The Archive

IN THIS EDITION

The House GOP’s pitfalls in executing Trump’s agenda

Inside Barrasso’s style in the Republican trifecta

The Vault: Crypto has some asks on market structure

McCarthy’s new gig: Watchtower Strategy

ICC negotiations down to the wire ahead of pivotal Senate vote

THE TOP

The House GOP’s pitfalls in executing Trump’s agenda

Happy Tuesday morning.

DORAL, Fla. — As far as policy retreats go, today is a big day for House Republicans.

Lawmakers will be holed up in the Donald J. Trump Grand Ballroom from 9 a.m. to 5 p.m. to plot the future of President Donald Trump’s agenda.

Then they’ll have a session with House GOP leaders, another with Budget Committee Chair Jodey Arrington (R-Texas), plus breakout discussions with committees involved in executing a reconciliation package that will carry Trump’s agenda. Finally, they’ll hear from Vice President JD Vance.

So if you’re waking up this morning — perhaps at the Trump National Doral Miami, a bit bleary-eyed from Monday night’s “dinner on the lawn” and ensuing merriment — take a moment to consider some of the political headwinds House Republicans face as they try to pass Trump’s agenda.

1) Timing. One of Speaker Mike Johnson’s selling points as he lobbied Trump to endorse one reconciliation bill instead of two was that House Republicans could push through one bill much quicker than a pair of packages.

Trump kind of bought the argument — more on that in a minute — and now it’s on Johnson to deliver. Republicans have 27 days to pass a budget resolution to meet the speaker’s deadline of Feb. 24. That means they need to release a budget resolution and pass it through the House and Senate quickly.

Johnson said the House Budget Committee will begin marking up the budget resolution next week. The Louisiana Republican added that he’s still adhering to his rapid-fire timeline.

After they pass the budget resolution, Republicans have to craft the actual reconciliation package. That will involve negotiating on everything from tax policy to energy policy to border and immigration policy. That could take weeks or even months.

Remember: Then Treasury Secretary Steven Mnuchin promised tax reform would pass by August 2017. It was eventually signed into law in December 2017. In this instance, we’re not questioning Johnson’s leadership capabilities. It’s just that we’re a tad skeptical of the timeline.

2) Trump. Trump has an iron grip on the GOP, as strong as it’s ever been. But he’s a bit difficult to pin down on some issues.

For example, during his Monday night speech to House Republicans, Trump again cast doubt on whether he wants one or two reconciliation bills.

“Whether it’s one bill, two bills, I don’t care,” Trump said.

And with that, Trump reignited a major fight among Hill Republicans that pits members of the leadership against one another, the House versus the Senate and hardline conservatives versus everyone else.

This may seem like a minor point to Trump, but it’s been a massive dispute on Capitol Hill. House Ways and Means Committee Chair Jason Smith (R-Mo.) has effectively told anyone who would listen that one bill is the only way Trump’s tax cuts will get done.

Trump — the dealmaker — is focused on the big-picture issues, not the minutiae of legislative procedure. During his address to House Republicans, Trump said he wants to cut the corporate tax rate from 21% to 15%. Trump also insisted that he wants Congress to eliminate taxes on tips, Social Security payments and overtime. These are hugely expensive propositions.

The real trouble for congressional Republicans is that negotiations on this reconciliation package are sure to drag out. The debt limit and government funding have to be addressed soon. And Trump will grow frustrated that he’s not getting his priorities — including border security money — across the finish line quickly enough.

3) Margins. The House margin is 218 Republicans to 215 Democrats. Florida voters won’t fill the now vacant seats held by former GOP Reps. Matt Gaetz and Mike Waltz until early April.

But the Senate Foreign Relations Committee is expected to vote on Rep. Elise Stefanik’s (R-N.Y.) nomination to be ambassador to the United Nations later this week. Stefanik could be confirmed by the Senate next week.

That means House Republicans would be down to a 217-to-215 seat majority. Thus, if they lose a single vote, the reconciliation package fails.

To put this in perspective, Republicans lost 13 votes on the Tax Cuts and Jobs Act in 2017 — including Stefanik, ironically.

