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December 19, 2022
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PRESENTED BY
THE TOP
Happy Monday morning.
The 117th Congress is ending where it started two years ago – talking about Donald Trump.
The Jan. 6 select committee will meet this afternoon to release its final report on the deadly Capitol attack by Trump supporters. Only the executive summary is expected to be issued today. The full document and accompanying materials may take a few more days to complete.
More importantly, the select committee is expected to approve an unprecedented criminal referral to the Justice Department on Trump. The charges include obstructing an official proceeding of Congress, conspiracy to defraud the federal government and insurrection, according to multiple sources and media reports. There could be more. NBC’s Ali Vitali, Kate Santaliz and Haley Talbot listened to the committee’s rehearsal of the hearing yesterday.
As we’ve told you for a while, additional referrals are expected, including against John Eastman, the Trump lawyer who came up with the “fake elector” plan. Rep. Bennie Thompson (D-Miss.), the select committee’s chair, has told reporters that the panel is looking at whether witnesses may have perjured themselves during testimony to investigators.
Congress has never made a criminal referral against a current or former president, although it’s more symbolic than legally binding for DOJ. Federal prosecutors led by special counsel Jack Smith are conducting their own criminal probe into Trump related to the 2020 election. That investigation, however, was spurred in part by the stunning revelations from the select committee.
“Viewing it as a former prosecutor, I think there’s sufficient evidence to charge the president,” Rep. Adam Schiff (D-Calif.), a member of the select committee, said Sunday on CNN’s “State of the Union.”
We’ll also see what the select committee does with House Minority Leader Kevin McCarthy, Rep. Jim Jordan (R-Ohio) and other GOP lawmakers for refusing to comply with subpoenas. A referral to the Ethics Committee, as Thompson has suggested may occur, doesn’t mean much, even though it would please Democratic leaders and the White House. The Ethics Committee is evenly divided between the two parties, and it’s not going to take any action against McCarthy and the other Republicans.There’s no time left in this Congress either. The Ethics Committee would have to affirmatively vote to continue this issue in the next Congress. That’s not going to happen.
We’ll repeat something that we’ve said here before – the Jan. 6 select committee was groundbreaking in many ways. It changed how big congressional investigations will be conducted in the future. It did immense political damage to Trump and his allies by shining light on their private behavior and exposing it to public scrutiny. And it kept Republicans from being able to move past what occurred that day. Any one of these developments by itself are important; all of them together are historic.
On Tuesday, the House Ways and Means Committee will hold a business meeting to decide whether to release part or all of Trump’s tax returns from 2015 to 2020.
The session will begin as a business meeting for the committee. Panel members – led by Rep. Richie Neal (D-Mass.), the chair – will then vote to move into executive session. Behind closed doors, the committee will decide whether to publicly disclose Trump’s taxes. Trump sued to block this move and took it all the way to the Supreme Court, but he lost.
We expect the committee to move pretty quickly to get the Trump tax info out into the public domain once it votes.
Republicans will rail against this move, of course, as will Trump. They’ll warn that Democrats are “weaponizing” the release of tax returns and threaten that Republicans could do the same in the future. Yet if Democrats stick together, there’s nothing that Rep. Kevin Brady (R-Texas), the ranking member, and his Republican colleagues on Ways and Means can do to stop it.
There’s precedent for public disclosure of confidential tax information by Ways and Means. In 1973-74, Congress investigated President Richard Nixon over big tax deductions he’d claimed before taking office and later released some of that information (Nixon’s infamous “I am not a crook” line came as a result of that probe, not Watergate.) In 2014, the Ways and Means Committee – chaired at that time by GOP Rep. Dave Camp (Mich.) – released thousands of pages of internal IRS documents as part of the Lois Lerner investigation.
Following Tuesday’s blockbuster move – if this plays out as expected – the questions will become:
1) Is there any political fallout for Trump, and
2) Whether there’s anything in Trump’s taxes that warrants further investigation. That’s not something the Ways and Means Committee is doing as part of this exercise. There are also only a couple weeks left before the GOP takeover of the House. But the Senate Finance Committee could wade into this issue next year, if Democrats choose to do so.
Programming note for Premium subscribers: We only have AM editions this week. But we imagine we may be sending out a few special editions as news breaks on the Hill.
– John Bresnahan
PUNCHBOWL NEWS x CES
Punchbowl News is headed to CES!
Punchbowl News will be an official media partner at CES, The Consumer Electronic Show in Las Vegas. 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 Vegas for CES in the past, so we wanted to make sure we were there. Let us know you’ll be there!
GOVERNMENT SPENDING
The omni is coming. So is Christmas
The last big policy fight of the 117th Congress – passage of the FY2023 omnibus funding bill – is likely to start unfolding this afternoon. The deadline for passing it before Christmas is tight.
