with his tactics and is unwilling to set aside its own short-term politics to seek a long-term funding deal. Just 57% of House Republicans voted for the CR Tuesday, hardly a mark of confidence in the new speaker.
House Republicans will only have a narrow four-seat majority by that point. And Johnson will still have a conference that is seeking steep spending cuts while the Senate is proceeding with bipartisan funding bills.
Johnson’s members have so far failed to pass some major spending bills, including the Labor-HHS, Commerce-Justice-Science and Transportation-HUD packages. The Senate will still be far more united than the fractured House.
Johnson couldn’t even pass a rule — a typically party-line procedural motion — for the CR this week. When it comes to actually winning a spending showdown with President Joe Biden and Democrats, Johnson and House Republicans are nowhere.
“Well, that’s a problem,” said Sen. John Cornyn (R-Texas), referring to the narrow majority and the House’s inability to pass key appropriations bills.
The Senate will begin work today on the short-term CR, which sets Jan. 19 and Feb. 2 as funding deadlines. The White House is signaling it will back the measure, despite officials publicly bashing it previously.
By early next year, Johnson will have used up a significant amount of political capital to squeeze a clean CR through the House with just 127 of 221 GOP members, an embarrassing result for any Republican speaker. The House GOP Conference remains divided over aid to Ukraine and the reauthorization of FISA surveillance authority — not to mention the negotiated NDAA bill.
On top of that, Johnson declared Tuesday he won’t pass another short-term spending bill, adding even more pressure to an already tense situation.
In fact, it’s difficult to see any reason why January and February will be any better for House Republicans.
Johnson’s biggest challenge isn’t of his making, but he’s unable to avoid it either.
Biden and former Speaker Kevin McCarthy cut a deal in May on the Fiscal Responsibility Act, which lifted the debt limit and set out spending parameters for next year. It included proposed FY2024 spending levels that are supported by Biden, the Senate and House Democrats.
House Republicans, though, are intent on slashing tens of billions of dollars from that total, plus throwing in a lot of culture war provisions on climate change, transgender policy and other issues into appropriations bills. This guarantees the bills aren’t going anywhere, but House GOP lawmakers — pushed by hardline conservatives — keep trying.
Plus, the Senate is laboring to pass a huge national-security funding package that will include provisions conservatives hate — Ukraine aid, for example — as well as border-security changes that won’t go far enough for a lot of House Republicans.
“We’ll have a lot of the same issues we’re still dealing with now,” Senate Minority Whip John Thune said of the next funding clash. “There’s a ton of work to do. But I think keeping the government funded this week is a good starting point.”
For Thune’s chamber, having more time to debate FY2024 appropriations bills will be a benefit, especially since the Senate has only passed three of the 12 funding bills so far.
But Senate Republicans are also warning against the idea of a year-long CR, saying it would short-change the Pentagon. Some Republicans suggest that Majority Leader Chuck Schumer is dragging his feet on FY2024 appropriations bills to force an omnibus.
“The Senate has got to continue to lead on this issue. If Sen. Schumer had rolled immediately into the next minibus, we would have finished it by the end of last week,” Sen. Susan Collins (R-Maine), the top GOP appropriator, told us. “I truly don’t understand it, other than maybe his preference is for an omnibus. But that’s certainly not the preference of most members.”
Senate appropriators have been discussing the idea of grouping the remaining funding bills into one legislative vehicle, but this could easily be dismissed by Johnson and House Republicans as an omnibus-like bill. Of course, it’s different from an omnibus in that each portion was approved overwhelmingly in committee.
And remember: the Four Corners have yet to agree to topline spending numbers, which needs to happen before the House and Senate can begin negotiations on their FY2024 bills. Senators believe they have the upper hand here because of how bipartisan their process has been.
“Maybe we don’t get them conferenced because the numbers are pretty far apart,” Thune said. “But at least when it comes time to write a final bill, we’ll be starting at benchmarks that were set by full involvement of all senators on both sides of the aisle, instead of having it written in Chuck Schumer’s office.”
— Jake Sherman, Andrew Desiderio and John Bresnahan
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TONY 2.0
The Tony Gonzales right-wing multiverse
Rep. Tony Gonzales (R-Texas) stood in the way of Rep. Jim Jordan’s (R-Ohio) speaker bid last month, angering the conservative grassroots movement that already viewed the two-term Texas Republican with suspicion.
