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March 15, 2023
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THE TOP
Happy Wednesday morning.
Mitch McConnell’s absence from the Capitol is depriving the Senate of one of its strongest pro-Ukraine voices as his party wrestles with abandoning support for Kyiv.
Former President Donald Trump and Florida Gov. Ron DeSantis are now staking out the same neo-isolationist position on Ukraine. Senate Republican aides said McConnell would be speaking out this week against a trend that he’s described as both dangerous and naive.
“His stature is important when it comes to sending a message of solidarity among Republicans,” Sen. Mike Rounds (R-S.D.) told us.
Some Democrats and Biden administration officials privately acknowledge that McConnell’s consistent outspokenness on Ukraine has been beneficial in maintaining bipartisan support for the Western coalition and minimizing the impact of the GOP’s growing anti-Ukraine wing.
The reality is more complicated. The GOP’s growing divide over Ukraine has been on full display after DeSantis likened the war to a “territorial dispute” with Russia and suggested it’s not a “vital” national security interest for the United States.
Between DeSantis and Trump, the party’s presidential field is reflecting the base when it comes to Ukraine. Polls of Republican voters show support for Ukraine softening, with GOP confidence in President Joe Biden’s handling of the conflict plummeting. A majority of Democrats and independents, however, continue to back Biden and Ukraine.
On the Hill, Speaker Kevin McCarthy has declared there will be no “blank check” for Ukraine, while conservatives ranging from Rep. Marjorie Taylor Greene (R-Ga.) to Sen. Josh Hawley (R-Mo.) have expressed their strong opposition to continued U.S. backing for its embattled ally. So far, the United States has provided Ukraine with more than $113 billion in economic and military support since the Feb. 2022 Russian invasion.
McConnell has acted as a firewall preventing that view from permeating throughout the Senate GOP conference. A majority of Senate Republicans still back Ukraine aid.
It’s unclear thus far who will fill that void with McConnell undergoing physical therapy at an in-patient facility following a fall during a private GOP dinner a week ago. The Kentucky Republican suffered a concussion and a fractured rib in the incident. McConnell’s aides have said he’ll likely spend another week or two at the rehabilitation facility.
McConnell’s absence underscores the vital bulwark role he plays in these types of debates — especially on foreign policy.
“This is one area where he really does so frequently assert himself, often quite helpfully,” Sen. Todd Young (R-Ind.) said. “He tends to have credibility on national security matters. And if someone is undecided on a particular issue, looking to the leader…oftentimes can be a tiebreaker for some members.”
Sen. Kevin Cramer (R-N.D.) said McConnell’s “absence will be felt” but “nobody’s confused about where he stands on it.” Cramer added: “Others will articulate it.”
Senate Minority Whip John Thune — a potential McConnell successor — will lead the GOP leadership press conference this afternoon. Thune broke from DeSantis when asked about the Florida governor’s view on Tuesday, but he didn’t make a McConnell-esque case for Ukraine aid.
Both Thune and Sen. John Cornyn (R-Texas), also a potential future GOP leader, said they had exchanged text messages with McConnell. But there’s been few details offered on the 81-year-old’s condition.
A number of Republican senators were furious at DeSantis on Tuesday, with Cornyn even suggesting the Florida governor’s Ukraine statement “raises questions” for him about DeSantis possibly carrying the GOP banner in 2024.
“We’re a diverse party, people have different views, particularly when it comes to foreign policy and matters of war and peace,” Cornyn told us. “I respect their views but I feel strongly that helping Ukraine fend off this invasion is important not just to the region but for world peace.”
Yet the DeSantis-Trump position on Ukraine is becoming the dominant one among Republican primary voters. Sen. Lindsey Graham (R-S.C.), who’s endorsed Trump but is in the McConnell camp when it comes to Ukraine, believes much of the opposition to Ukraine aid is driven by a desire to create a contrast with Biden.
McConnell has achieved that, though, even while being firmly pro-Ukraine. McConnell has long argued that while Biden generally has it right on Ukraine, he’s been too slow to approve the transfer of weapons that have proven pivotal on the battleground for the Ukrainian military.
