The Archive

IN THIS EDITION

Johnson loses trio of key policy aides

The Vault: How G7 could reshape the REPO Act

The Vault: Dems push for quick Gruenberg replacement

Esper warns of a ‘cool war’ with China and threats to world order

THE TOP

Johnson loses trio of key policy aides

Happy Tuesday morning.

News: Three leading members of Speaker Mike Johnson’s policy team are leaving his office by the end of May, robbing the House’s top Republican of a critical core of experienced aides.

Brittan Specht, Jason Yaworske and Preston Hill — all of whom also worked for former Speaker Kevin McCarthy — are heading to Michael Best Strategies, a lobbying firm with offices in D.C. and around the country.

The departure, which is striking in size and in experience, strips Johnson of a significant amount of expertise in his domestic policy shop. Specht was McCarthy’s policy director and was key in crafting the Fiscal Responsibility Act, which raised the debt limit and set budget levels for two years.

Yaworske is a well-respected adviser to the speaker on the appropriations and budget matters. As the House Appropriations Committee begins marking up the FY2025 spending bills, Yaworske’s expertise on government spending is in demand.

And Hill, a longtime figure in GOP leadership, was in charge of overseeing House Republican policy in burgeoning policy areas such as cryptocurrency, artificial intelligence as well as Education and the Workforce and Financial Services.

Another common thread here is that all three have been at the table during high-stakes negotiations — something that is a rarity at the top levels of the Republican leadership.

Downtown view: Michael Best Strategies is the professional home of former Rep. Steve Israel (D-N.Y.), former Sen. Cory Gardner (R-Colo.) and former White House Chief of Staff Reince Priebus. Priebus is the chair of the board of advisers, Gardner is on the board of advisers and Israel is a senior counselor and on the board of advisers.

Michael Best represents the Haribo Group, a candy company; Long Island University; Ripple Labs; T-Mobile and Waste Management.

The big picture: Johnson had a nine-person policy shop anchored by Dan Ziegler, the speaker’s policy director. Losing three senior advisers with significant experience isn’t great for the Louisiana Republican. It’s true that Congress is a transient institution, where ambitious aides slip between K Street and government with regularity. But having the speaker lose three policy aides with this kind of experience is a blow.

Team Johnson says they will be hiring new policy staff soon. But we’ll see who is willing to commit with the election only 167 days away.

The reaction: Johnson, in an emailed statement, thanked the trio for their “sacrificial service” to his team and “all House Republicans over many years.”

McCarthy, who employed all three, said this:

Also: With the House returning today, it’s worth watching three developments this week:

→	The House Appropriations Committee is marking up the MilCon-VA bill in subcommittee today. House Republicans’ first FY2025 spending bill has all the same problems with riders and funding levels that last year’s bills had, per Democrats.

→	The House Armed Services Committee will hold its markup for the annual defense authorization bill on Wednesday.

→	The House Agriculture Committee will mark up the farm bill on Thursday.

None of these processes may be finished until a lame-duck session. But they all begin over the next three days.

— Jake Sherman and John Bresnahan

Event this week! Join us on Thursday at 8:30 a.m. ET for a conversation with Rep. Zach Nunn (R-Iowa) about AI and economic opportunity. Punchbowl News founder and CEO Anna Palmer will sit down with Nunn to discuss news of the day and how AI can affect productivity and innovation. In-person RSVPs close at noon on Wednesday. Advance registration is required to attend in person. RSVP Here!

The Vault: How G7 could reshape the REPO Act

FRANKFURT, GERMANY — Treasury Secretary Janet Yellen says the U.S. government is prepared and willing to start seizing Russian sovereign assets to aid Ukraine.

But the need to move in lockstep with European allies is changing how U.S. authorities are thinking about their own strategy in the near-to-mid-term.

“We’ve not taken that off the table, and we do think it’s justified,” Yellen told us in an interview en route to Europe, referring to sovereign asset seizure. “But I think we may have found a way to do this that gives us a lot of resources for Ukraine that can command consensus.”

