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February 6, 2023
Presented by AARP
48 million family caregivers give everything to help older loved ones. They give time and energy, too often giving up their jobs and paying over $7,000 a year out of pocket. With a new Congress, it’s time to act on the Credit for Caring tax credit.
PRESENTED BY
THE TOP
Happy Monday morning.
As the 118th Congress continues its slow start – really, really slow – the biggest action on Capitol Hill this week will be President Joe Biden’s State of the Union address on Tuesday night.
With the 80-year-old president looking to possibly launch a reelection campaign during the next few months, this year’s gathering of the nation’s political leaders will feature even more drama than usual. Biden faces a divided Congress for the first time since he came to office; Speaker Kevin McCarthy will be sitting behind Biden Tuesday night next to Vice President Kamala Harris.
Despite the lowest unemployment rate in decades and strong jobs growth, Biden’s handling of the U.S. economy remains deeply unpopular. House Republicans have issued their first subpoenas, with more expected as they ramp up investigations into Hunter Biden and everything else. The war in Ukraine will reach its one-year anniversary soon, and there’s no end in sight. Biden’s own classified documents scandal has undermined Democratic attacks on former President Donald Trump. The Chinese balloon incident shows how fast things can get really dumb on even serious issues.
The president will use the SOTU address to play up his strong legislative record in the last Congress and urge Republicans to seek bipartisan deals during the next two years.
Biden and McCarthy are in the opening stages of talks on the debt limit and federal spending. Biden and senior administration officials have insisted on a clean debt-limit boost. But these officials are also signaling they can hold discussions simultaneously with Republicans over the country’s “fiscal path.”
Here’s Transportation Secretary Pete Buttigieg to ABC’s Jon Karl during a Sunday appearance on “This Week”:
Both Biden and McCarthy have ruled out cuts to Medicare and Social Security. That leaves other entitlement programs in the mix – including Medicaid, at least for Republicans – but there could be serious political costs for changes to any of them.
McCarthy wants a spending-cap deal if he can get it, and Biden wants to preserve funding for critical initiatives that Congress has already passed. Look for a lot of discussion about “clawing back” spending approved under the Inflation Reduction Act and American Rescue Plan, although this will be a tough sell on the Hill. About as tough as cutting $100 billion-plus from non-defense discretionary spending to get back to FY2022 spending levels, which is what GOP conservatives are pushing.
Our friend Peter Baker of the New York Times said Sunday that Biden “plans to present himself to what is likely to be his largest television audience of the year as the adult in the room, willing and able to reach bipartisan compromises in an age of deep partisanship.”
The flip side of this approach is that someone else has to be the non-adult in the room, meaning House Republicans. Yet, after watching the first couple weeks of this Congress, this isn’t a terrible bet by Biden.
Biden spent the weekend at Camp David working on his speech, according to White House officials. Following his speech, the president will head to Madison, Wis., on Wednesday. Biden will be in Tampa, Fla., Thursday. On Friday, Biden and Harris will meet with governors at the White House as the National Governors Association holds its winter meeting in Washington. Other Cabinet officials will criss-cross the country doing events as well.
On the Hill: On Tuesday morning, members will read the Constitution out loud on the House floor.
Legislation scheduled to come to the House floor this week includes a measure eliminating the Covid vaccine mandate for foreign travelers entering the United States, as well as two Republican joint resolutions related to the D.C. government. One would bar D.C. from allowing undocumented immigrants from voting in local elections, while the other “disapproves” of the District’s revised criminal code.
The Senate continues to ease into 2023. There’s one nomination vote on Tuesday. Both Democrats and Republicans will hold their respective party retreats on Wednesday.
— John Bresnahan
THE BALLOON
Lawmakers poised to learn more about Chinese spy balloon this week
The Chinese spy balloon’s journey across the United States might be over, but congressional oversight of the Biden administration’s response is just beginning.
President Joe Biden’s decision to order the downing of the balloon after it crossed through the Carolinas on Saturday drew responses that fell largely along party lines.
The criticism from Republicans boils down to this: Biden should have moved to shoot down the balloon even before it crossed into U.S. airspace.
Senate Minority Leader Mitch McConnell said China made “a mockery of our airspace.”
Here’s more:
Defense Department officials have been actively rebutting that argument, claiming they were able to glean valuable intelligence from the balloon as it moved across the country. What’s more, officials said, shooting down the balloon over land could have put Americans in danger from the debris.
Senate Majority Leader Chuck Schumer said GOP complaints against Biden were “breathless, political, and premature.”