“I understand that among the Republican base it’s unpopular,” said Sen. Thom Tillis (R-N.C.), who co-chairs the Senate’s NATO Observer Group. “I think it’s up to us to educate people.”
— Andrew Desiderio and John Bresnahan
Don’t miss out! House Appropriations Committee Ranking Member Rosa DeLauro (D-Conn.) will join Punchbowl News founder Anna Palmer on Thursday, March 23, at 9 a.m. ET to discuss women’s access to healthcare. RSVP here!
BANK BULLETIN
Progressives don’t need a bill to shape bank policy
Progressives in Congress don’t have the votes to enact more regulations following the high-profile collapse of two regional banks. But they still have plenty of power, and they’re ready to wield it.
As we wrote Tuesday night, there are deep divisions between Democrats about where bank regulation goes from here. Led by Sen. Elizabeth Warren (D-Mass.), progressives are pushing for the wholesale repeal of a bipartisan deregulation bill from 2018 that eased certain regulatory requirements for small- to mid-sized banks.
Even in the Democratic Senate, that repeal effort isn’t going anywhere anytime soon. You have to go back to 2018 to understand why.
The deregulation bill best known as S.2155 had strong support from moderate Senate Democrats including Sens. Mark Warner (Va.), Jon Tester (Mont.), Tim Kaine (Va.), Michael Bennet (Colo.), Debbie Stabenow (Mich.), Gary Peters (Mich.) and Joe Manchin (W.Va.).
We asked several of those senators last night whether the collapse of Silicon Valley Bank and Signature Bank made them second-guess their support for the 2018 bill, particularly a key provision that raised the size threshold for banks requiring the strictest supervision from $50 billion to $250 billion. (SVB and Signature had between $100 and $200 billion of assets.)
The answer we heard was a resounding no, for now. Virtually every moderate we spoke with, including Warner, Kaine, Bennet and Stabenow, said they wanted more information about the twin failures before considering policy changes.
Here’s Bennet with a response that echoed others:
But progressives don’t need moderates’ votes to shape bank policy — at least not for now. Many of the key regulators leading the Biden administration’s banking agencies today are significantly more left-leaning than they were under the Obama administration.
During the last two years, the Biden administration has had to work closely with progressives such as Warren and Senate Banking Committee Chair Sherrod Brown (D-Ohio) to push favored nominees through the Senate confirmation process.
Brown pointed to some of those individuals – including Michael Barr, the Fed’s top bank regulator, and Lael Brainard, a former Fed vice chair who now leads the National Economics Council – in a lengthy scrum with reporters, urging the administration to weigh stricter bank regulations.
Wouldn’t you know it: the Wall Street Journal’s Andrew Ackerman reported Tusday night that the Fed was weighing a “raft of tougher capital and liquidity requirements,” as well as “steps to beef up annual ‘stress tests’” for mid-sized banks.
Still, this won’t go as far as Warren and other progressives ultimately want, and they won’t stop pushing for additional legislative reform.
“I tried, with everything I had, to prevent the passage of S.2155, the 2018 regulatory rollback,” Warren told us in an interview Tuesday night. “I predicted that it would cause banks to lever up their risk, pay their executives handsomely… and increase the odds that one or more of these huge banks would crash.”
We asked Warren about actions she’d like to see the regulators pursue in the coming days – higher capital requirement increases, stress testing, etc. Warren said she wanted to see them “to do it all.”
As Warren knows, regulation can be fickle. Regulators change with who’s in the Oval Office. Legislation tends to have a longer shelf life in Washington.
“We have an opportunity to pinpoint the exact provisions of S.2155 and pull them out of the statute, root and branch,” Warren said. “If we do that, we’ll have a much safer banking system.”
– Brendan Pedersen
THE SENATE
Senators unveil never-before-used tactic to target Saudi Arabia
Congress has long tried — and failed — to regulate the U.S. relationship with Saudi Arabia. So a bipartisan duo is trying something new.
