The Archive

IN THIS EDITION

Senate on the verge, Republicans are at war

The House has a bumpy week ahead

The numbers driving the US economy this week

Are we reading too much into NY-3?

THE TOP

Senate on the verge, Republicans are at war

Happy Tuesday morning.

The war inside former President Donald Trump’s Republican Party is playing out in real-time on Capitol Hill — and it continued on the Senate floor while you were sleeping.

The Senate is on the brink of passing a $95 billion aid package for Ukraine, Israel and Taiwan. The effort has bitterly divided Republicans for months as they fought over conservatives’ demands to link any aid package to border security before eventually killing a bipartisan border bill intended to unlock support for both.

Despite those obstacles, Senate Minority Leader Mitch McConnell will ultimately help push a national security supplemental through the chamber — thanks to overwhelming Democratic support.

Trump is opposed to this bill. And Speaker Mike Johnson released a statement Monday night saying, in effect, he’ll kill the legislation in its current form because it’s “silent” on border security.

Here’s the key graf from Johnson’s statement, which we scooped Monday night:

Here’s how to understand the political dynamics in the House Republican Conference right now: There are very few strong supporters of Ukraine aid while support for Trump is growing. Even if Johnson backs sending money to Kyiv — which the speaker claims he’s open to — the House GOP leadership believes it can’t bring this bill to the floor if the Louisiana Republican wants to remain speaker. It’s that simple.

Johnson says the House will have to “work its own will.” One way for the House to do that is to put this bill on the floor and allow lawmakers to amend it. But Johnson is almost certainly not going to do that. What Johnson really means is that he wants the House GOP Conference — which hasn’t agreed on anything for months — to figure out what it wants and then try to pass it.

That could ultimately lead to a bill that’s markedly different from the current Senate bipartisan product. ​​Or it could lead to more stalemate.

Sen. Dan Sullivan (R-Alaska) told us he’s had conversations with House defense hawks whom he says are eager to “shape” the Senate bill. Ultimately, Sullivan said, “the speaker needs to answer history’s call.”

Many Republicans support axing nearly $8 billion in Ukrainian economic support from the bill while maintaining lethal aid, for example. Sullivan crafted an amendment to do just that, but a handful of GOP senators thwarted amendment votes.

“We had no cooperation from our side,” Sullivan said. “You’ve got senators bitching about no amendments, and then they block all amendments.”

Already, several GOP senators are entertaining Trump’s idea of turning the foreign aid into a “loan” — though, it should be noted, the vast majority of the $95 billion isn’t actually sent overseas. Even Sen. Lindsey Graham (R-S.C.), one of the Senate’s most outspoken defense hawks, embraced Trump’s “loan” idea and is now opposed to the package.

Let’s be clear: A pressure campaign from President Joe Biden or the Senate will do nothing to get this bill moving. In fact, it might hurt this package’s prospects. Supporters of the Senate bill understand that.

“Sometimes public pressure and public arguments are effective in this town. There are other times where that just inflames passions and undermines your ability to move legislation forward,” Sen. Todd Young (R-Ind.) told us.

Let’s review a few more dynamics here:

1) It’s pretty wild to see how Johnson and McConnell are in completely different universes. Aides to both emphasize that the two leaders regularly talk, as do their advisers. But it’s clear that they represent two separate camps of the Republican Party. One of these is the pro-Trump camp. The other is everyone else.

The last three GOP leaders — Kevin McCarthy, Paul Ryan and John Boehner — took pains to move in sync with McConnell. Johnson either isn’t able to or doesn’t want to. And McConnell increasingly finds himself in a minority in the Senate.

2) House Republican leadership aides have told us they have a few options here. They can try to split up the bill and have separate votes on Ukraine, Israel and Taiwan. That would be perilous. House Republicans can also try to rally around border security provisions to attach to this bill. The House would then be back talking about H.R. 2, a bill that doesn’t stand a chance in the Senate.

Indecisiveness is a mark of Johnson’s speakership. The leadership is exceedingly clunky these days. It’s slow to make decisions. And occasionally, when it makes decisions, it makes really bad decisions.

