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December 22, 2023
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PRESENTED BY
THE TOP
Happy Friday morning.
This is our final regularly scheduled edition of 2023. What an amazing year. Thank you for being along for the ride. We have so much in store for you in 2024.
We’ll be back on Jan. 2. In the meantime, sign up for Premium and Premium Policy to make sure you don’t miss any breaking news. And sign up for Punchbowl News texts. Merry Christmas, happy holidays and happy New Year.
Leader Look: We wanted to close out the year with a close look at the two Senate leaders and where their heads are on what will be an eventful first few months of 2024. They both had quite the year for different reasons.
Senate Majority Leader Chuck Schumer: The New York Democrat was able to sidestep a number of tricky issues throughout 2023, although divided government and GOP infighting prevented a repeat of the legislative wins of the last Congress.
From avoiding a debt default and two potential government shutdowns to navigating a months-long struggle over military promotions and the Pentagon’s abortion policy, Schumer did what he had to with a very thin majority.
Yet Schumer’s toughest test will come in 2024, when he will face the daunting task of defending an array of vulnerable Senate Democrats in a presidential election year with an unpopular 81-year-old incumbent at the top of the ticket. His Democratic colleagues can run perfect races and still lose. Schumer — a former DSCC chair — knows this.
Schumer has been emphasizing what he sees as the steady hand of the Democratic-controlled Senate in contrast with the chaos of the GOP-run House. And he’s continuing to focus on the implementation of the Senate’s big bipartisan achievements from the first two years of Joe Biden’s presidency.
As part of that effort, Schumer has been meeting on a bi-weekly basis with the six most endangered Democratic incumbents. Democrats believe that highlighting infrastructure projects in those states will give them a major boost.
Of course, the Republican-controlled House will continue to be a major hurdle for Schumer. When it comes to immigration and border security — the price Democrats must pay for Ukraine aid — there’s a real risk of a 2013 rerun, with the Senate searching for a bipartisan deal while the House does nothing. The migrant crisis at the U.S.-Mexico border is a major political vulnerability for Biden, Schumer and the party, so this’ll be one of the top storylines heading into the next session.
Schumer and Senate Democrats could also be forced to respond to a possible Biden impeachment. We think that’s more likely than not now that House Republicans have opened a formal inquiry. A Biden impeachment trial — with its pre-ordained outcome — would take weeks of floor time.
And then there’s government funding. Congress finds itself in a real jam here, with the first of two funding deadlines looming just 10 days after lawmakers return in January.
While Schumer has been criticized for not moving fast enough on the issue, Senate appropriators believe they have a blueprint in their 12 committee-approved bills, regardless of whether they pass on the floor. Being senators — and having crafted these measures to conform to the bipartisan Fiscal Responsibility Act — they think the House should be forced to accept their position.
The House already moved in the Senate’s direction on shutdown-averting government funding bills and other must-pass items like NDAA. Senate Democrats think appropriations will be no different.
Senate Minority Leader Mitch McConnell: The longest-serving party leader in Senate history had one of his most difficult years and could face an even more turbulent 2024.
At the start of this session, McConnell was fresh off the most significant challenge to his leadership role in his 16 years atop the GOP Conference. He fended it off easily, but lingering issues from that leadership fight popped up throughout the year, with hardline conservatives continuing to question McConnell’s strategy on a number of fronts.
McConnell’s health challenges also burst into public view even before his two “freezing” episodes were caught on camera. Earlier in the year, McConnell missed six weeks after suffering a concussion and broken ribs stemming from a fall. Taken together, these incidents had many wondering if McConnell’s days as GOP leader were numbered. It’ll be an even more potent question if Republicans take back the Senate majority next year, which they’re currently favored to do.
Yet even apart from his health, GOP senators say McConnell’s influence within his conference has waned. His steadfast support for Ukraine has particularly rankled conservatives, whose alignment with Donald Trump has fueled the burgeoning dissatisfaction with McConnell’s leadership. Trump, of course, detests McConnell for acknowledging that the former president lost in 2020.
McConnell has worked hard to ensure that Trump’s worldview doesn’t win out within the party, often breaking with the former president without uttering his name. But with Trump on track to secure the GOP nomination, it’ll become much harder for McConnell to avoid questions about the former president and his latest incendiary or racist comment.
January will be critical for McConnell, Washington’s most vocal Ukraine supporter. McConnell has embraced demands from his conference that any Ukraine aid bill be paired with GOP-approved border security and immigration policy changes. As we’ve noted repeatedly, this was a risky strategy given the thorniness of the immigration issue, but it was a necessary one given where the Republican Party is today. McConnell has held the line on this, to the pleasant surprise of Senate conservatives.
