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Happy Wednesday morning.
There’s been a lot of movement during the last 24 hours on President Joe Biden’s request to have Congress pass legislation to avert a potentially devastating railroad strike next week.
The House will vote today to codify the labor agreement Biden helped broker between a dozen labor unions and railroad companies back in mid-September. This tentative agreement included a 24% pay increase for workers, but just one day of paid sick leave. Workers were seeking as many as 15 days.
Since Biden announced the tentative deal, rank-and-file members for several unions have voted against accepting the proposed contract, throwing the agreement in doubt and raising the possibility of a shutdown of the nation’s freight trains in the midst of the holiday season. Analysts estimate a strike could potentially cost the U.S. economy hundreds of thousands of jobs and damage supply chains.
Speaker Nancy Pelosi announced Tuesday night that the House would vote on two bills:
The tentative agreement that Biden reached between the unions and railroads three months ago.
A separate bill that would increase the paid sick leave for union workers from one day to seven days.
Both of these measures are expected to pass the House. GOP leaders expect a good number of rank-and-file Republicans to support the tentative agreement. Some might even support the increase in paid sick leave.
Across the Capitol, it seems as if the tentative agreement could pass the Senate – as long as every Democrat votes yes.
But senators on both sides of the aisle told us they think it’s possible that the paid-sick leave portion could potentially pass as well. The issue of supporting more than 115,000 railroad workers cuts across party lines, making a vote count hard to predict.
Yet the prospect of the paid leave element gaining congressional approval has railroad operators on edge, sources told us Tuesday evening. A number of Senate Republicans do appear open to an increase in paid sick leave from one day to seven days.
If the paid sick leave portion fails in the Senate, the underlying rail agreement could still go to Biden’s desk without returning to the House for another vote.
Ukraine news: National Security Adviser Jake Sullivan will be on Capitol Hill today to brief top senators on the need for additional U.S. economic and military aid for Ukraine as it faces an ongoing Russian military onslaught. Biden has requested another $37 billion in aid for Ukraine, although opposition to such assistance is growing among conservative Republicans in the House and Senate.
This comes as party leaders and the White House are scrambling to cobble together an omnibus spending package before the Dec. 16 deadline. Pentagon officials have been outspoken about the problems that could result from passage of a year-long continuing resolution at current funding levels. The Pentagon has never been funded for an entire year under a CR, and doing so would harm new and existing programs, DOD officials warned.
Attending the briefing: Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, Armed Services Committee Chair Jack Reed (D-R.I.), incoming Armed Services Committee Ranking Republican Roger Wicker (Miss.), Foreign Relations Committee Chair Bob Menendez (D-N.J.), Foreign Relations Committee Ranking Republican Jim Risch (Idaho), Intelligence Committee Chair Mark Warner (D-Va.), Intelligence Ranking Republican Marco Rubio (Fla.), Appropriations Committee Chair Pat Leahy (D-Vt.), Appropriations Committee Ranking Republican Richard Shelby (Ala.) and Sen. Jon Tester (D-Mont.), who chairs the Defense subcommittee on Appropriations.
Schumer, Reed and Tester all made the case on Tuesday that it’s critical to pass an omnibus for national security purposes. However, McConnell and other Senate Republicans are opposed to Democratic efforts to add billions of dollars in new domestic spending to any omnibus package at the same time.
– Jake Sherman, John Bresnahan and Heather Caygle
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PUNCHBOWL NEWS x CES
Punchbowl News is headed to CES (Consumer Electronic Show)! Punchbowl News will be an official media partner at CES, The Consumer Electronic Show. We’ll bring you behind the scenes Jan. 5-7 every day in the newsletter. We know that top aides on the Hill, members of Congress and others have decamped for Las Vegas for CES in the past, so we wanted to make sure we were there.
Will you be at CES? Let us know!
THE NEW BOSS
Introducing Hakeem Jeffries and the New Three
Some time after 9 a.m. today, House Democrats will elect Hakeem Jeffries as their new leader. This is a watershed moment for both the House Democratic Caucus and Congress.
Jeffries is the first new leader for House Democrats in two decades. Nancy Pelosi took the reins of the caucus on Jan. 3, 2003. That was two years into George W. Bush’s presidency and just two months before the fateful U.S. invasion of Iraq.
