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Happy Monday morning.
There are 50 days until the midterm elections.
The House and Senate are both in session today. President Joe Biden is in London attending the funeral for Queen Elizabeth II.
Congress faces some big decisions this week on permitting reform and government funding. Biden and other world leaders will attend the U.N. General Assembly, with the war in Ukraine the most serious issue under discussion. But the top story is the U.S. economy, the Federal Reserve and interest rates.
The Federal Open Market Committee meets on Tuesday and Wednesday. Central bankers are expected to approve an interest rate increase of at least 75 basis points. Federal Reserve Chair Jay Powell will likely signal at his Wednesday press conference that more big rate increases are coming until inflation – which remains at a four-decade high despite lower gas prices – cools down. These rate hikes are starting to hit the housing market as mortgages top 6% for the first time since 2008, as well as spilling over to other sectors.
Biden and senior administration officials have been careful to acknowledge the pain being felt by average Americans due to soaring prices, but the president’s answers to Scott Pelley on Sunday’s CBS’ “60 Minutes” are already being criticized by Republicans:
Pelley: “Mr. President, as you know, last Tuesday the annual inflation rate came in at 8.3%. The stock market nosedived. People are shocked by their grocery bills. What can you do better and faster?”
Biden: “Well, first of all, let’s put this in perspective. [The] Inflation rate month to month was just– just an inch, hardly at all….”
Pelley: “You’re not arguing that 8.3% is good news?”
Biden: “No, I’m not saying it is good news. But it was 8.2%, or 8.2% before. You’re making it sound like all of a sudden, ‘My God, it went to 8.2%.’”
Pelley: “It’s the highest inflation rate, Mr. President, in 40 years.”
Biden: “I got that. But guess what we are. We’re in a position where, for the last several months, it hasn’t spiked. It has just barely … it’s been basically even. And in the meantime, we created all these jobs. And prices have gone up, but they’ve come down for energy. The fact is that we’ve created 10 million new jobs since we came to office. We’re in a situation where the unemployment rate is about 3.7%, one of the lowest in history. We’re in a situation where manufacturing is coming back to the United States in a big way. And look down the road, we have massive investments being made in computer chips and employment. So, look, this is a process. This is a process.”
Biden is optimistic that the country can avoid a recession despite the Fed’s aggressive anti-inflation stance. This isn’t a view held by every Democrat – see Sen. Elizabeth Warren (Mass.) here – but Biden and other top administration officials have continued to press this line as it’s become clear the U.S. economy is nearing some kind of tipping point. Biden sounded a little more upbeat than Treasury Secretary Janet Yellen did last weekend:
Pelley: “Sir, with the Federal Reserve rapidly raising interest rates, what can you do to prevent a recession?”
Biden: “Continue to grow the economy. And we’re growing the economy. It’s growing in a way that it hasn’t in years and years.”
We’ll note here that the U.S. economy has shrunk for two quarters in a row. Job growth has remained strong and unemployment is historically low, as Biden said. But how long can this continue with rising interest rates, high inflation, slowing home sales, China and Europe wobbling, and Wall Street in a funk? And what does this mean for the midterms?
Biden and the Democrats have seen a resurgence in the polls in recent months. A dramatic economic slowdown would provide new fodder for Republicans on top of the problems at the U.S.-Mexico border and crime, two other major GOP talking points on top of inflation.
There are some other Biden quotes from the “60 Minutes” interview worth flagging – and we’re not talking about what the president said about running for reelection in 2024.
First, Biden declared “The pandemic was over,” which likely came as a surprise to other administration officials and Hill Democrats (especially those who’ve just had Covid.) This came in response to a question about his attendance at the Detroit Auto Show last week, held for the first time since 2019:
“The pandemic is over. We still have a problem with COVID. We’re still doing a lotta work on it. It’s – but the pandemic is over. If you notice, no one’s wearing masks. Everybody seems to be in pretty good shape. And so I think it’s changing. And I think this is a perfect example of it.”
Set aside the fact that more than 450 Americans are dying daily and there are tens of thousands of new infections reported. The White House requested more than $22 billion in emergency Covid prep funding just a few weeks ago. Republicans have rejected this request, and it doesn’t seem likely to make it into the short-term funding bill being hashed out on the Hill right now. Biden’s comments, however, could make that a lot easier for GOP negotiators.
Secondly, Biden once again seemed to rewrite U.S. policy on defending Taiwan from an attack by China. And once again, White House officials walked it back afterward. The new “strategic ambiguity” on Taiwan isn’t American officials refusing to be pinned down on what the United States will do if the self-governing island is attacked. It’s Biden saying flatly the United States will defend Taiwan, only to have aides say there’s no change in American policy.
It’s getting more difficult to see how this could be a mistake or a misstatement by the president at this point. Biden said the same thing in May. Biden made similar comments in Oct. 2021. Biden said something similar in Aug. 2021.