“The bottom line here is that shooting down the balloon over water wasn’t just the safest option, but it was the one that maximized our intel gain,” Schumer said at a press conference Sunday:
But there are questions about whether the Biden administration should have alerted Americans — or, at the very least, congressional leaders — to the aircraft earlier than it did and whether officials should have been more transparent about its flight path.
Despite the squabbling, it seems there will be a serious bipartisan attempt to learn more, including whether the decision to allow the balloon to cross into and ultimately traverse the continental U.S. was the right one.
Sen. Jon Tester (D-Mont.), whose state the balloon was traversing over when it first became public, has said he’ll hold a hearing examining the Biden administration’s response.
The Gang of Eight — the group of congressional and intelligence committee leaders privy to the most sensitive national-security information — is expected to get a briefing this week. And the Senate Foreign Relations Committee has a previously scheduled hearing on U.S.-China relations. That hearing will feature testimony from the State Department’s No. 2 official, Wendy Sherman.
On Feb. 15, the full Senate will get a classified briefing on China. This was also previously scheduled, but there will be heightened interest given the recent developments.
— Andrew Desiderio
FEE FIGHT
How the bank lobby is preparing for battle over late fees
The U.S. banking lobby is preparing to mount a serious fight over the future of credit card late fees. It’s one of the most significant conflicts yet between the financial sector and the Biden administration. And it’s also a key issue that House Republicans will try to whack the White House on.
Last week, the Consumer Financial Protection Bureau and the White House proposed a rule that would set new limits on how much credit card providers can charge customers in late fees.
This isn’t the first time the Biden administration has pressured the financial sector to cut back on its use of customer fees. Since 2021, regulators have sought a crackdown on banks’ use of overdraft fees and more.
But the latest plan marks an escalation for regulators. The CFPB predicted its proposed rulemaking could cut the banking industry’s annual income from credit card late fees by roughly 75% – from $12 billion to $3 billion a year.
The CFPB has said banks could potentially charge higher late fees if they can prove the charge is in line with their collection costs. And in a statement, a spokesperson for the agency said it would “carefully review and consider comments from all parties as it considers whether to finalize a final rule in the months ahead.”
Late-fee income from credit cards is a typical stream of income for banks of all sizes. Their use of overdraft fees, while also significant, is more uneven throughout the sector; some institutions rely more heavily on overdrafts than others.
That means targeting late fees is a lot more likely to unite different factions of the banking sector, including community banks, retail banks, mega-banks and even credit unions. A united bank lobby can be a fearsome, deep-pocketed foe in Washington.
This is a struggle that, on the surface, will take place mostly within the regulatory system and the 30-day public comment period. Bankers and their representatives tell us that they’ll, for instance, argue the CFPB is flouting important administrative requirements.
But in reality, we also expect this conflict to be the banking lobby’s first serious test of Republican support this Congress.
Lindsey Johnson, president and CEO of the Consumer Bankers Association, told us that “there is a role that Congress absolutely can and must play” in the credit card fee fight:
A GOP House can’t actually block regulations by itself. But lawmakers could play a significant role in the public-facing push against the rule. Republicans on the House Financial Services Committee have promised to bring CFPB Director Rohit Chopra to testify regularly as part of their commitment to “regulatory oversight.”
Late fees also touch on a Republican policy priority in both the House and Senate – improving “access to credit.” Banks’ core argument against the CFPB’s plan is that it could limit credit among poor or disadvantaged communities by leading to higher interest rates on cards.
– Brendan Pedersen
👀
What we’re watching
| → | Monday: The House Ways and Means Committee has a hearing in Petersburg, W.Va., on the state of the economy in Appalachia. The House Rules Committee will meet on the legislation for this week. |
| → | Tuesday: The House Transportation and Infrastructure Committee will have a hearing on the FAA reauthorization with agency and industry officials. The House Financial Services Committee will have a hearing titled “Combatting the Economic Threat from China.” |
The House Oversight and Accountability Committee will have a hearing on the border. The House Intelligence Committee will have its organizational meeting. The House Natural Resources Committee will have a hearing on its oversight plan.
House Energy and Commerce will mark up five bills. Senate Small Business will have its organizational meeting.
| → | Wednesday: The House Transportation and Infrastructure Committee will hold a hearing on the WOTUS rule. The House Science and Technology Committee will hold an organizational meeting. |
House Oversight will hold a hearing on “Twitter’s Role in Suppressing the Biden Laptop Story.” Witnesses will be former Twitter executives.