Johnson is going to have to move quickly here. Because there will undoubtedly be Ukraine and Israel supporters in the House who will consider joining Democrats on a discharge petition. The way Johnson could head this off is to show that he has a plan.

— Jake Sherman and Andrew Desiderio

THE PEOPLE’S HOUSE

The House has a bumpy week ahead

The House is out next week, so GOP leaders are going to make this week a doozy.

There are four live issues that we’re watching as the House comes back into session tonight. Let’s run them down.

Israel: The House Republican leadership has no plans as of now to try to pass an Israel aid bill this week. Remember that just last week, the $17.6 billion bill failed under suspension of the rules, which requires a two-thirds majority for passage. Lawmakers from both parties opposed the legislation — although Democrats voted no in much higher numbers.

The GOP leadership has considered putting the bill through the Rules Committee to give it a pathway to pass with a simple majority. But top Republicans abandoned this plan because they don’t think they can get the bill through Rules.

The Mayorkas impeachment: In one of the biggest belly flops of this Congress, Speaker Mike Johnson’s House failed to pass a resolution impeaching DHS Secretary Alejandro Mayorkas last week. Incredibly, House Republican leaders blamed the failed vote on Democrats after Rep. Al Green (D-Texas) showed up in hospital scrubs following emergency surgery. But House Minority Leader Hakeem Jeffries said he is under no obligation to tell Johnson how many of his colleagues are showing up any given day — and Jeffries is right.

Johnson’s leadership team plans to bring the Mayorkas impeachment resolution up for a vote tonight. House Majority Leader Steve Scalise, who has been away from Washington for the last eight weeks getting stem-cell treatment for cancer, will return, theoretically giving GOP leaders the victory they want. We’ll see if there are any other attendance issues due to weather or other circumstances that will make Johnson’s team reschedule the vote.

SALT: New York Republicans, some of the most “walked-all-over” members of the House Republican Conference, just saw a tax bill get through the chamber without as much as a whisper about the state-and-local-tax-deduction limit that they have been complaining about for years.

In exchange, these NY GOPers have proposed a bill to double the deduction limit for married couples.

But guess what? This rule is likely to fail on the floor. Womp, womp. That will be the end of that push, which wasn’t much of a push at all.

FISA: The House Republican leadership has a new FISA Section 702 overhaul bill that they’ve been working on behind the scenes. Here’s the bill for your reference. It puts new restrictions on the FBI and has a number of other provisions to overhaul surveillance procedures for U.S. intelligence agencies.

The House Rules Committee noticed that it would hold a meeting on Wednesday to prepare the FISA bill for the floor. That means that the legislation can’t feasibly come to the floor until Thursday at the earliest.

The House Freedom Caucus will hold a news conference at 3 p.m. today to discuss their views on the legislation. Sources tell us that the HFC wants to amend the bill and there could be between five and 12 proposed amendments.

So color us skeptical that the Republican leadership will be able to get this through the House this week. FISA is a terribly complicated issue that divides the House Republican Conference and the House overall. Perhaps we’re overly bearish here. But this leadership has not shown us anything that would lead us to believe that they can handle an issue so weighty over a four-day period.

— Jake Sherman and Mica Soellner

The numbers driving the US economy this week

It’s a big numbers week for the U.S. economy. By Friday, we’ll know how fast prices are rising, how much consumers are spending and whether good vibes can hold — or even improve — for another month.

Here’s what to keep an eye out for:

CPI: The party kicks off at 8:30 a.m. morning when the Bureau of Labor Statistics releases the latest consumer price index covering the month of January.

The last few months’ worth of price data has been more or less exactly what the Federal Reserve wants to see. That said, officials like Chair Jay Powell have stressed it’s unlikely the U.S. central bank will cut rates at their next meeting in March.

Economists expect this CPI report to clock in around an annual 2.9% for January, which would be down nearly half a percent from December’s rate thanks largely to falling energy prices. Core CPI, which strips out energy and food prices, is expected to hit 3.7%, down 20 basis points from December.

Retail: Hot off of December’s holiday spending numbers, January’s retail spending figures from the Census Bureau will help set expectations for the rest of 2024. We’ll get that data on Thursday at 8:30 a.m.