But if there were any hard feelings on the Hill between Gonzales and the GOP’s right flank, you wouldn’t know it. On Monday evening, Gonzales held a telephone town hall with Jordan. The next day, Gonzales partnered with Rep. Marjorie Taylor Greene (R-Ga.) to tout an effort to impeach Homeland Security Secretary Alejandro Mayorkas.
The moves both center around border policy, which Gonzales told us was his “Number-one, number-two and number three issue.”
Gonzales’ increased proximity to two of the right’s most high-profile figures comes as he faces several conservative primary challengers in his sprawling, border-area district. But Gonzales denied that the recent joint appearances had anything to do with his political future.
“The American people are counting on us to make this crisis stop,” Gonzales said at a press conference with Greene. “My record has been very clear. I’ve hosted over 100 members of Congress. I’ve done over 20 different congressional delegations. My positions have not changed from day one [on the border].”
This dynamic has already caught the interest of at least one of his primary challengers, Victor Avila, a former Immigration and Customs Enforcement agent. Avila accused Gonzales of engaging in border issues for optics.
“Gonzales opposed impeaching Mayorkas for three years. But now that Gonzales knows he’s in trouble, suddenly he wants to help. This last-minute reversal is too little, too late to save his job,” said Brandon Wear, Avila’s spokesperson.
Gonzales pushed back at his critics by defending his relationship with more conservative members of the House GOP conference.
“It’s like, what multiverse are we in?” Gonzales joked when we asked about his appearances with Jordan and Greene. “A lot of people don’t realize [that] I’ve got a wide variety of friends here.”
If you recall, Gonzales was a key opponent to Jordan’s speakership bid. He voted against Jordan three times on the House floor.
Gonzales also was a key skeptic of the Mayorkas impeachment effort as we previously reported.
Gonzales said he and Jordan have worked closely together on border issues. The Texas Republican said he was involved in the drafting of the GOP’s signature border legislation that originated in the Jordan-led House Judiciary Committee.
“I’m very grateful that Jim Jordan took the time out of his day to do that. It means a lot,” Gonzales said about the town hall.
As for Greene, Gonzales noted they are in the same class and sit next to each other in the Homeland Security Committee. And when two of Greene’s constituents died in a car crash in Gonzales’ district recently, Gonzales said his “very first call” was to MTG.
“That’s how close we are,” Gonzales said. “It’s not a surprise to me. It may be a surprise to other people.”
Greene told us she confided in Gonzales before filing her impeachment resolution against Mayorkas and thanked him for his courage on the issue.
“As a matter of fact, Tony has hosted most of us in his district,” Greene said. “Tony Gonzales represents the district in Texas that has Eagle Pass. I would call that the front door to the invasion.”
In August, we scooped that several of the most high-profile House conservatives were plotting to knock off Gonzales. Reps. Matt Gaetz (R-Fla.), Scott Perry (R-Pa.), Troy Nehls (R-Texas) and Paul Gosar (R-Ariz.) have all met with Gonzales’ primary opponents this year.
First elected in 2020 by just four points, Gonzales won reelection last cycle by a wide margin. The Republican succeeded former Rep. Will Hurd (R-Texas) following Hurd’s retirement.
Gonzales, a close ally of former Speaker Kevin McCarthy, is also a prolific fundraiser.
— Max Cohen and Mica Soellner
PRESENTED BY CHEVRON
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‘We’re watching,’ Brown sets a high bar for FDIC workplace reform
The Democratic chair of the Senate Banking Committee says he’ll be sharply scrutinizing efforts at the Federal Deposit Insurance Corp. to address reports of rampant sexual harassment at the agency’s regional hubs.
Sen. Sherrod Brown (D-Ohio) hosted four of the Biden administration’s federal bank regulators Tuesday for a semi-regular oversight hearing. As expected, we heard a lot about capital reform.
But senators from both parties dedicated as much time — if not more — to grilling FDIC Chair Martin Gruenberg over a Wall Street Journal investigation published this week detailing a “toxic” culture among certain regional offices. Gruenberg said he was “personally disturbed and deeply troubled” by the story.
Catching up with Brown after the hearing, we asked whether the Ohio Democrat was satisfied with Gruenberg’s answers to senators’ questions. Brown replied that Gruenberg “said the right words.”
