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August 16, 2023
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THE TOP
Happy Wednesday morning.
We don’t know how much of the 2024 election is going to be about the state of the U.S. economy, but both Democrats and Republicans believe they’ve got a winning message on the issue.
Say hello to a weird split screen with an even weirder economy.
America’s economic story has largely stayed the same this summer. Virtually every macro metric that policymakers care about — unemployment, prices, growth — is trending in the right direction, even allowing for some recent fits and starts. Investment in new factories is soaring. Consumer sentiment has improved recently. And economists have backed off their recession call for 2023. In a big way. This should all be good for President Joe Biden and the Democrats.
But public polling hasn’t reflected that progress, as we’ve written before. Voters have consistently identified the economy as a top concern, and they haven’t heaped praise upon the Biden administration’s approach so far, to put it mildly.
The disconnect isn’t too hard to grasp. Inflation has been brutal during the past two years, and the resulting higher prices are still with us even as wages start to catch up. The pandemic-era boom in social welfare funding dried up long ago. And in the meantime, we’ve seen an unprecedented surge in U.S. food insecurity and homelessness. That makes it harder for Democrats to embrace “Bidenomics” as a full victory.
There are also pockets of danger lurking in the financial system, thanks in part to enduring weakness in the $20-ish trillion commercial real estate sector. No one’s quite sure whether the Federal Reserve will continue to hike rates this fall and winter. The federal government is awash in red ink, and the recent Fitch downgrade of the U.S. credit rating points to an “expected fiscal deterioration over the next three years.”
Lawmakers in both parties said they expect the economy to be at the forefront of the 2024 debate. More pols than we care to count invoked former Clinton-era political strategist James Carville’s immortal quip: “It’s the economy, stupid.” (Note to comms directors: It’s probably time for a new quip.)
“Talking to people, I think the economy will be a significant issue, because people don’t feel confident yet,” Rep. Bill Huizenga (R-Mich.) said. Others argued that elections are always about the economy to some degree. “I think every election is about the economy,” Rep. Emilia Sykes (D-Ohio) said.
Both sides have some legislative wins to point to, although there are more for Biden. He can tout the Inflation Reduction Act, CHIPS bill and the $1 trillion infrastructure package. Republicans can say they forced Biden to cut spending with the Fiscal Responsibility Act.
Expect Republicans to continue hammering Democrats for higher prices. And the GOP is skeptical that the slower inflation we’ve seen this summer will erase voters’ memories of the red-hot price hikes we saw between 2021 and 2022.
“One thing I know for sure is you cannot pee on people’s backs and convince them that it’s raining,” Sen. Kevin Cramer (R-N.D.) said. “They are living whatever it is they’re living, and telling them something different than that generally doesn’t work.”
But there are also signs that Republicans aren’t 100% confident about winning an economic election. All summer, culture war frontliners have dominated right-wing media and GOP-controlled state legislatures.
“The truth is that Republicans haven’t leaned into the economy,” Sen. Peter Welch (D-Vt.) said. “What they’ve leaned into are the cultural issues that have nothing to do with the economy.”
Some Republicans accuse Democrats of the same thing. Rep. Zach Nunn (R-Iowa) said the GOP would try to make the economy “one of the three top issues” in 2024 while Democrats talk about “social issues that they’re hoping will win over their already very blue districts.”
To be fair, Republicans have pushed hard on social issues while in charge and also while not in charge. Plus, the Supreme Court’s decision to strike down Roe v. Wade was a huge factor in the 2022 midterms and promises to be again next year.
Democrats can point to historically high employment figures, one of the most prominent features of this thing called “Bidenomics.” The unemployment rate has sat below 4% since January 2022 and currently sits at 3.5%. Some key 2024 swing states are in especially good shape unemployment-wise. Hello Arizona, Michigan, Pennsylvania and Wisconsin!
This will be a tricky thing for Republicans to attack Democrats on if the labor market holds through 2024. It won’t stop the GOP from trying, though.
Huizenga argued that the job market’s tightness has been a real problem for small business owners, at least. “That has been a problematic issue throughout, because we still have not gotten people back to work,” the Michigan Republican said.
The challenge for both parties, we think, will come down to messaging about the future. For Democrats, it’s a wait-and-see economy, where the good stuff is coming, and voters will be able to feel the results any day now.
Republicans, meanwhile, will need to do more to convince voters that Bidenomics is a road to ruin. For all the problems we’ve experienced since the Covid-19 pandemic, though, a bona fide recession has proven illusive.