→ Megabanks on the Hill. The CEOs of the nation’s largest banks will testify before the House Financial Services Committee on Wednesday, followed by the Senate Banking Committee on Thursday. The witness list includes Wells Fargo’s Charles Scharf, Trust Financial’s William Rogers, Bank of America’s Brian Moynihan, Citigroup’s Jane Fraser, J.P. Morgan Chase’s Jamie Dimon, PNC’s William Demchak and Bancorp’s Andy Cecere.
→ House Republican leadership will head to the Pittsburgh area Friday to unveil their election-season agenda, dubbed the “Commitment to America.” GOP lawmakers will get a sneak peek at the document Thursday during a member meeting in D.C.
– John Bresnahan and Jake Sherman
TOMORROW: Join us at The Roost or on the livestream at 9 a.m. ET for a conversation with Senate Republican Whip Sen. John Thune (R-S.D.) to talk news of the day, the role of private capital in supporting small businesses, jobs, and the economy. RSVP Here.
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Dems seek $12 billion for Ukraine as CR talks continue
House and Senate Democratic leaders are seeking $12 billion for Ukraine in a short-term funding bill designed to keep the federal government running until mid-December.
“Ukraine has made significant advances against Russia in the war, the vicious war that Putin has waged against the Ukrainian people,” Senate Majority Leader Chuck Schumer said at a Manhattan news conference on Sunday, according to the N.Y. Daily News. “I will be pushing for at least $12 billion in aid for Ukraine in the budget so they can continue to win the war effort.”
Democratic aides said Schumer was advocating for the position on behalf of top House and Senate Democrats in the negotiations over the continuing resolution. The CR could see floor action beginning as early as this week in either chamber, depending on what happens with the negotiations over permitting reform.
This is also largely in line with what the White House asked for on Ukraine earlier this month. Republicans seem supportive of the request, although details were still being worked out over the weekend.
If it’s approved, this would bring total U.S. spending on the war in Ukraine to more than $60 billion, with lots more expected.
The CR under discussion would extend government funding until mid-December, likely Dec. 16. The White House has requested tens of billions of dollars in new Covid prep funding to cover the cost of tests, therapeutics and new vaccines. Republicans have balked at this, saying the Biden administration should redirect money from the $1.9 trillion American Rescue Plan to cover this.
The White House has also sought money for dealing with the monkeypox outbreak and disaster relief as part of the CR. Like the Covid request, Republicans have been opposed to this new monkeypox funding. On disaster relief, the two sides are still discussing what this might look like.
The issue on timing for the CR remains permitting reform. Schumer and Sen. Joe Manchin made a deal that a permitting reform proposal from the West Virginia Democrat would be attached to the CR.
Republicans, though, are opposed to the Manchin plan, as are a large block of progressive House Democrats. Schumer is moving ahead as if the permitting reform provision will be included in the CR anyway. We expect some decision on this by midweek at the latest.
If permitting reform is dropped, there’s an outside chance that the CR could be approved this week. It’s pretty unlikely, but there’s a chance. Lawmakers in both chambers want to go home for the election.
However, we still expect Congress to be in next week. House Democratic leaders want to have a vote on a bill banning stock trading by members before they leave town, and that doesn’t appear possible before next week. It also gives party leaders time to deal with any hiccups on the CR.
Remember, neither chamber is in session on Monday and Tuesday due to Rosh Hashanah.
→ Schumer is expected to file cloture tonight on the DISCLOSE Act, a campaign finance transparency bill long pushed by Sen. Sheldon Whitehouse (D-R.I.). The Whitehouse legislation would require super PACs and 501 (c)(4) non-profit groups to disclose any donors who have given $10,000 or more. Groups spending money on ads tied to judicial nominees would also have to disclose their donors.
Republicans will block cloture, so this bill won’t go anywhere but Whitehouse has advocated strongly for this legislation. Here’s the Rhode Island Democrat, a frequent critic of the Supreme Court’s 2010 decision in the Citizens United case, from a July hearing before the Senate Rules Committee:
“The wreckage from the dark-money aftermath of Citizens United is staggering.
Dark money political spending went from under $5 million in 2006 to more than $1 billion in 2020. Megadonors and special interests had a bonanza. Billionaire political spending increased by a factor of 70, from $17 million for the 2008 election to $1.2 billion for 2020. In 2018, super PACs and other dark-money groups collectively outspent even candidates’ own campaigns in 16 federal races.”
– John Bresnahan
Who we’re watching
→ Senate Majority Leader Chuck Schumer. Schumer has continued to stick by his deal with Sen. Joe Manchin (D-W.Va.) on permitting reform, indicating the provision will be attached to the continuing resolution funding the federal government beyond Sept. 30. The problem is that no one – meaning Republicans or progressive Democrats – really likes this plan. But Schumer is playing this out all the way. We’ll see how this goes.
→ Jay Powell. The Federal Reserve has a big week ahead as central bankers will decide whether to hike interest rates by 75 basis points – or even more. Powell’s press conference Wednesday will be very closely watched to divine what the Fed sees in the future on inflation and additional interest rate hikes.