As we’ve written already this week, Treasury officials headed to the G7 Finance Ministers’ conference are focused on rallying E.U. leadership behind a plan that stops short of asset seizure. Some G7 nations would prefer to securitize the interest earnings of frozen Russian assets to fund a larger loan that could further back Ukraine.

Yellen said the REPO Act, which Congress passed alongside the most recent foreign aid package, gives the White House broad discretion on whether and how sovereign assets are handled.

“The REPO Act doesn’t require seizing assets. It allows the assets to be seized,” the Treasury secretary said.

News: The lawmakers who authored the REPO Act are already putting pressure on the Biden administration for an implementation plan.

In a letter to President Joe Biden, the bipartisan group asked for specific information about how the law is being rolled out, including:

→	Whether financial institutions have formally informed Treasury about Russian assets they’re currently holding.

→	A briefing from the National Security Council, which is leading the administration’s coordination efforts with European nations and G7 partners. This includes funding “creative mechanisms” for using the frozen Russian assets in their countries.

→	Whether Treasury has “engaged with central banks, regulators, and repositories in partner jurisdictions — in particular, the National Bank of Belgium, the Belgium Financial Services and Markets Authority, and Euroclear — on the concept of confiscating Russian sovereign assets.”

Sens. Jim Risch (R-Idaho) and Sheldon Whitehouse (D-R.I.), along with Reps. Michael McCaul (R-Texas) and Marcy Kaptur (D-Ohio), signed the letter. The lawmakers said Russia needs to know that the United States is “serious” about asset seizure.

“Russia shows no signs of relenting on its illegal military campaign or engaging in multilateral talks, so the time to act is now,” they wrote.

We asked Yellen: Will G7 conversations this week shape the law’s U.S. implementation? Yellen responded in part by pointing to the New York Fed, which plays a key role in holding Russia’s sovereign assets located in the United States.

For the record: The Treasury secretary argued this wouldn’t be a weaker approach to harnessing Russian assets so much as an alternative approach to that same goal.

“It’s a simple step to make loans that are backed by the stream of revenues on those assets,” Yellen told us. “In terms of a workable idea that can generate a significant set of assets that could be repeated — if we take several years of proceeds, make a loan against it, that’s something that can be repeated again in the future.”

— Brendan Pedersen and Andrew Desiderio

The Vault: Dems push for quick Gruenberg replacement

Senate Democrats are hoping for fast action to replace Martin Gruenberg now that the Federal Deposit Insurance Corp.’s chair said he’ll step down when the Senate confirms a successor.

For Democrats, it would be a welcome end to the political uproar following the release of an independent report detailing the FDIC’s toxic workplace culture and systemic failures to stop sexual harassment.

But with the election just months away, it won’t be easy for a nominee to win Senate confirmation.

“The White House needs to nominate somebody who’ll move quickly,” Senate Banking Committee Chair Sherrod Brown (D-Ohio) told us. “Leadership of the FDIC is really important for a whole host of reasons.”

Brown, who called for new FDIC leadership just before Gruenberg announced his plans to step aside, said he has discussed names for a potential replacement with the White House. With Gruenberg in hot water for weeks over the report, bank lobbyists and other insiders have been eyeing some potential options whom the White House could tap.

“I think the Biden administration will recognize that it’s important to move very quickly, and we here in the Senate need to act very quickly on the confirmation,” Sen. Chris Van Hollen (D-Md.) said.

The challenge: It’s entirely possible that the Senate won’t be able to confirm Gruenberg’s replacement this year, especially this close to an election. It will be difficult enough to get 50 Democrats on board. And we don’t expect Republicans to play ball with the possibility of a new Trump administration looming in January. That means an FDIC nominee could burn through a lot of Senate floor time that Majority Leader Chuck Schumer would rather use for something else.

But Democrats aren’t too worried that Gruenberg’s announcement represents a setback for their party’s banking regulatory policies. Democrats pointed to the fact that Gruenberg will remain in the job until there’s a successor in place.

“It’s now up to the president to nominate someone who… changes the culture of the agency, not the policies,” said Sen. Jack Reed (D-R.I.), a senior member of the Banking Committee.

“Because I think Marty has done a good job in trying to make the banks more responsive,” Reed added. “At this point, his willingness to depart is an opportunity for not only continued policy, but addressing the cultural issues of the agency.”