But Brown also made clear his committee would expect more than verbal contrition in the weeks ahead.
“He’s got to live up to what he said. You can’t be satisfied — with problems that deep — in the words,” Brown said. “We will continue to watch, and we’ll continue to let him know we’re watching.”
The House Financial Services Committee is also watching. Lawmakers requested a briefing from the FDIC’s inspector general earlier this week on the matter.
A quiet agency in the absence of a financial crisis, the FDIC has been subject to increased political scrutiny in recent years. Republican lawmakers still haven’t forgotten the ouster of former Chair Jelena McWilliams, a Trump-era appointee who resigned shortly after Biden-appointed members of the FDIC board attempted to push policy without her approval.
The FDIC also played a crucial role in the March banking crisis and the resolution of failed regional institutions including First Republic Bank and Silicon Valley Bank. Lawmakers, particularly Democrats, have criticized the policies that allowed megabank JPMorgan Chase to purchase First Republic.
But the FDIC’s sexual harassment scandal poses a particular political danger to Gruenberg. These workplace problems “stretch back more than a decade,” the Journal wrote. Meanwhile, the former Senate banking staffer has served on the FDIC’s board since 2005 — including several stints as both acting and Senate-confirmed chair.
Suffice it to say, no one in Washington can claim they have more experience leading the FDIC than Gruenberg, even if the agency’s problems have mostly festered away from the nation’s capital. For lawmakers, that means he’ll have a tougher, higher bar to clear. “He’s got to step up and fix it, period,” Brown said.
The FDIC declined to comment.
— Brendan Pedersen
PUNCHBOWL NEWS EVENTS
Uplifting Black Women event with Reps. Brown and Williams
We had a powerful conversation last night with Reps. Nikema Williams (D-Ga.) and Shontel Brown (D-Ohio) on the disparities affecting Black women and how to address them. Symone Sanders-Townsend, an anchor at MSNBC, co-moderated the conversation with Punchbowl News CEO Anna Palmer.
Follow the link below to watch the full recording if you missed the event. And look out for a recap with key takeaways in our midday edition.
CANNABIS CORNER
Lawmakers press Treasury for ‘red flag’ cannabis reform
Democrats are urging the Treasury Department to revise “out-of-date guidance” related to state-legal marijuana businesses and the Bank Secrecy Act, according to a letter obtained by Punchbowl News.
In the letter sent to Treasury Secretary Janet Yellen and Financial Crimes Enforcement Network Director Andrea Gacki Tuesday, lawmakers argued that guidelines published in 2014 predate “action by many states to legalize marijuana possession and sales” and must be updated.
That disconnect has resulted in years of unwarranted “red-flagging,” where financial institutions working with legal cannabis companies must conduct significant compliance work for state-legal cannabis companies. That has often included filing suspicious activity reports, or SARs.
“The updated guidance should clarify that if a marijuana-related act has been expunged, pardoned, is no longer illegal under state law, or is not disqualifying for obtaining a state marijuana license or permit,” the lawmakers wrote, “then financial institutions should not consider that offense a ‘red flag’ when conducting customer due diligence of marijuana businesses.”
Read the full letter here, which was led by Sen. Elizabeth Warren (D-Mass.). Other signers include Sens. Raphael Warnock (D-Ga.), Jeff Merkley (D-Ore.), Tina Smith (D-Minn.), Ed Markey (D-Mass.), Ron Wyden (D-Ore.), Bernie Sanders (I-Vt.), Cory Booker (D-N.J.), Peter Welch (D-Vt.), Brian Schatz (D-Hawaii), Reps. Earl Blumenauer (D-Ore.), Jan Schakowsky (D-Ill.), Katie Porter (D-Calif.), Del. Eleanor Holmes Norton (D-D.C.) and others.
The group is also focused on limiting the legal impacts of non-violent convictions that predate state-level legalization. Democrats argue that the existing guidance “disproportionately harms Black- and Brown-owned businesses, whose owners are more likely to have a marijuana-related conviction, though they are not more likely to have violated marijuana use laws.”
— Brendan Pedersen
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Presented by Apollo Global Management
One size rarely fits all. That’s why Apollo provides custom capital solutions designed to help companies achieve their ambitious business goals. Think Credit New