House and Senate appropriators toiled through the weekend to complete the roughly $1.7 trillion package. We don’t know the exact amount the legislation costs because, so far, party leaders refuse to disclose it. We’ll find out today.
Timing and votes are the big questions here. Government funding runs out at midnight Friday, and Christmas is Sunday. Senate Minority Leader Mitch McConnell has publicly declared he won’t stay in town past Thursday night.
Assuming the package is released today as expected, the Senate can move quickly to get on the bill. Senate Majority Leader Chuck Schumer would then file cloture, setting up a procedural vote Wednesday or Thursday (the hope is Wednesday.)
Once cloture is invoked, there’s an additional 30 hours of post-cloture time. This schedule can be shortened by consent, but it will take all 100 senators to do so. There will be enormous pressure to find a deal, especially once it’s clear the measure has more than 60 votes.
After the Senate finishes, the House can take up the bill and pass it pretty quickly. Speaker Nancy Pelosi only has a two-vote margin right now, but there will be enough Republicans who will cross the aisle to vote with Democrats to ensure passage.
As for the omnibus itself, Republicans have been pushing for a big boost in defense spending, and they refused to go along with Democratic calls for “parity” in increasing non-defense spending by a similar amount.
There are a host of policy riders and related issues that appropriators had to resolve as well. Some of these were kicked up to the level of the “Big 4” party leaders. Or in this case, the Big 3, since House Republicans refuse to support this package.
New economic and military aid to Ukraine is a vitally important issue for Congress and President Joe Biden. The White House has sought an additional $37 billion in Ukraine funding, which should last until the summer at current spending rates. Sources close to the issue say that request has been met.
Another big issue is reforming the Electoral College to avoid a repeat of 2020 in the next presidential election. The Senate version of that proposal – led by Sens. Susan Collins (R-Maine) and Joe Manchin (D-W.Va.) – will be included, sources told us.
– John Bresnahan
THE QUEST FOR 218
McCarthy will be speaker, his allies say over and over and over again
Part of House Minority Leader Kevin McCarthy’s play the last few weeks is to project his ascension to the speaker’s chair as inevitable, while branding his GOP detractors as an annoying swarm of gnats who need to be swatted away.
Team McCarthy says that the vast majority of the House Republican Conference supports him – this is true – and the small faction that doesn’t will have to come around eventually.
Unfortunately for McCarthy, the fight to become speaker is one that’s won on the floor with 218 yes votes, not the majority of the House Republican Conference.
Now McCarthy world is trying a new strategy. A group of Republicans has released statements saying that they will only vote for McCarthy as long as he’s on the ballot. Here’s Rep. David Joyce (R-Ohio), a leading moderate who was handing out “O.K.” pins last week. “O.K.” is meant to stand for “Only Kevin.” But these ornaments were the subject of lots of jokes because branding McCarthy as “O.K.” isn’t the greatest selling point.
Here’s Rep. Guy Reschenthaler (R-Pa.), a member of McCarthy’s leadership and a close ally of the California Republican, saying the same. Here’s Rep.-elect Nick LaLota (R-N.Y.), Rep. David Valadao (R-Calif.) and Rep. Mike Simpson (R-Idaho).
Also check out incoming House Majority Leader Steve Scalise, who said this:
FWIW: This N.Y. Post story really raised hackles in McCarthy’s orbit.
How to think of this: It’s really easy right now for people to say they’ll vote for no one but McCarthy. But the fact is this: If this race goes multiple ballots and McCarthy can’t move the five no votes, members will start to look elsewhere. We’ve spoken to plenty of lawmakers who like McCarthy and intend to support him but they are cognizant that he simply may not be able to win.
Here’s another example of inevitability projection: All of the incoming House committee chairs that have already won gavels are releasing a new letter this morning calling on their Republican colleagues to back McCarthy. Read it here.
The letter isn’t a huge shock. The incoming confirmed committee chairs are, unsurprisingly, a pro-McCarthy group. They derive their power, in part, from McCarthy’s support. And it’s unlikely that the appeal from the McCarthy allies will move the five members who form the “Never McCarthy” caucus.
“We urge our colleagues – let us not squander this majority before we even take back the gavels,” the committee chairs write.
The bottom line: The equation is actually pretty simple for McCarthy. He needs to win over at least some of the roughly five Republicans who say they’ll never vote for him. Or find some other way to lower the threshold by which he needs to win. McCarthy may have to do that by caving on the motion to vacate. Letters and statements aren’t going to cut it.
Also: Former President Donald Trump told Breitbart that McCarthy’s dissenters should stand down.
