The Archive

IN THIS EDITION

Hawks push for more Pentagon money, but will it happen? And when?

Top CEOs meeting with senators on Israel

The Vault: Lawmakers press IRS to get Covid-era biz relief out

Good, Cole fight for their political future

Cornyn hits $20 million fundraising milestone

THE TOP

Hawks push for more Pentagon money, but will it happen? And when?

Happy Tuesday morning.

Senate defense hawks in both parties want a big boost in Pentagon spending for next year, citing new and constantly evolving threats from U.S. adversaries.

Yet getting this done amid a battle for control of the Senate and White House — as well as a looming spending fight with endangered House Republicans — may prove too much to overcome this summer. A deal may be possible in the lame-duck session, although that all depends on who wins on Nov. 5.

The Senate Armed Services Committee last week approved a $25 billion increase to the Pentagon’s topline as part of the annual National Defense Authorization Act for FY2025. The committee voted 22-3 to send the bill to the Senate floor.

But that final tally, while a win for defense hawks, belied the reality on Capitol Hill as this year’s spending wars are intensifying. The NDAA is an authorization bill only, so it all comes down to what the Senate Appropriations Committee approves. There’s no deal right now on how much the federal government should spend next year, and it’s not clear if and when that will happen.

Sen. Jack Reed (D-R.I.), the Armed Services Committee chair, took the unprecedented step of voting against the NDAA package coming out of his own panel. While Reed supports a defense spending hike, he opposed the legislation because it would bust the spending caps agreed to under the 2023 Fiscal Responsibility Act. This would trigger sequestration for the Pentagon, Reed warned.

“There are reasons to increase investment in defense,” Reed told us. “But it would’ve been a whole different story if we did not have the Fiscal Responsibility Act.”

For their part, House Republicans are seeking steep cuts to domestic spending while calling for a $9 billion Pentagon boost, as well as more money for border security and the VA.

Speaker Mike Johnson and House Appropriations Committee Chair Tom Cole (R-Okla.) won’t honor the “side deals” negotiated by former Speaker Kevin McCarthy and President Joe Biden as part of the FRA. Those side deals included billions of dollars that went to spending bills.

Defense hikes paired with cuts to social programs won’t fly with the White House or Hill Democrats.

Sen. Jeanne Shaheen (D-N.H.), an Armed Services Committee member and a senior appropriator, told us that while there’s a real need for more defense spending, it shouldn’t “come at the expense of further cuts on the domestic side of the budget.” Shaheen voted against the proposed $25 billion boost, although she backed the overall NDAA package, which sets defense policy.

There’s also clear skepticism among appropriators in both parties that anything can get done before Election Day.

“My hope is that we’ll be able to do a [defense] increase that will help address very real needs,” said Sen. Susan Collins (Maine), the top Republican appropriator. “It’s going to be a challenging situation not only between the parties, but between the chambers.”

We’ll note that Collins and Appropriations Committee Chair Patty Murray (D-Wash.) don’t yet have an agreement for the FY2025 spending topline ​​or know when they’ll get one.

Sen. Roger Wicker of Mississippi, the top Republican on the Armed Services Committee, orchestrated the proposed $25 billion Pentagon increase. Wicker told us that despite the headwinds, he’s encouraged by his conversations so far with appropriators.

Wicker noted that the FRA caps were enacted before Iran, North Korea, China and Russia were all working together to undermine the West and U.S. security.

“We need to do what we have to do to make America strong and to preserve the peace,” Wicker told us. “So we need to make that decision collectively, have a national conversation about it, and after that, the technicalities will fall into place.”

Other Republicans said they’d support whatever it takes to meet the Pentagon increase including waiving spending caps. Sen. John Cornyn (R-Texas), who’s running for GOP leader, called for a “reset” of the way Congress thinks about defense spending. Senate Minority Whip John Thune, also running for leader, said appropriators should find a way to meet the Armed Services Committee’s goal.

Of course, even among Republicans, there’s far from a consensus on what to do about Pentagon spending. And progressives, who have long opposed defense funding hikes, see the GOP as violating the budget deal they demanded as a condition for raising the debt limit in 2023.

“It’s hard enough to hold things together in this Congress. But time after time, the Republicans cut a deal — that was very painful for Democrats — and then turn around… and back out,” Sen. Elizabeth Warren (D-Mass.) told us. “There comes a time when Democrats smarten up and say the House Republicans are not people you can cut a deal with. Because they will never stick to it.”

