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September 5, 2023
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THE TOP
Happy Tuesday morning.
The White House disclosed Sunday evening that First Lady Jill Biden tested positive for Covid-19. Elizabeth Alexander, the first lady’s communications director, said the 72-year-old Jill Biden was “experiencing only mild symptoms” and would remain at the family home in Rehoboth Beach, Del.
President Joe Biden has tested negative so far. The White House said Biden would undergo a “regular cadence of testing this week and monitor for symptoms.” The president is scheduled to leave for the G-20 meeting in India on Thursday.
Both Bidens – who’ve been vaccinated multiple times each – had Covid last summer with no serious side effects.
The Senate will be voting today for the first time since July 27. That’s 40 days. It feels longer. So welcome back, senators!
Now that Labor Day has passed, we’re getting deeper into what will be a tough election cycle for Senate Democrats. With only a slim two-seat majority, Democrats are defending 23 seats next year, including several in red states. Republicans are defending only 10.
Several senators who are key to the Democratic majority have yet to formally announce their plans. Sens. Joe Manchin (D-W.Va.), Kyrsten Sinema (I-Ariz.) and Bernie Sanders (I-Vt.) are the big question marks for Democrats heading into this critical year-end legislative stretch.
If Sinema decides to run, the DSCC will face a major dilemma with Rep. Ruben Gallego (D-Ariz.) already in that race. After leaving the Democratic Party, Sinema no longer attends caucus meetings but has retained her committee assignments on the Democratic side of the aisle.
Sanders will win re-election if he seeks a fourth term, while Manchin faces an uphill climb in deep-red West Virginia if he runs again.
On the GOP side, Utah Sen. Mitt Romney also hasn’t disclosed whether he’ll run for reelection. Romney’s decision is made more difficult by former President Donald Trump’s surge in the Republican presidential primary field. Romney is a Trump critic.
Manchin: The 76-year-old Manchin may be the most endangered Senate Democrat this cycle. Manchin could end up facing the sitting West Virginia governor, Republican Jim Justice, in a presidential year with Trump on top of the GOP ticket. A recent online poll has Manchin down 13 points to Justice in a head-to-head matchup. Manchin, though, has a four-point lead over GOP Rep. Alex Mooney if he’s the Republican nominee in the same poll. Justice and Mooney are locked in an ugly primary fight.
Manchin has flirted with leaving the Democratic Party, despite saying for a long time that he wouldn’t. He’s also been mentioned as a possible presidential candidate under the “No Labels” moniker. The Wall Street Journal recently reported that Manchin and his daughter Heather Manchin, a former drug-industry executive, are looking to set up a new $100 million political organization to boost centrist policies. The younger Manchin insists the effort isn’t tied to her father’s career.
A Manchin spokesperson said there is “no update” on the veteran pol’s timing for announcing his intentions. Manchin has stated repeatedly he’ll make a decision by the end of the year. Manchin has nearly $13 million in the bank between his reelection campaign and leadership PAC.
If Manchin decides not to run, Democrats have practically no chance of keeping that seat.
Sinema: Sinema left the Democratic Party in December 2022, but she hasn’t formally announced her reelection. There’s some speculation that Sinema won’t declare her plans until early 2024. Sinema is raising money like she’s running — including with some big Arizona Republican donors — and had $10.7 million in her campaign war chest as of the end of June.
In the meantime, the list of challengers is growing. Gallego has already raked in millions of dollars in campaign contributions from progressives and Democrats who have soured on Sinema. On the right, former gubernatorial candidate and election-denier Kari Lake is running, as is Pinal County Sheriff Mark Lamb. Blake Masters, who lost to Democratic Sen. Mark Kelly last cycle, is expected to jump into the Republican primary as soon as this week.
Sinema’s spokesperson Hannah Hurley told us that the senator remains focused on issues including security at the U.S.-Mexico border, the opioid crisis and veterans. Hurley gave no timetable for a decision.
“Arizonans are sick of career candidates constantly fighting the next election,” Hurley said. “Kyrsten promised Arizonans she’d be an independent senator who delivers lasting solutions, and that’s exactly what she’s done.”
Sanders: Sanders, who represents the polar opposite wing of the Democratic majority from Manchin and Sinema, hasn’t said what he plans to do next year.
The soon-to-be 82-year-old Sanders — his birthday is Friday — has been fending off the reelection question for months, and he continues to do so.
“The people of Vermont do not want never-ending campaigns,” Sanders’ spokesperson Mike Casca said in a statement. “Sen. Sanders will make an announcement when it’s appropriate.”
Sanders isn’t going to face a serious challenge if he runs. Sanders has $9.7 million in the bank if it comes to that, with the ability to raise whatever he needs from his national donor base.
Romney: Romney, 76, hasn’t declared whether he’ll seek a second Senate term. And his vocal anti-Trump stance is definitely a challenge back home.
Brad Wilson, the Republican speaker of the Utah House of Representatives, has signaled that he may run but is waiting to see what Romney does. Riverton Mayor Trent Staggs, another Republican, is already running, while former GOP Rep. Jason Chaffetz has said he’ll make a decision this fall.
Here’s Liz Johnson, Romney’s chief of staff: “I think everyone realizes it’s his race to lose if he gets in. He’s well-positioned to have the resources, political organization and voter support to win, and he is not fazed by the prospect of a primary.”
— John Bresnahan and Andrew Desiderio
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Impeachment inquiry and Afghanistan dominate GOP investigation agenda
As Congress returns from the long August recess, a potential impeachment inquiry into President Joe Biden looms large.
