The Archive

IN THIS EDITION

Johnson and House Republicans face reality

The top Super Tuesday storylines

W.H. works with Hill to ban TikTok

Powell, Congress and other things to yell about

Kemp on Trump, Haley and private capital in Georgia’s economy

THE TOP

Johnson and House Republicans face reality

Happy Wednesday morning.

Today is Day 133 of Mike Johnson’s speakership and here’s what’s going to happen:

1) A $460 billion-plus FY2024 spending package will be on the House floor, with members scrambling to pass it before a partial government shutdown at midnight Friday. This legislation — more than 1,000 pages long — is six annual spending bills mashed up into one big minibus. In other words, this is precisely the kind of legislating Republicans vowed they’d avoid when they took over the House in January 2023.

2) The spending package includes 605 pages of earmarks worth more than $12.6 billion for both the House and Senate. Johnson does have one $7 million earmark in there — along with Louisiana GOP Sens. Bill Cassidy and John Kennedy — for construction on a medical facility at Barksdale Air Force Base. Senate Majority Leader Chuck Schumer and House Minority Leader Hakeem Jeffries have some earmarks in these bills as well.

3) It was drafted behind closed doors by senior members of the leadership in the House and Senate, plus top appropriators. No one outside of this group saw it before its release Sunday night. No amendments or other revisions to the package will be allowed, or else the whole thing could collapse. Johnson is having the House consider the package under suspension of the rules, which requires a two-thirds majority for passage — and forces Republicans to rely on a hefty number of Democratic votes. Then it’s the Senate’s turn.

4) Late next week or early the following, if all goes according to plan, House and Senate leaders will roll out the final six spending bills — including the massive Pentagon, Labor-HHS and Homeland Security bills — for an up-or-down vote.

5) The legislation today and, in all likelihood, the second spending package due by March 22, will be supported by more Democrats than Republicans. In case you forgot, Republicans have the majority in the House.

There’s plenty of legitimate criticism of Johnson from members of his own leadership. The Louisiana Republican is slow to make decisions, they assert. He’s preoccupied with leaks. He has no plan on how to deal with getting new U.S. aid to Ukraine, Israel or Taiwan, some of this country’s most important allies.

But what is happening today on the House floor is the byproduct of two distinct dynamics.

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Johnson’s predictable inability to break away from the spending deal cut by his predecessor, Kevin McCarthy, which is a real bipartisan compromise between the White House and Capitol Hill. Johnson became speaker 10 months into the Congress, limiting his leeway to change the trajectory of this high-stakes debate in any meaningful way.

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Hardline conservatives’ all-or-nothing attitude has plunged the House Republicans into a dysfunctional majority. These GOP lawmakers wanted a year-long continuing resolution that would force tens of billions of dollars in cuts to social spending. President Joe Biden and the Democratic-controlled Senate were never going to allow that to happen.

In the end, the centrifugal force of appropriators and leadership looking to avert a shutdown was far too powerful for a small and universally loathed group of conservatives to overcome.

“Once [McCarthy] got a deal done, I’m sorry, the play has been called. You couldn’t pull it out, undo it, and start all over again,” said House Rules Committee Chair Tom Cole (R-Okla.), who is also a senior appropriator. “[Johnson] made a gallant try, and he got some symbolic additional cuts. But this is broadly still the same thing we had.”

Cole is referring to the Fiscal Reduction Act, the agreement that McCarthy reached with Biden last May covering the debt limit and government spending. It’s the basis for the legislation today, and the upcoming Minibus Part Deux — if and when it happens — as well.

In some way, Johnson also is handcuffed by the institutional structures that have trapped so many speakers in the past. House Republicans don’t stick together. They abandon their speaker at every opportunity. And that weakens Johnson’s hand with Democrats.

House Freedom Caucus Chair Bob Good (R-Va.) is a perfect example of the thinking that drives the hardline faction in the conference.

Before walking into a leadership meeting Tuesday afternoon, Good said there is “very little, very little in the way of policy wins” in the spending bill. He complained about the lack of GOP policy riders in the package and spending levels, which are roughly in line with the deal McCarthy cut last year.

“When we have one house, we ought to get half of our wins, shouldn’t we?” Good asked a group of reporters.

When we told Good that his logic was flawed because House Republicans need Democrats to pass anything, he angrily ended the gaggle and walked into the speaker’s office. When Good emerged, he refused to talk further.

But in the closed-door meeting, Good lectured the group that House Republicans should shut down the government in September, just six weeks before the election, because Democrats will try to lock in policy wins before a new Congress and potentially a new president.