House Natural Resources will hold a hearing on “Unleashing America’s Energy and Mineral Potential.” The House Financial Services Committee will hold a hearing on the accredited investor definition.
The House Intelligence Committee will hold an open hearing with former national security officials. Ways and Means will hold a hearing on unemployment fraud.
The House Homeland Security Committee, Appropriations, Foreign Affairs and Small Business will all hold organizational meetings.
| → | Thursday: The Committee on House Administration will hold a hearing with the Architect of the Capitol to discuss his strategic plan. House Natural Resources will hold a hearing on “America’s critical minerals crisis.” |
Senate Judiciary has a business meeting. The Senate Armed Services Committee will hold a hearing on global threats. Senate Energy and Natural Resources will hold a hearing on U.S. territories. Senate Agriculture will hold a hearing on the farm bill.
Senate Banking will have a hearing on the state of U.S. housing. Senate Foreign Relations will have a hearing on “U.S.-China policy in the era of strategic competition” with Deputy Secretary of State Wendy Sherman.
The House’s “Weaponization of the federal government” subcommittee will hold a hearing, its first.
– Jake Sherman
PRESENTED BY COMCAST
Digital Navigators can come from anywhere. Watch how teens from the Boys & Girls Club of Southeastern Michigan help seniors get online.
THE CAMPAIGN
Stutzman considering bid to come back to Congress
News: Former Rep. Marlin Stutzman (R-Ind.) is mulling a run for his former House seat, he told us.
Stutzman was first elected to the House in 2010. Stutzman gave up his seat to run for the Senate in 2016, paving the way for Rep. Jim Banks (R-Ind.) to get elected. The four-term lawmaker lost the Senate primary to Sen. Todd Young (R-Ind.). Banks is now running for the Senate seat being vacated by GOP Sen. Mike Braun, who’s running for governor.
Indiana’s 3rd district seat is very red, so whoever wins the GOP nomination is likely to be the next member
– Jake Sherman and John Bresnahan
Whitmer and DeSantis are K Street’s top 2024 picks outside of Biden and Trump
We have this month’s results from The Canvass, our survey of K Street leaders. All week, we’ll be sharing with you the latest on what downtowners are thinking will happen during the 118th Congress and as the 2024 elections come into clearer view. The survey was conducted Jan. 11-27 in partnership with Locust Street Group.
| → | Somewhat surprisingly, nearly all GOP K Street leaders (96%) do NOT believe former President Donald Trump is the Republican Party’s best option for winning the White House in the 2024 election. The Trump years were great for K Street as he feverishly worked to remake the federal government and undo a myriad of regulations. |
On the Democratic side of K Street, 59% believe President Joe Biden is the party’s best option for winning the 2024 election.
Biden has said he plans to run in 2024 but hasn’t officially announced his candidacy. He has, however, proposed switching up the presidential primary calendar. That would allow South Carolina to be the first state to vote in the Democratic primaries, followed by New Hampshire and Nevada. Biden’s 2020 victory is, in part, credited to Black voters in South Carolina who saved his flailing campaign.
| → | Most Republican K Street leaders (90%) still believe Florida Gov. Ron DeSantis is likely to be the Republican nominee if Trump – who is already running – bows out. |
The sentiment shared among Republican K Street leaders about the 2024 GOP field doesn’t exactly mirror some of the recent polling. Surveys from Emerson College, Morning Consult and Harvard CAPS show DeSantis trailing Trump in a two-way race. Trump’s favorability initially dropped after the disappointing midterm elections, allowing DeSantis to gain momentum at the time from his overwhelming victory in Florida.
Other possible candidates for the GOP presidential nomination include former U.N. Ambassador Nikki Haley, who is expected to announce her run next week; Virginia Gov. Glenn Youngkin; and former Secretary of State Mike Pompeo, who told CBS News Trump’s decision to run had no impact on his own.
| → | For Democrats downtown, Michigan Gov. Gretchen Whitmer (49%) is most likely to be the Democratic nominee if Biden doesn’t run. Whitmer has, however, shut down speculation about 2024 presidential ambitions. “I can tell you, period, I am not running for anything in the next two or four years,” she told FOX 2. |
Democrats’ second pick is Transportation Secretary Pete Buttigieg (38%). Buttigieg told us last week that he’s not leaving his current job.
Politicians, of course, change their mind all the time.
– Donna Baeck
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Presented by AARP
48 million family caregivers give everything to help older loved ones. They give time and energy, too often giving up their jobs and paying over $7,000 a year out of pocket. With a new Congress, it’s time to act on the Credit for Caring tax credit.