— Andrew Desiderio and John Bresnahan

New Event! Join Punchbowl News on Thursday, June 27 at 9 a.m. ET for a conversation with Rep. Josh Gottheimer (D-N.J.). Punchbowl News founder and CEO Anna Palmer will sit down with Gottheimer to discuss the news of the day and his bipartisan work as a co-chair of the Problem Solvers Caucus in the 118th Congress. Afterward, Jane Adams, vice president of U.S. federal government affairs for Johnson & Johnson, will join Anna for a fireside chat focused on health equity. RSVP now!

WASHINGTON X THE WORLD

Top CEOs meeting with senators on Israel

News: A group of high-powered tech, finance and defense industry CEOs — many of whom are GOP megadonors — are scheduled to meet with top senators in the Capitol on Tuesday to advocate for continuing U.S. arms sales to Israel.

The private meeting, titled “Fostering a Private-Public Partnership in Support of Israeli Security and Regional Peace and Stability,” is a show of private sector support for Israel. It comes as an increasing number of Democrats are souring on American military assistance for Israel’s deadly war against Hamas in Gaza.

Among the business leaders set to attend, per the agenda we obtained: Palantir CEO Alex Karp, Citadel CEO Ken Griffin, Oracle CEO Safra Catz, Pfizer CEO Albert Bourla, Booz Allen Hamilton CEO Horacio Rozanski and Blackstone CEO Stephen Schwarzman.

A number of the invitees are major Republican donors who are cutting huge checks to Senate GOP super PACs.

Sens. Lindsey Graham (R-S.C.) and Cory Booker (D-N.J.) are hosting the event, according to the agenda. Senate Majority Leader Chuck Schumer is listed as a “likely” attendee, but we’re told he won’t be showing up.

Interestingly, Sen. Jacky Rosen (D-Nev.) is listed on the agenda and will attend, according to her office. Rosen is running for reelection this year and is considered one of the most vulnerable Democratic incumbents.

It’s notable that Rosen will be in the same room as many of the people who are funding — to the tune of tens of millions — efforts to defeat Senate Democrats, as well as President Joe Biden. Rosen is more hawkish on Israel than much of her party, so Republicans have a hard time grouping her with progressives who’ve called for cutting off U.S. funding for Israel.

Monday night, the Washington Post reported that the top Democrats on the House Foreign Affairs and Senate Foreign Relations committees approved a massive weapons package for Israel under intense pressure from the Biden administration. The package included F-15 jets that won’t be delivered for several years, as well as air-to-air missiles.

— Max Cohen and Andrew Desiderio

The Vault: Lawmakers press IRS to get Covid-era biz relief out

First in Punchbowl News: Lawmakers are pushing the IRS to speed up processing for a pandemic-era relief program so that small businesses can get their funds.

Rep. Claudia Tenney (R-N.Y.), a member of the House Ways and Means Committee, and Sen. Tommy Tuberville (R-Ala.) each sent similar letters to the IRS pressing the agency on when it will resume processing new employee retention tax credit claims and how it plans to deal with a backlog that’s piled up, according to copies of the letters we obtained.

Read Tenney’s letter here and Tuberville’s here.

Both Republicans argue the IRS’ slow pace for doling out credits could lead small- and medium-sized businesses having to lay off workers or even close.

“While the public health concerns of the pandemic have largely ended, for many hard-hit industries and businesses the economic aftermath has not only persisted, but grown worse, severely delaying and regressing the anticipated economic recovery that American businesses were hoping for once COVID-19 abated,” Tenney wrote.

Tuberville wrote that “each day that passes with outstanding ERC claims unprocessed is a disservice to taxpayers and a threat to small- and medium-sized businesses.”

Here’s the wrinkle: The employee retention tax credit became a magnet for scams and fraud. The credit was meant to help smaller businesses and nonprofits stay afloat and keep workers on payroll during the pandemic. It ended after 2021, but businesses can still file claims for the aid.

The rampant misuse of the credit led Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Ways and Means Committee Chair Jason Smith (R-Mo.) to propose cutting off claims early. That would’ve provided nearly $79 billion in offsets for the duo’s tax deal, but that bill is going nowhere in the Senate.

The IRS has taken its own steps to battle fraud, including a pause on processing new credit claims.

Tenney wrote in the letter that fraud in the program shouldn’t be tolerated. Here’s what she said on IRS delays:

The credit has plenty of fans in Congress, but scammers’ success exploiting it made all things employee retention tax credit trickier.

— Laura Weiss

PRIMARY PREVIEW

Good, Cole fight for their political future

Happy primary day to those in Virginia and Oklahoma! Here’s what we’re watching today.

Will the House Freedom Caucus chair lose reelection?

Virginia’s 5th District Republican primary has united a fascinating group of odd bedfellows in an effort to unseat House Freedom Caucus Chair Bob Good (R-Va.). During his short stint in the House, Good has made plenty of enemies.