Most of the lawmakers in the room disagreed with Good, according to sources in the meeting that we spoke to. But the fight over FY2025 spending is already being joined. And the right is already setting standards for Johnson seven months in advance.

— Jake Sherman and John Bresnahan

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The half-day event will feature a one-on-one interview with House Financial Services Chair Patrick McHenry (R-N.C.), a panel conversation with speakers from a variety of industries and a fireside chat on innovation in payments and how the ecosystem supports consumers, small businesses, and the economy. This event is presented by Mastercard. RSVP now!

THE CAMPAIGN

The top Super Tuesday storylines

Former President Donald Trump won convincingly just about everywhere on Tuesday. He’s going to be the GOP presidential nominee this fall, marking the third straight cycle that he’s at the top of the Republican ticket. So let’s dive into the far more interesting world of congressional primaries!

Schiff and Garvey advance to Senate general election: Rep. Adam Schiff (D-Calif.) advanced to the general election in California’s Senate race, capping off a dominant primary campaign win over his fellow Democrats. Schiff is a massive favorite against Republican Steve Garvey in November. The primary losses for Reps. Katie Porter (D-Calif.) and Barbara Lee (D-Calif.) are setbacks for the progressive pair.

Schiff boosted Garvey in the primary, hoping to run against a Republican in deep blue California instead of a Democrat. And it worked.

Moore beats Carl in member-on-member race: Rep. Barry Moore (R-Ala.) narrowly beat fellow Rep. Jerry Carl (R-Ala.) in a redistricting-forced primary. Moore, a member of the House Freedom Caucus, emerged victorious in a bitter campaign dominated by immigration-themed attacks. Carl, a more mainstream GOP appropriator, tried to blast Moore’s vote against a 2023 continuing resolution deal paired with the conservative H.R. 2 border bill.

Valadao set for rematch against Salas: Despite California’s 22nd District threatening some drama, national Democrats and Republicans saw their preferred candidate advance to the general election. Rep. David Valadao (R-Calif.), one of the most endangered House Republicans, will again face Democrat Rudy Salas on Election Day. Valadao won last cycle, but will certainly be heavily targeted by Democrats in a seat that voted for President Joe Biden by 13 points in 2020.

Gonzales heading to May runoff: Rep. Tony Gonzales (R-Texas) fell just short of the threshold to advance to the general election and will face right-wing challenger Brandon Herrera in a May runoff. Herrera has worked with Freedom Caucus members to unseat Gonzales and accused the incumbent of failing to live up to conservative campaign promises. Gonzales notably supported the bipartisan gun safety bill following the horrific Uvalde school massacre in his district.

CLF gets its candidate in NC-1: Republican Laurie Buckhout, who the GOP leadership-aligned Congressional Leadership Fund supported, beat failed 2022 candidate Sandy Smith in a key primary. Buckhout will face vulnerable Rep. Don Davis (D-N.C.) in the Tarheel State’s only competitive seat. This is a big win for Republicans who were wary that Smith’s scandal-ridden record would again harm the party in November.

In other North Carolina primaries, Trump-endorsed Addison McDowell is heading to a runoff with former Rep. Mark Walker (R-N.C.) in the 6th District. And retiring Rep. Jeff Jackson (D-N.C.) won the Democratic primary in the attorney general race. He’ll face retiring Rep. Dan Bishop (R-N.C.) in November.

Figures heads to runoff with Daniels in Alabama Democratic primary: Shomari Figures, a former DOJ and White House aide, advanced to a runoff with Alabama House Minority Leader Anthony Daniels in the newly drawn majority-minority district in Alabama. Figures finished first in the crowded primary but fell around seven points short of the 50% needed to avoid a runoff. Whoever emerges from the primary is heavily favored to win in the blue-leaning seat.

— Max Cohen

TIKTOK TROUBLE

W.H. works with Hill to ban TikTok

The Biden White House is backing a bipartisan bill that could lead to a ban on the hugely popular social media app TikTok in the United States.

The legislation, which we scooped yesterday, would force ByteDance to sell TikTok if it wants to remain in U.S. app stores. The bill is set for a markup Thursday in the House Energy and Commerce Committee following a classified hearing with officials from the FBI, Justice Department and Office of the Director of National Intelligence.

Not only is the Biden administration sending these officials to brief the committee but the White House provided lawmakers with technical assistance when they were drafting the bill, according to several sources familiar with the effort.