Flagging for House GOP leadership: The front page of the NYT has a brutal story about Rep.-elect George Santos’ (R-N.Y.) biography. Read the entire thing. There may be enough questions here that Democrats challenge seating Santos in the next Congress.
– Jake Sherman, John Bresnahan and Max Cohen
IN MEMORIAM
Remembering the finserv bills that (probably) won’t pass in 2022
It’s been quite a year in financial services news. But it hasn’t exactly been a banger for financial services legislation.
Lawmakers delivered some significant legislative achievements this year, including the Inflation Reduction Act, CHIPS Act and even bipartisan gun control measures. But few major changes to financial policy made it across the finish line.
In a statement, House Financial Services Committee Chair Maxine Waters (D-Calif.) said she was proud of the “substantial number of bills” the panel approved over the last two years but argued “the Senate stood in the way of a great deal of the progress we made.”
Could that change in 2023? Maybe. But control over Congress will be split come January, so we’re not bullish.
Here are some of the top bills we’ve tracked that will likely fall short this year.
| → | Federal housing reform and funding: |
A top priority for Waters this year was addressing the sorry state of the American housing market.
There were a few opportunities for Democrats to secure federal funds that would have bolstered the development of affordable housing units, funded rental assistance and down payment programs, backed the enforcement of fair housing laws and more.
Waters mounted a mighty push for reforms to be included in the Build Back Better Act, as well as the Inflation Reduction Act. It didn’t happen, and Waters will hand the committee gavel to Rep. Patrick McHenry (R-N.C.) next month.
But this is an area that Senate Banking Committee Chair Sherrod Brown (D-Ohio) will care about next year. He’s fond of reminding reporters that the full name of his committee includes “Banking, Housing and Urban Affairs.”
McHenry told us last week he’d also like to explore some housing reforms in 2023. But let’s not get too excited. We don’t expect much overlap in the kinds of reforms favored between McHenry and Waters or Brown.
“What has been woefully missing from the last few Congresses is a substantive housing agenda,” McHenry told us last Thursday. ”I’m hopeful this can come together in the next Congress.”
Waters said in her statement that the “long overdue investments” in American housing she pursued “would’ve been life-changing for communities everywhere.”
| → | Stablecoin reform: |
It was a big year for crypto meltdowns and a not-so-big year for crypto legislation.
It will take time for broad crypto legislation to develop. But one targeted effort appeared feasible this year – new rules for a crypto product known as stablecoins, which attempt to function like a private currency by maintaining a steady value.
Stablecoins make financial regulators nervous. By mimicking private money, stablecoin projects can be susceptible to bank-like runs if too many users try to cash out at once.
Over at the House Financial Services Committee, McHenry and Waters spent months trying to hammer out a bill to introduce some basic federal safeguards to stablecoins, including disclosure rules and reserve requirements. They came close to introducing what would have been the first federal legislation to address crypto, but discussions fizzled out by the late fall.
That said, bipartisan progress made so far should help this effort in the 118th Congress. Expect to hear more about this next year.
| → | Cannabis banking reform: |
Things aren’t looking good for the Secure and Fair Enforcement Banking Act as we approach the end of the lame duck, marking one of the biggest legislative disappointments for both the cannabis sector and banking industry.
We’ve said it before and we’ll say it again: Rep. Ed Perlmutter’s (D-Colo.) bill to reform the law around banking legal cannabis companies is broadly popular in both parties.
If there was ever a golden window to pass SAFE Banking, the rapidly-shrinking month of December was it. Perlmutter retires from Congress next month, and the lame duck’s urgency won’t carry over into 2023.
There are some new tailwinds that proponents can feel good about, however. Brown is newly supportive of SAFE Banking now that the Senate’s version is expected to include some restorative justice measures. And in the GOP House, McHenry has said he won’t stand in the way of a bill he otherwise opposes.
But we’re beginning to wear down the tape on this particular cassette. We’ll keep you posted either way.
– Brendan Pedersen
PRESENTED BY BLACKROCK
BlackRock is proud to support U.S. roads and infrastructure, with over $20 billion invested on behalf of our clients. Learn more.
THE CAMPAIGN
| → | Man in demand: Rep.-elect Maxwell Alejandro Frost (D-Fla.) spent the weekend working the phones to urge voters to back state Sen. Jennifer McClellan in the race to replace the late Rep. Donald McEachin’s (D-Va.). Frost is fresh off an appearance in Georgia earlier this month to stump for Sen. Raphael Warnock (D-Ga.). |
Frost’s surrogate duties are pretty notable for a member who hasn’t even been sworn into Congress yet.
– Max Cohen
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At Wells Fargo, we cover more rural markets than many large banks, and nearly 30% of our branches are in low- or moderate-income census tracts. What we say, we do. See how.