→ President Joe Biden. Biden has a big week. He’s in London right now for Queen Elizabeth II’s funeral. And tomorrow, he’ll head to New York for the United Nations General Assembly, where he’ll address world leaders Wednesday.
— John Bresnahan and Jake Sherman
What we’re watching
→ Tuesday: Senate Banking has a hearing on “tightening the screws on Russia, focusing on smart sanctions, economic statecraft and next steps.” Assistant Secretary For Terrorist Financing and Financial Crimes Elizabeth Rosenberg and Andrew C. Adams, the chairman of DOJ’s Task Force KleptoCapture, will testify.
The Senate Agriculture Committee will have a hearing on crypto as a tool for financial inclusion. Senate Judiciary will have a hearing on the enforcement of antitrust laws. This hearing will be chaired by Sen. Amy Klobuchar (D-Minn.).
→ Wednesday: The House Committee on Oversight and Reform has a hearing on Russia’s use of private military contractors. House Financial Services will have a hearing on “Holding Megabanks Accountable: Oversight of America’s Largest Consumer Facing Banks.” Senate Environment and Public Works will have a hearing on implementation of the infrastructure law, with local officials testifying. Senate Armed Services has a hearing on military recruitment.
→ Thursday: Senate Banking has the same group of top U.S. bank CEOs in to testify.
– Jake Sherman
Emmer to donors – Buchanan will be next Ways and Means chair
NRCC Chair Tom Emmer said at a Florida fundraiser last week that Rep. Vern Buchanan (R-Fla.) will be the next top Republican on the House Ways and Means Committee.
“Vern will be the next Ways and Means chairman,” Emmer said at the fundraiser, according to a source present. “Vern has been a mentor to me and many others in our conference.”
Now, you may think this is an endorsement. But we are told Emmer is still neutral in the race. He doesn’t sound so neutral to us.
Let’s be straight: Buchanan has been good to Emmer. Buchanan has raised and donated millions of dollars to the NRCC this cycle as part of his quest to be the next top GOP tax writer. But so has Rep. Jason Smith of Missouri and, to a lesser extent, Rep. Adrian Smith of Nebraska. So fully backing Buchanan could be tricky for Emmer.
Emmer is eyeing a run for leadership. He wants to be the whip in the next Congress if Republicans take the majority, so his comments are especially noteworthy. If Emmer wins a leadership slot, he’ll retain his Steering Committee seat, giving him a vote for the next top Republican on Ways and Means.
Emmer’s remarks came during an event at Buchahan’s home in Longboat Key, Fla. The event raised more than $200,000 for the NRCC. Buchanan gave $50,000 from his campaign account to the NRCC at the fundraiser.
– Jake Sherman
→ Here’s something you don’t see a lot these days. Joe O’Dea, the GOP candidate to take on Sen. Michael Bennet in Colorado, is running an ad touting his pro-choice credentials. This spot is running in Denver.
→ Sen. Mark Kelly (D-Ariz.) is going negative on his Republican opponent Blake Masters. Kelly’s new spot, running statewide, features a man showing his friends a video of Masters criticizing military brass.
– Jake Sherman
President Joe Biden and First Lady Jill Biden are in London for Queen Elizabeth II’s funeral. He will return to the White House around 5 p.m.
Biden’s week: Tuesday: Biden will travel to New York for the U.N. General Assembly. He’ll also attend a DNC fundraiser.
Wednesday: Biden will address the U.N. General Assembly. He will also meet with UK Prime Minister Liz Truss. Biden will speak at the Global Fund’s Seventh Replenishment Conference. He will also host the Leader’s Reception at the American Museum of Natural History.
Thursday: Biden will attend a DNC reception and then return to D.C.
Saturday: Biden will travel to Wilmington, Del. Sunday: Biden will return to D.C.
→ “The Story So Far: Where 6 Investigations Into Donald Trump Stand,” by Peter Baker
→ “Trump Rally Plays Music Resembling QAnon Song, and Crowds React,” by Alan Feuer and Maggie Haberman
→ “All of Puerto Rico without power as Hurricane Fiona slams island,” by Matthew Cappucci, Jacqueline Alemany and Praveena Somasundaram
→ “Republicans in key battleground races refuse to say they will accept results,” by Amy Gardner, Hannah Knowles, Colby Itkowitz and Annie Linskey
→ “Can the Sunday morning talk show be saved?” by Paul Farhi
→ Reps. Liz Cheney (R-Wyo.) and Zoe Lofgren (D-Calif.): “We Have a Bill to Help Prevent Another Jan. 6 Attack”
Note: The Senate has its own election reform bill. These two pieces of legislation will likely need to be negotiated during the lame duck.
→ “Big Regional Banks Might Face New Rules for Dealing With a Crisis,” by Andrew Ackerman
→ “Liz Truss’s Chief of Staff Is a Witness in FBI Bribery Probe,” by Benjamin Stupples
→ “Iran’s President Says He Wants Guarantee US Won’t Quit New Deal,” by Josh Wingrove
Crucial Capitol Hill news AM, Midday, and PM—5 times a week
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