December’s retail figures shattered expectations, growing by 0.6% instead of the forecasted 0.4%. It’s not uncommon for numbers to slip a bit in the wake of the holiday season, but in 2023, January’s data was significantly better than December’s. So who knows?

Remember: Consumer spending is the U.S. economy’s most powerful engine. If it starts to sputter in earnest, that’s a tough problem to solve.

Vibe check: The University of Michigan will release its latest survey of consumer sentiment on Friday at 10 a.m.

This is a long-running assessment of how consumers feel about their economic health. But the survey garnered a lot of attention last month when it posted the largest two-month increase in sentiment since the 1990s.

President Joe Biden is banking on Americans embracing his economy as we close in on November, though former President Donald Trump continues to outperform in voter expectations on the issue.

That disconnect makes a bit more sense when you consider the historical trends here. Consumer sentiment in UMich’s last survey was still 7% below average going all the way back to 1978. If Friday’s release closes the distance, it’ll be that much easier for Biden to run on the economy. Probably.

Meanwhile at the Fed: We’ll be tracking a pair of speeches this week from Vice Chair for Supervision Michael Barr. We’re particularly interested in the speech Barr is giving on Wednesday about “monetary policy and bank regulation.”

Elevated interest rates can put a lot of pressure on bank balance sheets — look no further than the collapse of Silicon Valley Bank. If Barr has thoughts to share here, Wall Street will take note.

— Brendan Pedersen

THE CAMPAIGN

Are we reading too much into NY-3?

For the past two months, much ink has been spilled on the special election in New York’s 3rd District. Both parties have spent millions of dollars trying to win the battleground Long Island seat that will determine how much leeway Speaker Mike Johnson has this year.

But it’s important to remember as results trickle in tonight that the battle between former Rep. Tom Suozzi (D-N.Y.) and Republican Mazi Pilip is an intensely local affair. While there are major implications for House margins given the narrow GOP majority, it may be a mistake to forecast November’s results based on the NY-3 tally. Here’s why:

Low turnout: A February House election will only motivate the most die-hard party loyalists to come to the polls. Both candidates expect turnout to be anemic — in the words of Suozzi, “very low, low, low, low” — and thus the electorate won’t be representative of the November election.

Plus, there are eight inches of snow forecasted!

The party machine: As Nick Fandos of the New York Times summed up on Monday, the vaunted Nassau County GOP machine is working overtime to deliver Pilip the win. Nassau County is one of the last places in the country where a machine operates so efficiently. This type of voter turnout operation isn’t easily replicated elsewhere in the nation.

The issue set: Yes, Republicans are running on the message that every district is now a border district thanks to the problems at the U.S.-Mexico border. But the migrant crisis is particularly pronounced in New York City and its surrounding suburbs.

The media market is filled with stories on NYC Mayor Eric Adams’ pleas for federal help to contain the surge in migrants. There’s a center to house migrants in the district that’s attracted controversy. And weeks before the election, the alleged assault on NYPD cops by migrants in Times Square dominated the airwaves.

Why it still matters: All that being said, it’s nonetheless notable that Democrats are spending so heavily on a seat that voted for President Joe Biden in 2020 by eight points. And it’s clear that immigration — an issue that has traditionally favored Republicans — will be front and center on the campaign trail between now and November.

— Max Cohen

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What we’re watching

Tuesday: The consumer price index report for January is out at 8:30 a.m., giving policymakers a window into how the Federal Reserve is faring in its fight against inflation.

Wednesday: The House Foreign Affairs Committee will have a hearing on AUKUS with Bonnie D. Jenkins, the undersecretary of State for arms control and international security.

The House Budget Committee will hear testimony from CBO Director Phil Swagel. The House Agriculture Committee will have USDA Secretary Tom Vilsack.

The House Financial Services Committee will hear from Brian Nelson, the Treasury undersecretary for terrorism and financial intelligence, and FinCEN Director Andrea Gacki.

Thursday: The Ways and Means Committee will have a hearing with IRS Commissioner Danny Werfel.

The Census Bureau will release its latest retail sales report.

Friday: Look for the producer price index for January at 8:30 a.m. Plus, the University of Michigan’s latest consumer sentiment survey data at 10 a.m.

— Jake Sherman and Laura Weiss

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