Keeping Republican defections to zero is an incredibly tall task. And it means that every single House Republican has tremendous leverage. Trump put it this way Monday evening:

4) Newbies. Sixty-one percent of House Republicans — 134 members — have been elected to the chamber since the 2017 Trump tax cuts were enacted. Thus, more than half of the GOP conference has never had to deal with high-pressure, one-party legislating.

There are new committee chairs, as well. Rep. Brett Guthrie (R-Ky.) was just elected chair of the House Energy and Commerce Committee. His panel is charged with finding as much as $2 trillion in savings. Newly elected House Education and the Workforce Chair Tim Walberg (R-Mich.) will have to lead his committee to unearth as much as $500 billion in savings.

About those cuts: Rep. Steny Hoyer (D-Md.) is leading 150 House Democrats in asking the Trump administration exactly what funding projects are being paused.

— Jake Sherman, Mica Soellner and Max Cohen

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THE SENATE

Inside Barrasso’s style in the Republican trifecta

Senate Majority Whip John Barrasso is working to shake up traditional GOP leadership practices.

The newly-minted No. 2 Senate Republican wants to limit floor votes to 30 minutes, prioritize frequent communication with GOP colleagues and have a constant pipeline to President Donald Trump and top White House officials.

That paid off with the ever-so-narrow confirmation of Pete Hegseth as defense secretary, which was Barrasso’s first real stress test as GOP whip. But Barrasso knows he’ll have even more difficult whip efforts in the future, especially as Senate Republicans look to quickly install Trump’s top nominees and a major reconciliation package makes its way through Congress.

“We are not going to be slowed down by the Democrats’ complete obstruction” on Trump nominees, Barrasso said in a Monday interview. “It is our goal to have all of these folks confirmed by the time of our first scheduled recess [in March].”

The new Senate GOP leadership team, helmed by Majority Leader John Thune and Barrasso, is playing hardball with Democrats by making good on threats of weekend and late-night votes. And like Thune, Barrasso is in constant communication with Trump and his top aides, including White House Chief of Staff Susie Wiles and Stephen Miller, the deputy chief of staff and policy director.

At the same time, Barrasso’s 53-seat Republican majority includes several senators who aren’t an automatic “yes” on Trump’s nominees. A three-seat cushion is helpful, but on some nominees, it might not be enough.

“I was trying to get to 56, 57,” Barrasso said, referring to his campaign trail blitz last year for GOP candidates. “You want to make sure you have people who can support the team, stay united and also represent their own situations at home.”

Here’s what Barrasso told us when we asked about Sen. Mitch McConnell’s (R-Ky.) opposition to Hegseth — and the scathing statement the former GOP leader released afterward:

Barrasso explicitly put former Rep. Tulsi Gabbard’s (Hawaii) Thursday confirmation hearing in that category, showing GOP leaders are clear-eyed about the hurdles Gabbard faces in her bid to win confirmation as director of national intelligence.

“People want to get reassurance that the president’s going to get the information he needs and that she’s the right person to provide that to him,” Barrasso told us. “There’s the FISA issues that have come up and where she has come to a position that I think is the correct position.”

We recently scooped that Gabbard reversed course on Section 702 of the Foreign Intelligence Surveillance Act, a key authority she once tried to repeal. Still, some GOP senators, like Sen. Susan Collins (R-Maine), are skeptical that Gabbard truly means what she says. Collins is a member of the Intelligence Committee, which will consider Gabbard’s nomination.

— Andrew Desiderio, Max Cohen and John Bresnahan

The Vault: Crypto has some asks on market structure

First in The Vault: One of the country’s leading crypto trade associations will release a list of a dozen “principles” for crypto market structure reform this morning.

The document, which you can read here, is a reflection of how Republican control of Washington has transformed the digital asset industry’s priorities in the nation’s capital. Market structure reform is one of the main legislative priorities for the GOP’s financial policy committees in the 119th Congress.

In an interview, Blockchain Association CEO Kristin Smith said market structure reforms via Congress had become an easier lift with Republican control of Washington, thanks to the change in regulators.

“The SEC and the CFTC are likely going to move forward and take certain steps that are clearly already within their jurisdiction,” Smith said. “We’ll be able to focus Congress on the new authorities that are needed in order to do this correctly.”