Having support from the Biden administration — which has undergone a sharp internal debate over TikTok’s future, according to multiple Democratic and GOP sources on the Hill — is big. Previous congressional efforts to ban TikTok didn’t have White House backing. Congress was able to pass legislation removing TikTok from government phones, but that was it.

Yet there will still be opposition from both the right and left on any TikTok bill, so this is no slam dunk despite the White House support. We’ll also note that President Joe Biden’s reelection campaign just got on TikTok several weeks ago.

Rep. Cathy McMorris Rodgers (R-Wash.), chair of the Energy and Commerce Committee, said Speaker Mike Johnson and GOP leaders will back this proposal, which she hopes to bring to the floor soon after Thursday’s markup.

“It’s a very narrow bill that we’ve been working with the China Select Committee very closely on,” McMorris Rodgers told us Tuesday night. The Washington Republican said Johnson and other House GOP leaders support the measure.

But the speaker’s office told us they don’t yet have a view on the bill.

The legislation was authored by Reps. Michael Gallagher (R-Wis.) and Raja Krishnamoorthi (D-Ill.), the chair and ranking member of the China Select Committee. There’s a broad bipartisan group of members cosponsoring it as well.

Here’s a spokesperson for the National Security Council on the legislation:

TikTok, which is headquartered in Singapore and backed by Chinese investors, has been in the crosshairs of Congress for more than a year. National security hawks say the Chinese government has undue influence over and insight into the app’s data.

But the politics here are tricky for both parties. First off, TikTok is hugely popular, especially with younger Americans. Banning the app would be a kick in the gut for its gigantic user base. Secondly, TikTok has made a First Amendment argument — that proponents of a ban are taking away the rights of people to communicate on their platform of choice.

— John Bresnahan and Jake Sherman

Powell, Congress and other things to yell about

Federal Reserve Chair Jay Powell will appear before Congress starting today. It’s never an easy gig, but at least the U.S. economy is doing well.

Powell starts off in the House this morning and will journey to the Senate tomorrow. These are standard, statutorily mandated appearances where the Fed chair will talk about monetary policy and a lot of other stuff. (Hopefully, he talks about his love for the Grateful Dead).

Economy 101: Things are looking pretty good for both the Fed and White House when it comes to slowing inflation while boosting economic growth. The U.S. central bank’s preferred inflation gauge is hovering around 2.8% annually, according to the latest numbers. And we expect President Joe Biden to lean hard into the economy in the State of the Union address tomorrow — ultra-low unemployment and rising wages will help.

There will be some chatter revolving around when the Fed might cut rates. Progressives want those cuts to come sooner than later, but most other lawmakers have taken a hands-off approach in recent weeks. “This is more art than science,” Sen. John Kennedy (R-La.) said. “In some respects, our economy is overheated. In some respects, it’s underheated.”

Many Democrats have worries about the impact higher interest rates have had on the affordability of housing. Powell has said housing affordability isn’t part of how the Fed balances the risks of inflation, but that won’t stop lawmakers from asking. “We have seen a slowdown when it comes to the housing market,” said Rep. Nydia Velázquez (D-N.Y.).

Broader banking policy will get plenty of billing. We’ve spilled a lot of ink about Basel III, a set of capital reforms proposed by the Fed that banks are fighting. Powell isn’t the front person on that reform — that distinction belongs to Vice Chair for Supervision Michael Barr — but expect lawmakers to batter the chair with questions about how the reforms could change before they’re finalized.

We’ll also probably hear about some less marquee issues.

Some news here: An interesting bipartisan group of House lawmakers wrote to the Fed this week with concerns about proposed changes to Regulation II, a Dodd-Frank era reform that caps what fees banks can charge in debit card transactions. Read the letter here.

Members led by Reps. Nikema Williams (D-Ga.) and Blaine Luetkemeyer (R-Mo.) are concerned the latest update from the Fed in this space could undermine banks’ ability to offer certified low- or no-fee checking accounts.

“We are concerned that the proposed nearly 30% cut in debit interchange rates could upend the economics that enable financial institutions of all sizes to offer Bank On-certified accounts in a sustainable manner, thereby limiting consumers’ ability to access affordable banking products,” the lawmakers wrote.

— Brendan Pedersen

PUNCHBOWL NEWS EVENTS

Kemp on Trump, Haley and private capital in Georgia’s economy

Missed our event with Georgia GOP Gov. Brian Kemp in Atlanta yesterday? The Peach State governor weighed in on former President Donald Trump’s 2024 bid for the White House, why he thinks Nikki Haley is still running and the role of private capital in growing Georgia’s economy.

You can watch the full conversation here.

— Elvina Nawaguna

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