We expect Pelosi to speak during today’s caucus meeting. Pelosi was formally designated “Speaker Emerita” by the Democratic Steering and Policy Committee on Tuesday night.
House Majority Leader Steny Hoyer ascended to the No. 2 post at that time as Pelosi. Four years later, House Majority Whip Jim Clyburn joined them atop the caucus. The vast majority of House Democrats have never served under any other leadership team. That’s all about to change.
“This is a moment of transition. And we stand on the shoulders of giants,” Jeffries told reporters during a pen and pad Tuesday night.
Jeffries will become the youngest congressional leader. At 52, Jeffries is five years younger than House Minority Leader Kevin McCarthy, 20 years younger than Senate Majority Leader Chuck Schumer, and 28 years younger than Senate Minority Leader Mitch McConnell. This also means that all four congressional leaders will once again be men.
The New York Democrat, whose district is anchored in the Bedford-Stuyvesant and Canarsie neighborhoods of Brooklyn, is the first Black person to serve as a congressional party leader in U.S. history.
Rep. Greg Meeks (D-N.Y.), a close ally, told us this:
“[J]ust as Barack Obama made us all proud, his intellect and how he did it, Hakeem Jeffries is going to do exactly the same thing. He was chosen not because he’s Black, but because of his ability.”
Jeffries will take control alongside two lieutenants: Massachusetts Rep. Katherine Clark, who will serve as whip, and California Rep. Pete Aguilar, who will serve as caucus chair. The trio – which we’ve referred to as the New Three – face a number of challenges and opportunities worth exploring.
“The three of us embrace the enthusiasms, exuberances and eccentricities of the House and what it magically represents as an institution. And look forward to leaning into it as we move forward as leaders,” Jeffries said.
The vast majority of this leadership team is new. Yes, the experienced Clyburn will serve as assistant Democratic leader. But Jeffries, Clark and Aguilar are all fresh faces at the top of the party, charged with making decisions on issues they’ve only peripherally been involved with previously.
Jeffries acknowledged this but noted the three have had a seat at the leadership table during a time of remarkable uncertainty and upheaval.
“We’ve been able to demonstrate some ability to lead during difficult moments where our ability was quite naturally tested.
“Through the Trump presidency, multiple impeachment proceedings, a once in a century pandemic, the shutdown of the American economy, a violent insurrection… and a very ambitious legislative agenda that many doubted we could get over the finish line.”
Jeffries will have to forge some sort of working relationship with McCarthy. Right now, there isn’t any relationship. Jeffries has spent much of the last year bashing McCarthy.
Jeffries said Tuesday he has been “gentle” on McCarthy over the years, only responding to “things that he has either said or done that I found to be outrageous.”
“I’ve had more interaction with the incoming Republican Majority Leader Steve Scalise but have an open mind about being able to engage with Kevin McCarthy for the good of the country,” Jeffries added.
Now the two lawmakers, of the same generation but from vastly different parts of the country, will be charged with the management of the House, a combustible institution with little cohesion and even less collegiality, especially in the post Jan. 6 era.
This Democratic leadership team does have some advantages heading into the new Congress.
Power bases. Jeffries has strong support in the Congressional Black Caucus. Clark has the pulse of the progressive wing and allies among the growing number of women in the House Democratic Caucus. And Aguilar hails from the Congressional Hispanic Caucus and has extensive backing inside the powerful California delegation.
An early test. Who will Jeffries tap as the DCCC chair? A new rules change will allow Jeffries to nominate his pick, which will be subject to the caucus’ ratification – more on that below. Will Jeffries take a pass on nominating someone and let the caucus decide? Or will Jeffries push for his choice in an early test of his internal political acumen?
Jeffries declined to reveal his views on this Tuesday, saying he’d first let the caucus “work its will” in deciding whether to change the current rules before disclosing who he wants to have the DCCC during the next Congress.
Jeffries’ inner circle: We have exclusive details on who will be nominating Jeffries for Democratic leader today. Rep. Nanette Barragán (Calif.), the likely next Congressional Hispanic Caucus chair, will nominate Jeffries.
An array of influential Democrats from across the caucus will then second his nomination:
Rep. Derek Kilmer (Wash.), the former New Democrat chair
Rep. Grace Meng (N.Y.), a close Jeffries ally from their days in the legislature in Albany.
