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December 2, 2022
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PRESENTED BY
THE TOP
Happy Friday morning.
House Democrats finally have former President Donald Trump’s tax returns after a yearslong political and legal fight that sharply divided the caucus at times. Now they have to decide what to do with them.
That’s the issue befuddling Democrats on the Ways and Means Committee, led by Rep. Richie Neal (D-Mass.), with just a month left in their majority.
Neal is facing pressure from Ways and Means Democrats to move quickly to analyze Trump’s returns – and possibly release them to the public – before Republicans take over and make the whole question moot.
“There’s a time factor here,” Rep. Bill Pascrell (D-N.J.) said after Ways and Means Democrats huddled in Neal’s office off the House floor on Thursday. “We got Jan. 3. And that doesn’t count up to too much time to me.”
But Neal is providing little detail about how he plans to spend the next 32 days. In fact, the Massachusetts Democrat wouldn’t even acknowledge gaining access to six years of Trump’s tax returns, citing privacy laws. His nonanswer comes despite the Treasury Department saying this week it had turned over the information to the panel after the Supreme Court declined to intervene in the long-running battle with Trump.
Trump had repeatedly argued in court that Democrats were going to leak his tax returns as soon as they obtained them in order to damage him politically. Neal clearly was cognizant of that claim as he responded to press inquiries.
“It’s very sensitive information,” Neal told reporters. “We intend to deal with it professionally the way that we have.”
In the 15-minute sitdown with reporters, Neal would say very little, often looking toward a trio of attorneys and his committee staff director in the back of the room for any signal before answering.
“I have not even acknowledged that I have them or don’t have them, I can’t comment on that,” Neal said at one point.
The only real information Neal divulged was that he has appointed an undisclosed number of staff to serve as “agents” – experts who can officially review Trump’s tax documents.
Democrats on the panel didn’t get much more info from Neal in their closed-door meeting either, according to several members we checked with after. The discussion was tense at times, with members “extremely frustrated” about the lack of transparency regarding next steps with so little time left, one Democrat told us. Led by some of their senior colleagues on the panel, Neal was grilled about his intentions and offered little on his plans.
Remember, these frustrations have been simmering under the surface of the Democratic Caucus for years.
Neal’s allies maintain that he has always taken a studied and methodical approach to this issue and isn’t going to change that now.
“Richie Neal has handled this with great dignity,” Speaker Nancy Pelosi said Thursday. “There had been those in the public who have been saying, ‘He should be doing this, he should be doing that.’ No. He should be handling it with the dignity that it deserves.”
But Neal’s critics within the caucus say he was reluctant to pursue Trump’s tax returns and slow-walked the issue, not even making the initial request until four months into the Democrats’ majority.
Here’s Rep. Lloyd Doggett (D-Texas), who has long pushed for Trump’s tax returns to be made public, after the meeting:
So what’s next? Several Democrats said they expect Neal to call an executive meeting of the panel in the coming weeks. It will occur after his agents have had time to review Trump’s taxes. It also means Republicans on the panel can participate too. Like Trump, Republicans have complained that Democrats didn’t have a “legitimate legislative purpose” for the review and risk “further weaponizing the tax code” to harm political opponents.
Democratic lawmakers and aides told us they were skeptical much would happen beyond an executive session of the panel given the looming end for Democrats’ majority. It will take a least a week or two for agents to review the documents, which are described as “very complex.” Christmas and New Year are in a couple of weeks as well. So the calendar is a huge challenge for any Democratic action.
| → | More IRS news: The IRS’s inspector general didn’t find any evidence that former FBI Director James Comey and Deputy Director Andrew McCabe were targeted for “highly invasive audits” by the Trump administration, although there were some “deviations” from the normal agency process in selecting the two for review. Here’s Mike Schmidt from the NYT on the inspector general report. |
– Heather Caygle and John Bresnahan
INSIDE THE GOP LEADERSHIP
News: Emmer taps Reschenthaler for chief deputy whip
News: Rep. Tom Emmer of Minnesota, the incoming House majority whip, has tapped Rep. Guy Reschenthaler (R-Pa.) as his chief deputy. This will elevate the 39-year old to one of the most important positions in House Republican leadership.
Reschenthaler ran Emmer’s internal campaign for majority whip, helping him stave off challenges from Reps. Jim Banks (R-Ind.) and Drew Ferguson (R-Ga.) to win the No. 3 job in GOP leadership.
The chief deputy whip serves as the top lieutenant to the whip and helps manage a large team of vote counters. This system allows the leadership to push bills through the chamber, as well as providing insight into what’s happening throughout the conference.
In a 222-seat majority, the whip team is going to have run efficiently. Reschenthaler will be charged with helping to make that happen.
Emmer also has been interviewing senior aides to join his operation. Emmer has a lot of critical decisions to make here. Few people in Washington have the experience necessary to run a whip operation in the majority.
Reschenthaler is widely seen in the GOP leadership as a good addition to the table. The former Navy JAG and Pennsylvania state senator has been in Congress since 2018. He serves on the House Appropriations and Rules committees. Reschenthaler is viewed as a possible future chair of the Rules panel.
Furthermore, the chief deputy whip job has traditionally been a springboard to bigger things in the House. Denny Hastert became speaker; Roy Blunt and Eric Cantor both served as whip and then majority leaders. Kevin McCarthy became whip and majority leader. We’ll see if the California Republican can add speaker to that resume.
– Jake Sherman
2024 RACE
Biden’s primary blockbuster
It’s hard to overstate how significant it is that President Joe Biden’s is calling for South Carolina to hold the nation’s first presidential primary, followed by New Hampshire and Nevada. The DNC’s Rules and Bylaws Committee is meeting today to consider changes to the nominating calendar. Here’s Biden’s letter to the committee, it’s worth a read.