While that’s good news for Biden’s banking agenda, it also leaves Democrats open to continued criticism on how they’re handling the scathing report about the agency’s workplace culture.

“Why wait?” Sen. Thom Tillis (R-N.C.) said of replacing Gruenberg. Tillis added that Gruenberg “needs to get out of an environment he made toxic.”

— Laura Weiss and Andrew Desiderio

PUNCHBOWL NEWS EVENTS

Esper warns of a ‘cool war’ with China and threats to world order

Former Defense Secretary Mark Esper warned of the potential for global unrest as Russian aggression continues, China’s ambitions grow, war rages on in Gaza and Americans face a potentially turbulent election in November.

Esper was speaking at the SALT conference in New York Monday evening where Punchbowl News founder Jake Sherman interviewed him on the foreign and domestic threats to the U.S.

The China problem: Esper said there’s a “cool war brewing with China” at a time of growing economic and political competition between the major powers. Esper urged U.S. officials to step up their leadership rather than retreat.

“I think we’re finally waking up to the strategic threat that China presents us,” Esper said. “I do think you’re going to see strategic decoupling in the most high-end of items. Semiconductors comes to mind because that’s already happening.”

Biden’s Ukraine performance: Esper praised President Joe Biden’s handling of China and other Asian countries as “reasonably good” but criticized his effort with Ukraine.

“I give him credit for pulling together the allies when Ukraine was first invaded by Russia, but I think a failure of the administration has been time and time again to deny the Ukrainians what they needed when they needed it to beat back the Russians,” Esper said.

Esper also drew parallels between Russia’s and China’s quests to dismantle the current world order. Esper is concerned that Beijing could be emboldened by Russia’s action.

Israel-Hamas war: Esper criticized Biden’s handling of the war in Gaza, particularly the administration’s decision to pause the shipment of 2,000-pound bombs to Israel. That move, he said, signaled to Hamas there’s a “growing divide” between Washington and Tel Aviv.

Still, Esper called on Israel to do more to minimize civilian casualties and improve the ability to deliver humanitarian aid.

2024 elections: Asked who he’d be voting for in November, Esper said he’s not enamored by either presidential candidate. But Esper certainly won’t be voting for his former boss, Donald Trump. Esper also said he wouldn’t vote for Biden, although he left that door slightly open.

“Maybe things will change over the next six months,” Esper said. “I’m not going to pull that lever until I have to pull that lever, but I know I won’t be pulling it for Donald Trump.”

— Elvina Nawaguna

THE CAMPAIGN

Voters head to the polls today for primaries in Georgia, Idaho, Kentucky and Oregon. Here’s what we’re watching:

Can DCCC-backed Bynum beat McLeod-Skinner? Oregon’s 5th District will be one of the most competitive districts come November. But first, Democrats have to choose their nominee to face off against freshman Rep. Lori Chavez-DeRemer (R-Ore.).

Will state Sen. Janelle Bynum, who’s on the DCCC Red-to-Blue list, triumph over 2022 nominee Jamie McLeod-Skinner? McLeod-Skinner is running as the anti-establishment progressive candidate, while Bynum is touting her electoral record of defeating Chavez-DeRemer in two previous state legislature elections.

Is Pramila Jayapal’s sister heading to Congress? Susheela Jayapal, a former county official and sister of Congressional Progressive Caucus Chair Pramila Jayapal (D-Wash.), is one of the leading contenders to succeed retiring Rep. Earl Blumenauer (D-Ore.) in the state’s 3rd District. Jayapal’s top opponent in the Democratic primary is state Rep. Maxine Dexter.

The race has attracted millions of dollars in outside PAC spending, largely opposing Jayapal and boosting Dexter. 314 Action Fund, a group boosting Democrats with STEM backgrounds, is running ads hitting Jayapal.

Will a Trump-endorsed candidate succeed Drew Ferguson? Former President Donald Trump is backing his former political director, Brian Jack, in the GOP primary for Georgia’s 3rd District. Jack is running to succeed retiring Rep. Drew Ferguson (R-Ga.) in the solid red seat.

— Max Cohen

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