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December 6, 2022
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PRESENTED BY
THE TOP
Happy Tuesday morning.
You know what time it is? It’s time for the “Biennial December Freak Out.”
Every two years, we find ourselves sitting here wondering how Congress will get everything done it needs to do as the calendar winds down. Will we be spending Christmas or New Year’s Eve in the Capitol again? Inevitably, party leaders figure it all out, but in the most inefficient way humanly imaginable.
This year is no different. With just a few weeks to go until Christmas, and less than a month to the start of the 118th Congress, there remain serious differences over government funding and the annual defense authorization bill. It’s hard to see how congressional leaders and the White House can get this done in the time they have left. It’s all being done in the most inefficient way humanly imaginable.
We did – for the first time during the post-election period — really feel that sense of urgency on Monday from party leaders. They realize that they’ve waited too long and there’s a chance everything could blow up. Hard negotiating has begun. Now we’ll have to see if they can put it all together in time.
Let’s take this issue by issue.
Government funding
It’s Dec. 6 and the government runs out of money in 10 days. Senior lawmakers in both parties have been trying to cut an agreement for a yearlong omnibus funding package, yet they remain tens billions of dollars apart – especially on non-defense spending. Senate Majority Leader Chuck Schumer huddled separately with Speaker Nancy Pelosi and Senate Minority Leader Mitch McConnell Monday. Meanwhile, President Joe Biden had lunch with Sens. Pat Leahy (D-Vt.) and Richard Shelby (R-Ala.), old colleagues who are the top two figures on the Appropriations Committee.
Remember a few things here:
| → | It seems almost certain that Congress will need to pass a short-term stopgap funding bill sometime ahead of Dec. 16 to give itself more time to try to reach an omnibus deal. So we view the real deadline as sometime between Dec. 23 and the end of the year. |
| → | There are dozens of policy riders that still need to be resolved. |
| → | Once a “topline” deal is reached, it will take time to assemble the omnibus package, send it to legislative counsel and release it publicly. It will take the House a few days to pass it, and then the Senate will need several more days to complete its work. There will be last-minute snafus as well, there always are. |
This sounds daunting, but the political incentives right now point to Congress being able to figure everything out. House and Senate Democrats want to get one more long-term spending bill into law before the year is up. A lot of Senate Republicans don’t have much faith in a GOP-run House being able to properly pass a government funding bill in the first few months of next year. House Minority Leader Kevin McCarthy can’t say it out loud – or openly support an omnibus – but he benefits from a long-term funding bill being signed into law now.
NDAA
The NDAA – the Pentagon policy bill which has passed every year for six decades – is also a real mess at the moment. House leaders had intended to release the bill publicly Monday night, but the two sides are still squabbling over a number of extraneous policy issues that various factions want to add. The omnibus and NDAA will likely be the last pieces of major legislation passed before Republicans take the House in January.
Under consideration right now are the following add ons.
| → | The SAFE Banking Act, which would allow banks to handle cannabis-related business. This has been a top priority for lawmakers in both parties. |
| → | The Journalism Competition and Preservation Act. Meta is staunchly opposed to this bill and has been issuing threats about what it would do if this measure passes. |
| → | Sen. Joe Manchin’s (D-W.Va.) permitting reform bill. Democratic leadership promised Manchin they would act on his proposal this year. “Democrats and Republicans both know how important permitting is to get anything accomplished here in this country for us to meet the challenges,” Manchin told us. |
| → | A provision that would cancel the vaccine mandate for members of the military. This is something McCarthy has pushed hard for. Democrats are demanding something in return, however, and it’s not clear what the GOP leadership will give up. This is a very sensitive issue. |
| → | The Electoral Count Reform Act, the bipartisan electoral reform bill, is also in the mix and lawmakers feel like it needs to get done this year. |
The NDAA would take a week on the Senate floor, barring any kind of time agreement. We definitely believe in “Senate magic,” especially with the holidays coming, but if you look at the calendar, we’re quickly running out of time to get all of this done.
Also: We no longer see any situation in which Congress can pass a debt limit increase this month.
Tomorrow: We’re interviewing Rep. Jason Smith (R-Mo.) tomorrow at 9 a.m. ET at The Roost about his priorities for the Ways and Means Committee next year. It’s our last in-person event of the year, so make sure to RSVP here!
– Jake Sherman, John Bresnahan and Heather Caygle
LOOKING AHEAD
Inside the GOP playbook to attack ‘woke’ finance in 2023
First in Punchbowl News: Republicans on the Senate Banking Committee are laying the groundwork for a campaign of intense scrutiny targeting three private asset managers during the next Congress: Vanguard, BlackRock and State Street.
In a report you can read here, staff for retiring Sen. Pat Toomey (R-Pa.) argue that those three firms wield undue influence in the realm of shareholder capitalism by using their massive influence in the passive investment funds market to “extract” concessions from corporations in favor of left-leaning policy.
That’s the argument anyway. This is a complicated area of law and policy, and we’ll continue talking about it in the 118th Congress. Although Republicans will remain in the Senate minority, these concerns are broadly shared by incoming House Financial Services Committee Chair Patrick McHenry (R-N.C.) as well as the Senate Banking Committee’s incoming Ranking Member, Sen. Tim Scott (R-S.C.).