House lawmakers have said they’re open to changes in market structure legislation. The Blockchain Association has one ask off the bat: The next market structure bill taken up by lawmakers should be simpler than the prior attempt, Smith said.

“We’re in a different political environment now,” Smith said. “We don’t need something as comprehensive and complex as we saw in the last Congress.”

The FIT for the 21st Century Act, a joint project between the House Financial Services and Agriculture Committees last session to change the market structure of crypto oversight, passed the House with more than 70 Democratic votes.

The principles: A lot of the points here will sound familiar. The crypto industry wants the federal government to be “pro-competition” in the digital asset space and come up with policies that protect consumers. “Regulations should provide tailored market intermediation,” the document says.

In fact, tailoring the future regulation of crypto is one of the most consistent themes of this policy outline. The Blockchain Association says policymakers should “focus on financial activities, not other applications of distributed ledger technology.” The industry also wants the government to keep its hands off “non-custodial software and services” and not declare them to be financial intermediaries, which come with certain supervision requirements.

Lawmakers should also stay clear of anything that could affect the liability of open-source software developers. “Liability protections ensure that developers are not held responsible for how their code is used by bad actors, encouraging open-source collaboration,” the doc says.

— Brendan Pedersen

D.C. BIZ

McCarthy’s new gig: Watchtower Strategy

News: Former Speaker Kevin McCarthy is launching a new public affairs firm with five close political allies, an entity that is sure to become an instant player in corporate circles.

McCarthy, Jeff Miller, Dan Conston, Arthur Schwartz, Cliff Sims and Brian O. Walsh are launching Watchtower Strategy. McCarthy will chair the firm and Conston, the longtime former president of the Congressional Leadership Fund, will be the CEO.

Miller is the founder of Miller Strategies and arguably the GOP’s top fundraiser. Schwartz, a close ally of Vice President JD Vance and political adviser to Donald Trump Jr., just finished running the confirmation process for Defense Secretary Pete Hegseth. Sims worked in the first Trump administration as deputy director of national intelligence and helped run John Ratcliffe’s confirmation as CIA director. And Walsh is a GOP ad maker who ran America First and CLF.

Watchtower Strategy aims to specialize in strategy, which includes C-suite consulting and corporate political positioning, crisis communications and advocacy campaigns.

As evidenced by last week, corporations could have a rough go of it during President Donald Trump’s tenure in the White House. And public affairs firms will be in high demand.

Watchtower has experience on Capitol Hill (McCarthy and Conston), the administration (Sims), media (Schwartz) and campaigns (Walsh).

McCarthy also serves on several corporate boards: C3 AI and Anivive Lifesciences.

The firm won’t be engaged in any lobbying.

— Jake Sherman and John Bresnahan

THE SENATE

ICC negotiations down to the wire ahead of pivotal Senate vote

A bipartisan deal on legislation to sanction the International Criminal Court over its targeting of Israeli officials remains elusive ahead of a 2:15 p.m. Senate vote on advancing the bill.

All 53 Republicans are expected to back the measure, and GOP leaders believe there are enough Democrats who would vote to advance it to overcome a filibuster. But Democratic leaders want to avoid splitting the party on such a contentious issue and are aiming to clinch an agreement before the first procedural vote this afternoon. If there’s no deal and enough Democrats side with their leadership, the bill won’t move forward in its current form.

As we scooped, Democrats believe the GOP-drafted measure is too broad and would impose sanctions on U.S. tech companies like Google, Microsoft and Meta. Representatives from the three companies got on a conference call with the negotiators last night, we’re told.

Democrats on the Senate Foreign Relations Committee gathered after votes Monday to get an update from the panel’s top Democrat, Sen. Jeanne Shaheen of New Hampshire, who told reporters she was still negotiating with Intelligence Committee Chair Tom Cotton (R-Ark.), the bill’s chief sponsor.

A senior GOP aide said the negotiations are intended to “clarify” the bill’s language, but said Senate Republicans “are united and won’t accept anything that weakens the bill.” The aide also disputed the notion that U.S. companies could be targeted and insisted that the companies believe they can “firewall” themselves from sanctions.

— Andrew Desiderio and Max Cohen

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