McConnell won’t be able to sign off on any agreement that Speaker Mike Johnson refuses to bring up in the House. Conservatives there have already trashed the idea of a Senate-brokered compromise, and half of the House GOP Conference opposes more Ukraine aid anyway.
So the internal GOP calculus — with Trump looming on the horizon — becomes more difficult to predict by the day.
— Andrew Desiderio, Jake Sherman and John Bresnahan
PUNCH POWER MATRIX
Power Matrix Year In Review
Our weekly Power Matrix rankings of who’s up and who’s down in Washington have been a staple of Punchbowl News from the start. Thanks for following along with us.
Today, as part of the last edition of 2023, we’re bringing you the Power Matrix “Year in Review.” We compiled each up and down this year to select the politicians with the best — and worst — Power Matrix differentials. Enjoy!
— Max Cohen and Robert O’Shaughnessy
How 2023 set the stage for major tax fights to come in the new year
We’ll just say it — 2023 wasn’t a great year for tax policy. But there’s hope for all you tax lovers out there.
The groundwork that lawmakers laid this year, along with some big deadlines on the horizon, could make 2024 a busy period in tax land. What happens in the new year will set up landmark legislative efforts to address a pile of tax policies that expire after 2025.
To be clear, no one was expecting a Republican House and Democratic Senate to yield significant tax changes this year. But that didn’t stop lawmakers from trying to revive some lapsed business tax breaks and exploring ways to reexpand the child tax credit.
Now, top lawmakers sound closer to a deal and appear far more willing to strike one than they did 12 months ago.
“I feel that we’re really well positioned now to be able to put something together,” Senate Finance Committee Chair Ron Wyden (D-Ore.) told us.
The landscape: Last December, Democrats and Republicans weren’t getting anywhere on expanding the child tax credit. But now lawmakers from both parties are saying publicly there’s a deal to be made that includes expanded benefits for families with kids.
Let’s be clear, however — it’s still highly unlikely any tax deal will come together before the lame-duck session next year.
But Sen. Mike Crapo (R-Idaho), ranking member on the Senate Finance Committee, told us Republicans taking over the House helped get bipartisan talks around the child tax credit to “more of a reasonable zone” this year.
Another factor in talks was Rep. Jason Smith (R-Mo.) ascension as chair of the House Ways and Means Committee. Smith and Wyden have built up their relationship over the past year. Wyden said this week he speaks with his Ways and Means counterpart regularly amid tax negotiations.
Democrats now appear willing to accept something closer to Republicans’ demands. The GOP wants to ensure work requirements for the child tax credit, and keep the costs way below the 2021 version.
Any deal on the child tax credit would also include revivals of tax breaks for businesses — likely for research and development spending, interest expenses and the purchase of assets that lose value over time.
Top tax writers would love the chance to attach a deal to a funding package early in the year, but that seems highly unlikely given bigger challenges in the spending fight. They’ve also considered trying to pass a standalone tax package, likely by using a widely-backed bill to extend tax treaty-like benefits to Taiwan.
Of course, it’s just as likely that blowout funding fights between the Senate and House early next year will force tax policy to get lost in the mix. But if tax committee members see an opening, don’t be surprised if they try to capitalize on it.
SALT-y shores: We can’t talk about 2024 without addressing deductions for state and local taxes. Republicans put a $10,000 cap on SALT deductions in their 2017 tax law, a move despised by property owners in high-cost metro areas.
If there was ever a time for SALT to crystallize as a major issue for both parties, it’s 2024. Many of the deduction’s champions represent the most vulnerable seats in Congress, and this issue affects a wide swath of their constituents.
Rep. Andrew Garbarino (R-N.Y.), a leader of SALT efforts earlier this year, told us he’ll keep pressing the issue as tax bills come up. Garbarino expects his allies will flex their power on SALT moving forward in any slim House majority.
“This goes beyond party lines here,” Garbarino said. “Like I said, it’s about the regions, the states. So I think no matter who’s in charge of Congress, it’s going to stay as a major issue, especially with the cap expiring in the next two years.”
With the cap set to expire after 2025, we expect opponents of the current SALT limit to make their presence known in the coming year.