Good initially endorsed Florida GOP Gov. Ron DeSantis for president, angering former President Donald Trump. So Trump backed Good’s primary rival, state Sen. John McGuire.

Good was also one of eight House Republicans who voted to oust former Speaker Kevin McCarthy. So McCarthy and his wealthy allies are funding attack ads bashing Good. Plus, a contingent of mainstream House Republicans interested in governing is endorsing McGuire.

Good is a consistent thorn in leadership’s side and an aggressive fiscal hawk. So top House Republicans in the national security space are backing McGuire as well, including House Armed Services Committee Chair Mike Rogers (R-Ala.).

McGuire has also significantly outraised Good.

There’s a real chance Good could lose today. It would be a major embarrassment for the Freedom Caucus and yet more evidence that Trump’s endorsement is the most consequential asset you can have in GOP politics.

Can the House Appropriations Committee chair stave off a right-wing challenge?

Rep. Tom Cole (R-Okla.), the new chair of the House Appropriations Committee, is engaged in an expensive battle to defeat businessman Paul Bondar. Bondar is attacking Cole as too willing to compromise with Democrats.

Bondar only recently moved to Oklahoma from Texas. Cole plays this up constantly in his messaging, painting Bondar as an out-of-stater. Cole is endorsed by Trump, but Bondar is running the more MAGA-ish insurgent campaign.

Cole is generally well-liked by Democrats who appreciate his old-school politics. Bondar is seizing on this and recently ran an ad criticizing Cole’s vote against censuring Rep. Adam Schiff (D-Calif.).

Bondar has poured millions of dollars of his own money into ads. GOP insiders are on the lookout for a massive upset. If Cole doesn’t clear the 50% margin, he faces an August runoff against Bondar.

Who will fight for Virginia’s battleground 7th District?

Rep. Abigail Spanberger’s (D-Va.) decision to run for governor means that her toss-up House seat is up for grabs in November. On the GOP side, Derrick Anderson is backed by Speaker Mike Johnson. Another Republican, Cameron Hamilton, is running a more insurgent campaign and is supported by many in the Freedom Caucus.

On the Democratic side, former national security official Eugene Vindman is the leader in the money game over a variety of local officials like state Del. Briana Sewell and former state Del. Elizabeth Guzman. Vindman was a key figure in the first impeachment effort against Trump.

Which Democrat will succeed Wexton?

Retiring Rep. Jennifer Wexton (D-Va.) has endorsed state Sen. Suhas Subramanyam to succeed her. But the primary also features eleven other Democrats vying for the nomination in the blue-leaning 10th District. Other favorites in the Democratic primary include state Del. Dan Helmer and former Virginia House Speaker Eileen Filler-Corn.

— Max Cohen

THE MONEY GAME

Cornyn hits $20 million fundraising milestone

News: Sen. John Cornyn (R-Texas) has raised $20 million so far in the 2024 cycle, according to a source familiar with his political operations, besting his total for the 2022 cycle.

Cornyn is running to succeed Senate Minority Leader Mitch McConnell as Senate GOP leader, and fundraising is a key element of his pitch to fellow Republicans. Aside from McConnell, Cornyn has been the top Senate GOP fundraiser for the last 15 years.

The $20 million figure includes money raised through his joint fundraising committee, dollars raised for the NRSC and direct fundraising for candidates.

Cornyn is heading to Ohio on Saturday to campaign for GOP Senate candidate Bernie Moreno, who’s running against Sen. Sherrod Brown (D-Ohio). Cornyn will be the special guest at a campaign reception for Moreno in Columbus.

Of course, Senate GOP candidates who win their races in November will get to vote in the leadership races, which are slated to take place just a few weeks later. So there’s a direct benefit for Cornyn here to get some face time with Moreno.

We’ll have more on what the Senate GOP leadership candidates — Cornyn, Senate Minority Whip John Thune and Sen. Rick Scott (R-Fla.) — are up to this summer in the next edition of our special campaign newsletter, The Tally.

More campaign news: St. Louis County Prosecuting Attorney Wesley Bell, who’s mounting a serious primary challenge against Rep. Cori Bush (D-Mo.), is stressing the need for Democratic unity in his first ads of the campaign.

Neither ad directly mentions Bush, the far-left Squad member who’s seen as one of the most vulnerable Democratic incumbents. But Bell’s message is clear — he’ll stand with President Joe Biden, while Bush pushes her own agenda.

“You can’t just cheer from the bleachers or grandstand for yourself,” Bell says in one ad. “You’ve got to be a team player that stands with President Biden… When Democrats come together, we can accomplish big things.”

Another spot touts his record of criminal justice reform through his work in the St. Louis prosecutor’s office.

— Andrew Desiderio and Max Cohen

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