Rep. Abigail Spanberger (Va.), a Frontliner and Blue Dog
Rep. Terri Sewell (Ala.), a fellow CBC member
Rep. Mark Pocan (Wis.), the former Progressive Caucus co-chair and a member of the Equality Caucus.
Jeffries’ Downtown Allies:
Cedric Grant: Grant was Jeffries’ chief of staff and now works at Subject Matter, the lobbying shop. Grant has lobbied for the American Gaming Association, the American Investment Council, Barclays, Block Inc., Bloomberg Philanthropies, Epic Games, Goldman Sachs, Hilton and Blackstone, among other entities.
Mike McKay: McKay is a New York insider who lobbies for Empire Consulting Group. He has represented American Airlines, Bank of America, Boeing, FedEx, Gilead and Nike. He is very close to the CBC.
Patrick Gaspard: Gaspard isn’t a lobbyist. Gaspard served as U.S. Ambassador to South Africa under former President Barack Obama. He’s now the president of the Center for American Progress. Jeffries and Gaspard became close in New York and know each other from when Gaspard was a top official at 1199SEIU United Healthcare Workers East.
– Jake Sherman, Heather Caygle and John Bresnahan
What to listen for in the Fed chair’s speech today
Federal Reserve Chair Jay Powell will give a speech this afternoon at the Brookings Institution to discuss the U.S. labor market. It’ll be closely watched for any signs of how the world’s most important central banker will approach inflation in 2023 and beyond.
There’s just one more meeting in 2022 for the Federal Open Markets Committee. We expect another rate hike on Dec. 14, but likely a smaller one than we’ve seen recently. The federal funds rate now sits between 3.75% and 4%.
But then there’s these comments from Fed Vice Chair Lael Brainard on Monday in Switzerland. Brainard made the case for a different approach to monetary policy that assumes supply chain disruptions and other forms of global instability could be a more enduring phenomenon in the future.
Here’s a key excerpt from Brainard’s speech:
“The experience with the pandemic and the war [in Ukraine] highlights the challenges for monetary policy in responding to a protracted series of adverse supply shocks.
“In addition, to the extent that the lower elasticity of supply we have seen recently could become more common due to challenges such as demographics, deglobalization, and climate change, it could herald a shift to an environment characterized by more volatile inflation compared with the preceding few decades.”
This is an important distinction because the Fed’s hikes don’t really affect the kind of inflation that stems from a snarled global economy. Rate hikes are supposed to cool demand by making lending more expensive, slowing growth and weakening consumer spending. Rate hikes can’t re-build a bombed factory in Ukraine.
Brainard is effectively arguing that even though inflation has emerged as a lasting problem over the past year, supply shocks are still a key part of the problem, making monetary policy moves less effective.
Remember: Powell is a bureaucrat by training, not an economist. He’s sought consensus as the Fed chair, and Brainard is effectively his No. 2. We’ll be closely watching the event today for any sign that Powell is sympathetic to her views.
Brainard’s argument also squares with what key Democrats have been saying. House Financial Services Committee Chair Maxine Waters (D-Calif.) and Senate Banking Committee Chair Sherrod Brown (D-Ohio) are concerned that the Fed’s aggressive anti-inflation drive could spur job losses across the U.S. economy.
Brown told us this week “of course” he still has reservations about Powell’s handling of inflation. The Ohio Democrat wrote to Powell in late October urging him not to crush the labor market.
“I talk to Powell with some regularity,” Brown said. “I’m always reminding him that there’s a dual mandate and that I don’t think the Fed historically has thought as much about workers as they have interest rates and Wall Street.”
Also of note: We’ll see some new employment data from the Bureau of Labor Statistics at 10 a.m. this morning. Will the Fed’s recent streak of good news hold up? Wall Street and the economic experts will be watching closely, as will we.
– Brendan Pedersen
PUNCHBOWL NEWS EVENTS
Blunt on electoral reform and government funding
Missed our conversation with Sen. Roy Blunt (R-Mo.) yesterday? Catch up here.
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RULES, RULES, RULES
It’s DCCC amendment day. Get excited!
House Democrats will decide today whether to change their internal rules to allow the Democratic leader to select who leads the Democratic Congressional Campaign Committee in the next Congress.