— Laura Weiss
LAWMAKER SPOTLIGHT
Celeste Maloy on GOP drama, 2024 vision
At No. 434 in the seniority ranks, Rep. Celeste Maloy (R-Utah) is entering the House during one of the craziest, most chaotic congressional sessions in recent memory.
Maloy succeeded former GOP Rep. Chris Stewart in Utah’s 2nd District after he stepped down due to family health issues. Maloy was sworn in at the end of November following a drama-filled fall dominated by House GOP infighting and a three-week speaker battle.
We caught up with Congress’ newest member this week to see what she thinks of the House drama, her experience so far and what to expect in 2024.
GOP fighting: Maloy said Republicans have to start uniting around issues they agree on, whether that’s border security or education reform, instead of wasting the majority by fighting each other.
“The things we disagree on are more ancillary, and I think we’ve been spending a lot of time focused on the things we disagree on,” Maloy said.
Maloy added: “If we can be disciplined, stick to the basics, talk about the things we agree on and legislate on the things we agree on, that’s going to help us when we have to deal with things where the conference is divided.”
Of course, that’s easier said than done with a conference that booted former Speaker Kevin McCarthy in October and continues to tussle over nearly every issue that arises.
Staff experience: Maloy is no stranger to congressional politics. She served as Stewart’s legal counsel before taking his seat.
“I’m learning that what my boss was doing all day was not as connected to what I was doing all day as I thought,” Maloy said.
Maloy also missed out on getting a freshmen orientation since she came in in the middle of the Congress. Maloy credits her staff experience as coming in handy in this case.
“It would be a lot tougher to get up to speed if I didn’t already have a good background in this district and know what’s happening,” Maloy said. “I don’t know how anybody comes in fresh without some background in how the Hill works.”
On Speaker Mike Johnson: Maloy came to Congress roughly a month after Speaker Mike Johnson won the gavel. Both are still finding their footing in their new positions.
Maloy said she reached out to Johnson before the NDAA vote last week to ensure leadership can move forward with FISA reforms, which have been a subject of much consternation within the Republican Conference.
The NDAA includes a short-term FISA extension. But Johnson had originally wanted to put two dueling long-term reauthorizations up for a vote last week. Johnson nixed that plan after rank-and-file Republicans protested the move.
Retirements: Maloy expressed concerns about the loss of institutional knowledge that will follow the wave of retirements this Congress. Fifty lawmakers have announced plans to retire, run for higher office or have left Congress early.
Maloy said she’s hopeful that the departures will allow younger members like herself to reshape how Congress works.
“It gives an opportunity for a lot of fresh faces to come in who don’t have any of the baggage or the biases about what we’ve already tried,” Maloy said. “I’m still optimistic about what we’re going to be able to get done.”
— Mica Soellner
WASHINGTON X THE WORLD
Gottheimer: Qatar needs to do more to free hostages
News: Rep. Josh Gottheimer (D-N.J.) just returned from a brief House Intelligence Committee trip to Israel. He met with Prime Minister Benjamin Netanyahu, the head of Mossad and other government officials.
Upon returning, Gottheimer is trying to up the pressure on Qatar to deliver on getting the hostages released.
“[Qatar], I believe, [has] the power and responsibility to help get more hostages freed and should be acting faster and doing everything they can,” Gottheimer said. “I believe it’s incumbent upon them and expected upon them to do everything they can, in their conversations with Hamas in those relationships, to get the hostages home as quickly as possible.”
Qatar is in an interesting position in the Middle East. They house the Hamas political office and also one of the largest U.S. outposts in the Middle East, Al Udeid Air Base.
— Jake Sherman
THE CAMPAIGN
McDonald Rivet to enter Michigan’s 8th District race
News: Michigan Democratic state Sen. Kristen McDonald Rivet is expected to announce her bid for the state’s open 8th District seat during the first week of January, according to sources close to the campaign.
Local Democrats are expected to quickly coalesce around McDonald Rivet’s candidacy in the critical swing seat vacated by retiring Rep. Dan Kildee (D-Mich.). Republicans have targeted Kildee in recent cycles in the district that President Joe Biden won by just two points in 2020.
McDonald Rivet won her state Senate seat last November and campaigned strongly on abortion rights, along with Michigan Gov. Gretchen Whitmer. McDonald Rivet’s Saginaw County state Senate district is also a swing seat.
Following Kildee’s retirement announcement, the Cook Political Report with Amy Walter shifted the seat from Lean Democrat to Toss Up.
— Max Cohen
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Presented by Apollo Global Management
Learn how Apollo is rethinking retirement income to last the modern lifespan. Think It New.