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IN THIS EDITION

Democrats are ready to embrace the economy

Freedom Caucus expanding rapidly outside of Washington

Inside the latest DCCC dues report

Congress stalls as critical Affordable Connectivity Program runs out of money

THE TOP

Democrats are ready to embrace the economy

Happy Friday morning.

We’re not going to argue whether the state of the U.S. economy is “good.” We could make the argument that the economy is at least OK, sure.

Let’s face it: economic well-being is in the eye of the voters.

But the one thing we do know is that public sentiment on the economy has been shifting. And after years of President Joe Biden taking a beating over this in the polls — especially on inflation — Democrats are ready to go on the offensive.

“The challenge of being president is, you own the bad stuff whether you caused them or not,” Sen. Mark Warner (D-Va.) told us. “You gotta own the good stuff as well.”

Biden and congressional Democrats have little shot at success in November if voters don’t believe the economy is working for them.

Here’s a look at their argument for why they should after a series of positive economic reports.

The pitch: Higher prices haven’t gone away, true. But the picture has improved consistently since mid-2022. Inflation is down, housing prices are down and wages and GDP are up.

Even energy costs are on a significant decline. The Commerce Department said the falling price of gasoline was “the leading contributor” to last month’s inflation win. That’s happened partly with the help of a booming U.S. oil market.

Then there’s the ultra-low unemployment rate, one of the Biden economy’s consistently brightest spots. The jobless rate has sat under 4% for 23 months.

Most importantly for the White House, the latest consumer sentiment data suggests voters are slowly but surely warming up to Democrats’ message.

“We just lived through a natural experiment testing whether austerity or investment strengthens an economy through troubled times,” Sen. Elizabeth Warren (D-Mass.) told us. “Bigger investment won by a wide margin. Credit goes to Team Biden for figuring that out.”

The GOP counter: Republicans aren’t ready to give an inch. They argue voters are still bruised and battered by inflation and Democrats can waive around all the wonky data they want. Here’s what Sen. Cynthia Lummis (R-Wyo.) told us:

But if you listen closely, Republicans are leaning in harder on other issues.

“We know right now it’s about the border, number one, and the cost of living, number two,” Lummis said.

Immigration will surely be front and center of GOP messaging. But let’s not forget that Republicans spent the last two years talking about the economy, especially soaring inflation and how Biden and Democrats allegedly caused it with excessive government spending. That economy is improving.

Here’s how Sen. Kevin Cramer (R-N.D.) took a crack at addressing the conundrum:

“I don’t dispute that people feel better about 4% inflation than they do about 9% or 10% inflation, for sure,” Cramer said. (Annual inflation is currently closer to 3%.) “But they’re still not able to get a mortgage, or they’re paying way too much interest on their car payments.”

We also asked Cramer, an optimist by nature, whether he thought rebounding consumer sentiment was a trend. Cramer’s response illustrates the tightrope Republicans may have to walk as the campaign heats up.

Cramer might be right. But with 10 months until November, Democrats have plenty of time to make their case.

Dem worries: Many of Biden’s congressional allies cheered by the positive economic news are also urging the administration to back off policies they worry could damage the recovery.

Some moderate Democrats have embraced arguments from the banking sector when it comes to new rules being considered for capital standards — known as Basel III Endgame — or the cushion regulators want lenders to maintain as a buffer against potential losses. Banks are on the warpath against the proposal.

Some news here: Several Democrats led by their campaign chief Gary Peters (D-Mich.) wrote to the Biden administration’s financial regulators with concerns about “the proposed Basel III Endgame’s impact on small businesses.” The focus here is mostly on access to credit, particularly among communities of color.

Read the full letter here, which is also signed by Sens. John Hickenlooper (D-Colo.), Tom Carper (D-Del.), Debbie Stabenow (D-Mich.) and Jacky Rosen (D-Nev.).

There’s also the massive government debt. Higher interest rates meant higher payments to service that debt. Interest payments are expected to exceed $1 trillion this year. And the annual budget deficit is large and growing. There’s no chance to address these issues without some bipartisan consensus. That’s not happening anytime soon.

So it’s not all roses for Democrats. But if the U.S. economy maintains its current trajectory, it’s going to be tougher to run against it as a Republican.

— Brendan Pedersen and Laura Weiss

CONSERVATIVE CORNER

Freedom Caucus expanding rapidly outside of Washington

News: The House Freedom Caucus is tapping candidates from its state network in hopes of bringing new recruits to Congress.