An amendment, proposed by Reps. Suzan DelBene (D-Wash.), Brad Schneider (D-Ill.) and Mark Pocan (D-Wis.), would let the Democratic leader nominate a candidate for the campaign arm’s top post. The full caucus would still have to ratify that pick.
The change is to ensure the DCCC chair shares responsibility with the Democratic leader and to avoid the chair facing a competitive reelection campaign.
Rep. Sean Patrick Maloney (D-N.Y.), the DCCC chair this cycle, was defeated on Election Day, while Rep. Cheri Bustos (D-Ill.) – who ran the DCCC during the 2019-2020 cycle – faced a tough reelection challenge that year. Bustos didn’t run for reelection in 2022.
Here are the dynamics at play:
Democratic sources we spoke to overwhelmingly expect the full caucus to pass the amendment. A key indicator that the rules change had broad support came on Monday, when the Committee on Caucus Procedures voted to favorably report the amendment to the full caucus.
Both Democrats publicly running for the position — California Reps. Tony Cárdenas and Ami Bera — are operating under the assumption that the rules change doesn’t pass and are still planning for a normal election. This makes sense because the language of the rules change allows any five members to nominate a different candidate than the leader picks.
Cárdenas is the former leader of the Congressional Hispanic Caucus BOLD PAC. He ran against Maloney for the DCCC chair in 2020 and narrowly lost. Bera served as the Frontline chair at the DCCC this past cycle.
The Congressional Asian Pacific American Caucus is endorsing Bera’s bid. Check out CAPAC Chair Judy Chu’s (D-Calif.) endorsement letter here. Other Bera backers include Frontline Rep. Kim Schrier (D-Wash.) and Colin Allred (D-Texas). The Congressional Hispanic Caucus is backing Cárdenas in the race, and he’ll also look to draw support from progressives.
Bera has the edge over Cárdenas in DCCC donations. According to the October dues list, both candidates raised 100% of their dues contributions. Yet while Cárdenas had given $20,000 to the DCCC, Bera had donated $1.5 million. Bera also raised and gave a total of $3.9 million to Frontline and Red-to-Blue candidates, while Cárdenas’ tally was $340,000.
Cárdenas’ team points to how the California Democrat overhauled BOLD PAC’s fundraising operation and says he gave an additional $250,000 this cycle to Democratic candidates and incumbents.
Bera has been criticized by some members of the labor movement for being anti-worker due to his vote in favor of fast-tracking Trade Promotion Authority in 2012.
Another wrinkle: There’s nothing in the proposed rule change that says the appointment has to be somebody who is publicly running for the position. So it’s possible incoming Minority Leader Hakeem Jeffries (N.Y.) could nominate a different candidate that isn’t Bera nor Cárdenas. This has been floated to us by some Democrats as an option.
The timeline: We don’t expect a new DCCC chair to be settled this week. Jeffries is likely to nominate a DCCC candidate in the coming weeks if the amendment passes, according to Democratic sources. Under the amendment rules, the Democratic leader doesn’t have to nominate a candidate until Feb. 15.
— Max Cohen
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9 a.m.: President Joe Biden will get his daily intelligence briefing.
10:10 a.m.: Vice President Kamala Harris will meet with French President Emmanuel Macron at NASA headquarters.
11:05 a.m.: Biden will head to the Interior Department for the Tribal Nations Summit. Biden will speak at 11:30 a.m.
2 p.m.: Karine Jean-Pierre will brief.
5:30 p.m.: The Bidens, Harris and Second Gentleman Doug Emoff will attend the National Christmas Tree lighting.
“U.S. Pledges $53 Million to Help Fix Ukraine’s Electrical Grid,” by Edward Wong and Steven Erlanger in Bucharest, Romania
“Paul Ryan on the GOP’s future: ‘We lose with Trump,’” by KK Ottesen
“Jiang Zemin, Former China Leader, Dies at 96,” by Chun Han Wong
“Apple’s Cook Goes to Washington to Meet With Top GOP Lawmakers,” by Emily Birnbaum and Mark Gurman
“The GOP’s same-sex marriage evolution: A slow, choppy tidal shift,” by Burgess Everett
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Editorial photos provided by Getty Images. Political ads courtesy of AdImpact.
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