When you own most types of public stock, you have a right to vote on certain initiatives at the company. But passive investors – say, someone with a 401(k) – go through an intermediary to hold their stocks, making it much less likely that they’ll use that power. But the managers of these funds can exercise that power, and do.
Conservatives say the largest passive funds may use sheer size and customer inattention to quietly steer companies in favor of pro-environmental or other “socially responsible” corporate policies. (Asset managers and many progressives, for their part, say those concerns are at best exaggerated.)
Here’s a key excerpt from the report:
There are two threats floated by Republicans in this report that are only a remote possibility in the current political environment but, given enough time, could represent a serious shift for asset managers throughout that industry.
The first comes via a securities regulation known as Rule 13D. Passive index managers such as Vanguard, BlackRock and State Street typically file a more abbreviated disclosure form around the entities they control compared to active managers seeking more explicit changes at a company they hold a stake in.
GOP staff recommend in the report that Congress and the Securities and Exchange Commission should tweak those disclosures to “require disclosure of all concessions and arrangements extracted and negotiated by purportedly passive investors.”
Republicans also suggested it was possible some asset managers’ ownership of bank stock could qualify them as “bank holding companies” under federal law. It is much, much tougher to be regulated as a bank than an investment fund. Since 2019, both Vanguard and BlackRock have asked the Federal Reserve to confirm they won’t accidentally become banks.
Asset managers have known this kind of attack from the GOP has been in the works for a while. BlackRock CEO Larry Fink in particular has become a frequent punching bag for Republicans railing against “woke” capitalism.
Some firms have already taken steps to address these concerns by making it easier for passive fund investors to vote by proxy. Fink highlighted a new program called “BlackRock Voting Choice” in a letter to clients from November, while Vanguard launched a pilot program for retail investors to participate in some shareholder votes.
Representatives for State Street did not respond to a request for comment. BlackRock did not provide a comment.
Emily Farrell, a spokesperson for Vanguard, said in a statement that the company looked forward to working with lawmakers, adding: “Our interests are squarely aligned with empowering everyday investors to reach their long-term financial goals, leaving management decisions to companies and public policy decisions to policymakers.”
— Brendan Pedersen
The Punch Up Profile: Ingrid Irigoyen
As part of The Punch Up, we’re profiling five trailblazers who are leading the charge for change when it comes to racial equity and sustainability.
We’re excited to share our fourth Punch Up profile, featuring Ingrid Irigoyen of the Aspen Institute. Irigoyen is associate director for ocean and climate for the Aspen Institute Energy and Environment Program.
Check out the full profile here. Some highlights from our conversation:
| → | Irigoyen said the key to solving some of the biggest problems when it comes to ocean sustainability involves bringing together industry leaders, policymakers and activists. But first, you have to build trust within the group. |
| → | Irigoyen said there’s more of an awareness and commitment to ocean and coastline sustainability than ever before. And that gives Irigoyen hope at times when she might get discouraged. |
“We can’t afford to get depressed about it. We have to take that feeling of discouragement – and again, it all boils down to human emotion – and convert that into another surge of motivation to say, ‘No, we are going to keep working on this and we’re going to make progress and we are making progress,’” she said.
| → | And don’t miss The Findings, our inaugural half-day summit as part of The Punch Up, happening Thursday. The Findings will bring together a diverse set of leaders from the business world, government and nonprofit sector to gather as a community and engage in a robust dialogue about racial equity and environmental sustainability. The conference will include conversations with cohort members, working group sessions and powerful keynote interviews. |
Interested in attending The Findings? Check it out here and register your interest at the bottom of the page.
— Heather Caygle
PRESENTED BY BLUE CROSS BLUE SHIELD ASSOCIATION
We’re working to make health care more affordable and equitable, in every ZIP code, for the health of America.
THE CAMPAIGN
Georgians are voting today in the Senate runoff election between incumbent Democratic Sen. Raphael Warnock (D-Ga.) and Republican Herschel Walker.
Conventional wisdom dictates that Warnock is the favorite in today’s election. Walker has endured week after week of negative headlines throughout the year, including the runoff. His issues range from allegations of abuse and paid abortions from former partners to rambling diatribes about cows, werewolves and good and bad air.
Warnock also ran narrowly ahead of Walker in the November general election, although the Democrat fell short of the 50% threshold to avoid a runoff.
The implications here are large. A Walker victory means the Senate is deadlocked at 50-50 again and the Democratic agenda will rest on the whims of Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.). A Warnock win grants Democrats some breathing room with a 51-49 advantage and true control over committees.
The Coverage
| → | AJC: “On the Georgia Trail: Warnock, Walker rally voters with runoff eve events,” by Greg Bluestein, Kelly Yamanouchi, Anjali Hunyh and Tia Mitchell |
— Max Cohen
PRESENTED BY BLUE CROSS BLUE SHIELD ASSOCIATION
Making health care affordable and equitable, for the health of America.
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