At least two candidates who are involved with state Freedom Caucus chapters are running for office, including in a primary against a Republican incumbent. There are currently 11 state Freedom Caucuses across the country, with the Missouri chapter launching this month. Many of these chapters are not affiliated with the D.C. Freedom Caucus, but are clearly inspired by them.

“Having the state Freedom Caucuses builds synergy for communications and networking to create sound ideas and cohesive conservative policies on the state and federal level,” Rep. Eric Burlison (R-Mo.) told us.

The Freedom Caucus’ influence in Washington has gone up and down in recent years, with the 118th Congress being an up. The group expends much of its energy trying to force GOP leadership to provoke governmental crises (shutdowns and debt defaults) thinking Democrats will fall in line. These tactics have yielded little in the way of tangible results. This Congress, in particular, has been chock-full of constant stalemates on legislation due to opposition from the far right.

The group has grown exponentially. It had just nine members when it was founded in 2015. Now, the caucus has more than three dozen members.

But, in truth, the HFC has changed a good deal in nine years. It was once a group devoted solely to the adherence of House rules. It now has sought to push the rest of the conference to the right on cultural issues and embrace the isolationist “America First” movement promoted by former President Donald Trump.

The Freedom Caucus has state chapters in Montana, Idaho, Wyoming, South Dakota, Arizona, Missouri, Illinois, Louisiana, Pennsylvania, South Carolina and Georgia.

Candidates to watch:

→	Adam Morgan, a South Carolina state representative, chairs his state’s Freedom Caucus chapter. Morgan is the first candidate from a state chapter to announce a congressional run. He is looking to oust Rep. William Timmons (R-S.C.), as we reported this week.

→

South Carolina state Rep. Stewart Jones, a founding member of the Palmetto State’s chapter, is running for Rep. Jeff Duncan’s (R-S.C.) open seat. “We’ve just done an incredible job pushing the Republican Party further to the right and closer to the Constitution,” Jones told us. “People don’t always like that message.”

A thorn in the side: Freedom Caucus members often infuriate their GOP colleagues. It’s no different at the state level.

→	In the Missouri Senate, Republican leadership stripped four members of its Freedom Caucus chapter from their committee chairmanships due to their hardball floor tactics.

→	More than a dozen members of the South Carolina Freedom Caucus were also booted from their GOP Caucus. They refused to sign a loyalty pledge vowing not to campaign against sitting Republican colleagues.

→	Last year, Rep. David Schweikert (R-Ariz.) resigned from HFC because of the reputation the Arizona chapter had, which he described as “much more populist.” Schweikert is in a district President Joe Biden won in 2020 and is politically vulnerable.

Rep. Austin Scott (R-Ga.), who has been frustrated by his conservative colleagues in Congress, criticized the expansion of the group.

Scott has blamed them for holding up legislation and helping to boot former Speaker Kevin McCarthy. The Georgia Republican has also donated to HFC Chair Bob Good’s (R-Va.) primary challenger.

“The Freedom Caucus has morphed into an organization that is counterproductive to accomplishing our goals as conservatives,” Scott told us. “There’s nothing conservative about voting procedurally with Democrats.”

– Mica Soellner

HOUSE DEMOCRATS

Inside the latest DCCC dues report

Happy Friday. Yes, it’s that time again. We got our hands on the spreadsheet that shows how much each House Democrat is kicking up to the DCCC. And it’s juicy, as always.

Let’s start with leadership. House Minority Leader Hakeem Jeffries leads the pack as he has paid 227% of his dues goal. Jeffries has chipped in $2.5 million to the DCCC and has raised $99.8 million, as of the December dues report. Jeffries has also raised and donated a total of $5.8 million to Frontline and red-to-blue candidates.

Jeffries is going a long way to put all those concerns about a post-Nancy Pelosi (R-Calif.) fundraising era to rest. Pelosi raised more than $1 billion during her two decades in House leadership.

House Minority Whip Katherine Clark has paid $1 million in dues, followed by Caucus Chair Pete Aguilar with $785,000 and Pelosi with $750,000.

The other members who have also exceeded their dues goals are Reps. Jim Clyburn (D-S.C.), Nanette Barragán (D-Calif.) and Raja Krishnamoorthi (D-Ill.).