— Brendan Pedersen and John Bresnahan
PRO FORMA NOTEBOOK
News on appropriations, Tuberville, Trump and more
Twice a week during recess, the House and Senate hold pro forma sessions, where one member gavels each chamber in and then quickly gavels out. It’s also a chance for quote-hungry reporters to talk to members during the (mostly) quiet recess weeks.
On Tuesday, it was Sen. Chris Van Hollen (D-Md.) and Rep. Morgan Griffith (R-Va.).
Government funding: Van Hollen, a top Senate appropriator, said Speaker Kevin McCarthy’s acknowledgement that a short-term continuing resolution will be necessary to fund the government past September wasn’t a surprise to him, especially given the House’s struggle to pass its own funding bills on the floor.
And Senate Majority Leader Chuck Schumer told reporters Tuesday that he supports a short-term CR, noting that he spoke with McCarthy about it recently. (We’ll see if Schumer changes his tune if McCarthy loads the stopgap bill with policy changes or spending cuts).
But FY2024 funding is an entirely different story. Van Hollen said it’ll be up to the Senate — where the Appropriations Committee has approved all 12 funding bills with overwhelming bipartisan support — to quickly pass the FY2024 spending measures and show that their approach is the more prudent one. Of course, the House’s funding bills have no chance of clearing the Senate or getting signed into law due to big spending cuts.
“What really worries me as part of this process is you’ve got Speaker McCarthy being led around the nose by his most extreme right-wing elements,” Van Hollen said. “I am pleased that the Senate has taken a different approach, a bipartisan approach… So at least there is a path forward here.”
Over in the House, Griffith told reporters he’d back the idea of a couple of rolling week-long CRs to avoid a government shutdown. This, of course, is an unlikely proposition.
“I don’t think it’s good for the country to have a shutdown,” Griffith said. “But it may be good for some members to make rhetoric about a possible shutdown because then maybe we can get everybody to come to some kind of an agreement.”
But in an illustration of the difficulty of reconciling the House and Senate positions, Griffith said, “We’re not going to agree to the Senate’s increased spending programs.”
Tuberville: Sen. Tommy Tuberville’s (R-Ala.) ongoing blockade of senior military promotions is becoming an even bigger story over August, especially now that three of the eight members of the Joint Chiefs of Staff are serving in an acting capacity.
Defense Secretary Lloyd Austin once again argued on Monday that Tuberville’s holds are harming military readiness, but the Alabama Republican is no closer to relenting. Earlier this week, Tuberville’s office sent another missive to reporters defending the holds.
We’ve been covering Senate leaders’ dilemma over how to deal with Tuberville’s unprecedented tactics. Most Senior Democrats believe it’s up to GOP leaders to pressure Tuberville to back down, but others have said that Schumer should put some of the highest-ranking positions on the floor for votes.
Van Hollen believes the best way for this to end is for Republicans to publicly push Tuberville to back off. Some GOP senators have done this in private, but Van Hollen said it would have an even greater impact if those pleas were made in public.
“Senate Republicans should be urging him every day to [back down],” Van Hollen said. “I haven’t seen them come down to the floor like Senate Democrats have and really put the pressure on… If that doesn’t work, we’ll have to look at other alternatives.”
It’s unclear what those alternatives would look like. But some Democrats have been musing about a potential rules change as an end-run around Tuberville’s blockade. Van Hollen said he has long called for these changes, such as not requiring every promotion to go through its own individual floor process.
Trump: Griffith summed up the House Republican response to former President Donald Trump’s latest indictment by declaring the charges “more of the same old, same old.”
“I haven’t read the indictments,” Griffith said.
— Andrew Desiderio and Max Cohen
THE BANK ACCOUNTS
How rich are senators? Really rich
Our favorite time of the year is when lawmakers file their financial disclosures. Why? Because it’s interesting to get a peek behind the curtain — or inside the bank accounts — of our nation’s elected officials.
Here are some details from financial disclosures over the last week. We’ll note this isn’t a comprehensive list. We’ve just pulled out some interesting highlights. We especially like to note book royalties, and lots of senators get them.
Sen. Rick Scott (R-Fla.) is the richest senator, with a fortune that runs into the hundreds of millions of dollars. Scott made his money at Columbia/HCA, the largest for-profit health care group in the United States. The Florida Republican’s financial affairs are handled by outside managers, but his income is still staggering. Scott reported earning more than $2 million last year, while his wife made millions more.
Oh, and Scott has airplanes worth between $25 million and $50 million.
Sen. Mitt Romney (R-Utah) received $2,555,775 from a Goldman Sachs IRA last year. The extraordinarily wealthy Romney reported owning between $250,000 and $500,000 in physical gold bullion.