Sens. Chris Murphy (D-Conn.) and Mike Lee (R-Utah) are unveiling a resolution this morning that could lead to a vote altering the terms of the U.S.-Saudi relationship.
The resolution would request a report from the Biden administration on the Saudi kingdom’s human-rights record. The Foreign Assistance Act of 1961 allows Congress to require that the State Department produce such a report.
Procedurally, Murphy and Lee can force a floor vote on the resolution – at a simple-majority threshold – 10 days after its introduction. If the resolution clears the Senate, the administration would have 30 days to submit a report to Congress. If it misses the deadline, all security assistance to Saudi Arabia would end.
If the report is submitted on time, Murphy and Lee can force yet another floor vote — this time on a resolution to cut off or otherwise restrict U.S. security assistance for Saudi Arabia. That measure would need a simple majority, too. And it would need to pass the House before going to President Joe Biden’s desk.
That report, of course, would expose Saudi Arabia’s human-rights record as abhorrent and squeeze the Biden administration on an issue it has tried hard to avoid — to the chagrin of even Biden’s closest foreign-policy allies like Murphy.
The joint effort from Murphy and Lee — and the procedural maneuver they’ve resorted to — reflects bipartisan frustration with how the Biden administration has handled the U.S.-Saudi relationship. Biden came into office promising to reset the relationship, but that hasn’t happened.
“This is obviously an innovative approach to put the question of the U.S. relationship with Saudi Arabia before the Senate, but I think it’s a necessary approach,” Murphy told reporters.
What’s more, Saudi Arabia’s decision to cut oil production last year — even though Russia’s invasion of Ukraine had caused prices to soar — led many lawmakers to argue that the kingdom isn’t a reliable security partner for the United States.
Those concerns were heightened earlier this month when Saudi Arabia and Iran re-established diplomatic ties with the help of China. Yet on Tuesday, the White House was touting Saudi Arabia’s purchase of dozens of Boeing airliners as a huge win.
The Murphy-Lee effort was already in the works as these developments unfolded. But Murphy said it’s further evidence that Riyadh doesn’t see a need to change its behavior.
While there’s bipartisan interest in re-evaluating U.S.-Saudi ties, top Republicans remain supportive of the relationship. Senate Minority Leader Mitch McConnell led a GOP delegation to the region last month that included a stop in Riyadh. McConnell and other GOP leaders have argued that Saudi Arabia is an important partner in countering Iran’s influence in the Middle East.
— Andrew Desiderio
PRESENTED BY GOLDMAN SACHS 10,000 SMALL BUSINESSES VOICES
The last time Congress reauthorized the SBA was before the University of Iowa’s Caitlin Clark was born.
… AND THERE’S MORE
DCCC’s big Feb. numbers, plus Don Jr. and Kimberly Guilfoyle raising for Banks
DCCC fundraising news: The DCCC raised $12.7 million during the month of February, leaving the House Democratic campaign arm with $21.3 million on hand. That’s a healthy haul.
House Minority Leader Hakeem Jeffries reeled in $9.3 million of the total February haul. Jeffries fundraised in Los Angeles last month and has trips planned to Boston and Chicago later in March.
Hoosier action: Rep. Jim Banks (R-Ind.) is the prohibitive favorite for the Indiana Senate seat being vacated by GOP Sen. Mike Braun. Most other Republicans have dropped out of the race in the deep red Hoosier State.
Banks, who has been traveling a ton of late, will be in Palm Beach, Fla., next week for an event with Donald Trump Jr. and his partner, Kimberly Guilfoyle.
TikTok’s new lobbyist. TikTok has signed up Dentons and former Rep. Jeff Denham (R-Calif.) to lobby on “[i]ssues related to internet technology, regulation of content platforms.” Denham, who lost his seat in 2018, was a close ally of Speaker Kevin McCarthy. TikTok also employs Crossroads Strategies, led by former Sens. John Breaux (D-La.) and Trent Lott (R-Miss.).
– Max Cohen and Jake Sherman
PRESENTED BY GOLDMAN SACHS 10,000 SMALL BUSINESSES VOICES
Sydney Rieckhoff: Iowa superfan and small business owner.
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