Democratic Reps. Mark Pocan (Wis.), Ami Bera (Calif.), Don Beyer (Va.), Jason Crow (Colo.), Jared Huffman (Calif.), Jim Himes (Conn.), Greg Meeks (N.Y.), Mike Quigley (Ill.), Scott Peters (Calif.) and DCCC Chair Suzan DelBene have all contributed 100% of their dues goals.

→	Thirty-two House Democrats have paid between 51% and 99% of their dues. Ninety-nine have chipped in between 1% and 50% of their dues.

→	There are 29 non-Frontline House Democrats who haven’t paid a dime in dues. The 28 Frontliners aren’t expected to give anything to the DCCC, given their tough reelections. But one member out of the group, Rep. Steven Horsford (D-Nev.), has chipped in $15,000.

Last cycle, dues became a contentious topic in the caucus. At a September 2022 private meeting, Pelosi accused members of skimping on supporting the party campaign arm.

— Max Cohen

Congress stalls as critical Affordable Connectivity Program runs out of money

Congress is about to let a popular government-backed affordable internet program lapse and lawmakers can’t agree on what to do next.

Households enrolled in the Affordable Connectivity Program began receiving notices this week from their providers about the impending impact on their internet bills. The $14 billion program — included in the bipartisan Infrastructure Investment and Jobs Act in 2021 — is helping 23 million households, according to the FCC.

The FCC will stop accepting new applications after Feb. 7 in anticipation of the program running out of money by April. Without congressional action, one in six households could lose broadband access, FCC spokesperson Paloma Perez said.

That’s left lawmakers representing rural populations and low-income communities franticly urging congressional leaders to save the program, to little avail.

“Families rely on this program to have telehealth appointments. Kids need it for their education,” Rep. Josh Harder (D-Calif.) told us. “We had kids sitting in Taco Bell parking lots during the pandemic doing schoolwork because they didn’t have internet at home. In 2024, that sort of thing should not be happening.”

The White House has requested a supplemental $6 billion for the ACP to continue while also pushing Congress to fund the program through the annual appropriations process.

The FCC has also dialed up pressure on Congress to act. But the agency has to contend with key GOP lawmakers, including House Energy and Commerce Chair Cathy McMorris Rodgers (R-Wash.) and Senate Minority Whip John Thune, who question the ACP’s effectiveness.

We’re following the issue as part of our platform, The Punch Up, which examines the equity divide in the U.S. and efforts to close it.

GOP skepticism: There’s bipartisan support for the ACP, but many Republicans argue the program is wasteful and subsidized households that already have internet access.

“We want to make sure what we do is correct,” Rep. Bob Latta (R-Ohio) said. “When money is going out the door to people who already have broadband, those are things we want to look at.”

Latta, who is the chair of House Energy and Commerce’s Communications and Technology Subcommittee, is part of a working group mulling ways to streamline the way the government funds low-income connectivity programs.

Sen. Shelley Moore Capito (R-W.Va.), another member of the working group, said the ACP should be tailored more to people who don’t already have internet access.

“I do think we need to narrow the focus, so that those who really need it the most are the ones getting it, and I think a lot of people agree with that,” Capito said.

There’s one other issue worth noting with the ACP – one company has swept up nearly a quarter of the subsidies under the program. Charter Communications has gotten $3 billion from the program. No other company has received more than $1 billion. This has attracted the attention of federal regulators, according to the Wall Street Journal.

Concern for rural communities: Meanwhile, some Democrats are urging congressional leaders to fund the program throughout December 2024.

“Republicans have more rural communities in their districts than Democrats,” Rep. Angie Craig (D-Minn.) said. “I can’t understand for the life of me why this isn’t a higher priority from a budgetary perspective.”

The New Democrat Coalition wrote a letter to leadership in October to consider including ACP “in any government funding package.”

Rep. Yvette Clarke (D-N.Y) and Sen. Peter Welch (D-Vt.) have also introduced bipartisan bills to boost the program with $7 billion. But it’s unlikely the ACP will get new funding while House conservatives seek to drastically cut federal spending.

Rep. Doris Matsui (D-Calif.), another member of the working group, said it will take a while to find alternatives to government-funded programs. She doesn’t want the ACP to be reliant on unpredictable appropriations.

“If everybody is in favor of broadband, we have to get real about this,” she said.

Don’t miss: Every last Friday of the month, The Punch Up will bring you coverage of a key equity issue playing out. For the first three months of this year, we’re focussing on digital equity.

— Mica Soellner and Elvina Nawaguna

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