Sen. Richard Blumenthal (D-Conn.), whose wife’s family is mega-loaded, reported income of more than $4 million.
Sen. Ted Budd (R-N.C.) made $375,630 from his ownership in ProShots, which is a “[r]etail sporting goods, indoor range and training facility.” His stake in the company is worth between $1 million and $5 million.
Sen. Tom Cotton (R-Ark.) reported making $373,537 from his book “Only the Strong: Reversing the Left’s Plot to Sabotage American Power,” which he holds in TBC Books LLC.
Sen. J.D. Vance (R-Ohio) earned $121,376 in royalties from book publisher HarperCollins. Vance’s 2016 memoir, “Hillbilly Elegy,” was a bestseller.
Sen. Tim Scott (S.C.), who is running for the GOP presidential nomination, made $184,167 in royalties from HarperCollins Christian Publishing.
Sen. Tommy Tuberville (R-Ala.) earned $1,750 in royalties from his appearance in the 2009 movie “The Blind Side,” which has been in the news for other reasons lately.
Sen. Raphael Warnock (D-Ga.) earned $655,005.57 from book royalties and $154,895 from Ebenezer Baptist Church.
Sen. Alex Padilla (D-Calif.), who is worth between $355,000 and $825,000, went to Aspen, Colo., last November with the Rodel Institute, which is a “nonpartisan center for leadership and intellectual growth.”
Sen. Ted Cruz (R-Texas) reported a $500,000 advance for a book. He also accepted tickets to two Houston Astros games. That’s $476 worth of tickets from GOP political consultant Jeff Roe and $420 in tickets from Jonathan Newton of Houston. Roe is backing Florida Gov. Ron DeSantis’ bid for the Republican presidential nod.
— Jake Sherman and John Bresnahan
DOWNTOWN DOWNLOAD
The United States Fund for UNICEF has hired Akin Gump and former Rep. Ileana Ros-Lehtinen (R-Fla.). Akin Gump will lobby on “[s]upport for Child Welfare initiatives; Issues related to appropriations; U.S. Presidents Emergency Plan for AIDS Relief (PEPFAR).”
Google has hired Crossroads Strategies to lobby on a host of issues, including “competition in online services and privacy; S.786/H.R.1582, PHIT Act of 2023; S.1409 Kids Online Safety Act; FY2024 National Defense Authorization Act; FY2024 Department of Defense Appropriations; FY2024 Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriations.”
Cobb County, Ga., has hired Dentons to lobby on “FY 24 Appropriations bills, Community projects; Transportation and other grant opportunities for county governments.”
PIM Brands, which owns Welch’s among other candy brands, has hired Subject Matter to lobby on “[i]ssues related to the confectionery industry.”
— Jake Sherman
THE CAMPAIGN
New: Freshman GOP Rep. Mike Lawler (N.Y.) is kicking his fundraising machine into high gear with a number of out-of-state appearances as he faces a competitive reelection campaign.
Later today, Lawler will appear on the tony island of Nantucket, Mass., for a fundraiser alongside House Financial Services Committee Chair Patrick McHenry (R-N.C.).
On Aug. 28, Lawler is traveling to a fundraising lunch hosted by the Connecticut GOP in Stamford, Conn. (The City That Works!) Later in the evening, Lawler will pop over to Danbury, Conn., for another Connecticut GOP-hosted reception.
Lawler is one of 18 House Republicans who represent districts won by President Joe Biden in 2020. Two high-profile Democrats — former Rep. Mondaire Jones (D-N.Y.) and Liz Whitmer Gereghty — are battling it out in the primary for the right to take on Lawler.
Maryland Senate watch: Sen. Chris Van Hollen (D-Md.) endorsed Angela Alsobrooks on Tuesday to succeed retiring Sen. Ben Cardin (D-Md.). Van Hollen’s endorsement of Alsobrooks, the county executive for Prince George’s County, is a major snub of Rep. David Trone (D-Md.), who’s pouring millions of his own money into the Democratic primary.
After presiding over the pro forma on Tuesday, Van Hollen talked to us about why he decided to endorse in the competitive primary.
“I think Angela Alsobrooks is the best candidate in this field. She’d make a great United States senator. She would be a good partner for progress,” Van Hollen said, noting that he’s worked closely with her. “She has shown remarkable leadership, and I hope she’ll be able to bring that leadership to the United States Senate.”
— Max Cohen and Andrew Desiderio
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Presented by Apollo Global Management
One size rarely fits all. That’s why Apollo provides custom capital solutions designed to help companies achieve their ambitious business goals. Think Credit New