Biden’s announcement acknowledges the growing power of Black voters and other people of color inside the Democratic Party. Iowa – an increasingly red state with a population that’s overwhelmingly white – gets shunted aside. This was likely to happen following the disastrous 2020 caucus anyway, at least for Democrats. New Hampshire no longer looks so special. Sens. Jean Shaheen (D-N.H.) and Maggie Hassan (D-N.H.) have objected, as has GOP Gov. Chris Sununu, yet it makes sense for both parties in the long run.
The shift will impact not only who wins their party’s nomination, but who can even run in the first place. And strategies for winning the nomination – where does a candidate spend their time, for how long, where do they run TV ads and build turnout operations – will shift dramatically. Higher-profile candidates get an even bigger early edge, and super PACs – meaning mega-donors – have that much more sway, if that’s even possible.
But as the Washington Post’s Michael Scherer and Tyler Pager note in their scoop on Biden’s move, Republican state officials will have to play ball to make this happen:
However, even if it doesn’t happen this cycle, this change will occur at some point. Logic and political necessity seem to dictate it.
– John Bresnahan
CANNABIS CONUNDRUM
DOJ memo: SAFE Banking could ‘significantly complicate’ law enforcement activity
News: The Justice Department has broad concerns with the potential implementation of a bill to reform the banking rules for cannabis companies, according to a memo obtained this week by Punchbowl News.
Lawmakers and the financial services industry have spent years pushing for the passage of the Secure and Fair Enforcement Banking Act, a bill that would provide a “safe harbor” for regulated financial institutions to work with cannabis firms in states where it’s legal. Cannabis banking reform is a top priority for Senate Majority Leader Chuck Schumer in the current lame duck session.
As those negotiations progressed, senior Senate staff received a memo from DOJ that said some of the original House bill’s legislative language “could significantly complicate law enforcement investigations and prosecutions.” We’re told the memo was first requested by Senate Republicans.
Depending on how the Senate responds, DOJ’s legal concerns here could be read as a preview of how the chamber could change a bill that’s been passed several times in the House since 2019. It also hints at the regulatory headaches that could follow cannabis banking reform’s passage.
But before we get into the nitty gritty, it’s important to keep this in perspective. Cannabis is illegal at the federal level, and the SAFE Banking Act doesn’t change that. Any bill designed to make incremental reforms, such as tweaks to financial services policy, is going to present some complications for DOJ.
And in spite of the potential challenges outlined in the memo, a DOJ official also indicated that with some minor changes, the agency “believes it can effectively implement the legislation,” according to an email obtained by Punchbowl News. (The changes suggested by DOJ to legislative text focused almost exclusively on technical language around Native American law.)
Here are some of the top concerns outlined by DOJ in its five-page technical assistance memo, which you can read in full here:
| → | The language around “legitimate” cannabis firms “is drafted broadly and could create an immunity shield around activities of cannabis businesses that involve other illicit drugs or activities,” the memo said. |
The Justice Department said the SAFE Banking Act organizes its reforms around “cannabis-related legitimate businesses,” rather than focusing on the specific activities done by cannabis companies. That could present enforcement problems, the DOJ said.
More on that:
| → | The bill doesn’t answer some key questions about the implications for anti-money laundering laws. |
For cannabis companies, DOJ wrote that a section of the law exempting certain revenue streams from some money laundering statutes “is drafted broadly and could create an immunity shield around activities of cannabis businesses that involve other illicit drugs or activities.”
And for banks, the DOJ memo said SAFE Banking “does not address financial institutions’ obligations” to verify a cannabis company’s compliance with state laws under common anti-money laundering statutes.
| → | DOJ isn’t confident about state governments’ ability to ensure legal cannabis companies compliance. |
The memo reported that key sections of the legislation say “nothing about how states will determine compliance with state law or what happens when state laws conflict,” particularly around the transportation of cannabis.
It’s not clear whether the DOJ memo will affect the viability of cannabis banking reform in the lame duck. The idea remains broadly popular among both parties, some lawmakers might not even object to the idea that law enforcement could face a higher bar prosecuting drug-adjacent offenses after decades of the U.S. government’s racially disparate “war on drugs.”
Representatives for Rep. Ed Perlmutter (D-Colo.), the long-time chief sponsor of the SAFE Banking Act who’s set to retire this year, didn’t respond to a request for comment. A spokesperson for DOJ declined to comment.
A spokesperson for Sen. Steve Daines (R-Mont.), who is leading the Republican side of negotiations around cannabis banking, told us: “The senator is continuing to work every day to build consensus so we can pass ‘SAFE Banking’ into law this year.”
– Brendan Pedersen, Jake Sherman and John Bresnahan
PRESENTED BY INSTAGRAM
2024
Banks hires Ward Baker for Senate run
News: Rep. Jim Banks (R-Ind.) has hired former NRSC Executive Director Ward Baker to run his Senate race, multiple sources told us.
Banks hasn’t officially jumped into the race to succeed Sen. Mike Braun (R-Ind.), who is running for governor. But hiring Baker is a sign that Banks is taking it quite seriously.
In addition to running the NRSC, Baker has served as an adviser to Sens. Marsha Blackburn (R-Tenn.) and Bill Hagerty’s (R-Tenn.) runs for Senate in the Volunteer State.
– Jake Sherman
THE CAMPAIGN
Stefanik says campaign donations sent through USPS have gone missing
Lawyers representing House Republican Conference Chair Elise Stefanik have written a letter to Postmaster Louis DeJoy, saying there has been theft of campaign donations sent through the USPS. Here’s one excerpt from the letter:
This is quite interesting. We’ll be following this to see how it turns out.
– Jake Sherman
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