And the debate could come to a head soon. House conservative hardliners including Rep. Marjorie Taylor Greene (R-Ga.) are trying to tie support for any government funding bill to a vote on opening such an inquiry.
The twinning of the two issues is an unprecedented prospect, tying a necessary function of government with a polarizing vote that will be sure to put the 18 House Republicans in Biden-won districts in a difficult spot politically. It’s also a useful talking point for Democrats, who have already started saying that Republicans only want to keep federal agencies open if they can impeach Biden.
Here’s what else to watch:
Afghanistan withdrawal: House Foreign Affairs Committee Chair Michael McCaul (R-Texas) set a Sept. 7 deadline for nine current and former State Department officials to arrange a transcribed interview with the panel.
McCaul is probing the 2021 U.S. withdrawal from Afghanistan and is seeking information from a variety of officials, including the former acting U.S. ambassador to Afghanistan and the former U.S. special representative for Afghanistan reconciliation. Check out the full list of officials here.
We’ve been closely tracking the push-and-pull between McCaul and Secretary of State Antony Blinken over access to documents from the 2021 military withdrawal.
Democrats try to shift focus to Kushner: As Republicans consider a Biden impeachment probe, Democrats are seeking to shine a light on former Jared Kushner’s overseas business dealings. Kushner is former President Donald Trump’s son-in-law. The move from House Oversight Committee Ranking Member Jamie Raskin (D-Md.) is a clear rebuttal to GOP attacks on Hunter Biden’s conduct.
Raskin is calling on House Oversight Committee Chair James Comer (R-Ky.) to subpoena Kushner’s investment firm for information on deals with Saudi Arabia, Qatar and the United Arab Emirates.
— Max Cohen
Debt rules, Powell and cannabis: Here’s what you missed over recess
Even the biggest economic nerds on Capitol Hill need a break from the politics of money and regulation every once and a while. August was as good a time as any.
But while you were summering in the Hamptons, rocking out in Rehoboth Beach, Del., or perfecting the DMV staycation, parts of the federal government continued to hum along. Some even made some financial news.
Here’s a non exhaustive list to catch you up:
Long-term debt rules: A trio of federal regulators proposed a tougher set of debt requirements last week for banks with more than $100 billion of assets. It’s one of the more consequential reforms to follow last spring’s miniature banking crisis.
The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency issued this Notice of Proposed Rulemaking on Aug. 29. The proposal would direct many regional banks to hold a certain amount of what’s sometimes called “loss-absorbing debt” or long-term debt.
Many of the country’s megabanks already follow these rules to an extent. Regulators estimated that the banking industry is already holding approximately 75% of the debt that would be required by the rule.
But the agencies also acknowledged that banks’ funding costs as a whole would likely go up, which the industry will argue can only be passed along to consumers.
Jackson Hole: Federal Reserve Chair Jay Powell addressed an annual symposium gathered at Jackson Hole, Wyo., late last month, where he told the world that the U.S. central bank was prepared to continue raising rates without more progress against inflation.
The message wasn’t quite as grim as last year’s Jackson Hole address, when Powell quoted the notoriously brutal former Fed Chair Paul Volcker and promised to make “forceful and rapid steps to moderate demand.”
But the gist of this year’s speech was the same: central bankers shouldn’t take their eye off the inflation ball, Powell said.
New rules for private funds: The Securities and Exchange Commission finalized a set of disclosure rules targeting pension boards, large private endowments and hedge funds.
The rulemaking, which you can read here in factsheet form, introduces new transparency standards and prohibits private funds from certain activities “that are contrary to the public interest and the protection of investors,” per the agency.
The rule has already been challenged in an industry lawsuit before the U.S. Court of Appeals for the Fifth Circuit. That court is one of the nation’s most conservative, giving the sector a good shot of dragging out the rule’s implementation for a good while.
Momentum for cannabis reform: The Department of Health and Human Services sent shockwaves through the cannabis sector on the last day of August when the agency recommended that the plant no longer be classified as a Schedule 1 drug, the same category as heroin and other hard drugs. It falls to the Drug Enforcement Administration to make the actual change. As a reminder, DEA is part of the Justice Department.
Cannabis’ status as a Schedule 1 substance has long been a major legal obstacle for any business trying to work with state-legal companies in the space. That includes banks and their regulators.
If the DEA takes the lead from HHS, the legal environment around cannabis would experience a significant shift – though experts say the need for cannabis banking reform and other state-versus-federal issues wouldn’t go away.
Still, momentum is everything in Washington.
– Brendan Pedersen
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INSIDE THE LEADERSHIP
Hudson plans trip to Philly for Fitzpatrick
NRCC Chair Richard Hudson is planning a trip to Philadelphia to boost Rep. Brian Fitzpatrick’s reelection.
Fitzpatrick, as you may recall, is facing a longshot primary challenge from conservative activist Mark Houck, who has ties to the House Freedom Caucus.
Fitzpatrick told us Hudson’s visit is in the works, but a date isn’t yet scheduled. Hudson is expected to join a quarterly steering committee meeting at the GOP-friendly Union League.
To be sure, Hudson does a lot of travel. But we thought this was worth pointing out given the Freedom Caucus was encouraging a primary challenge to Fitzpatrick.
Fitzpatrick is among Congress’s most vulnerable Republicans and has close ties to House GOP leadership.
The Pennsylvania Republican is known for being one of the most moderate members in the GOP, often making him a target of Democrats and his far-right colleagues.
– Mica Soellner, John Bresnahan and Jake Sherman
THE CAMPAIGN
Former Rep. Patrick Kennedy (D-R.I.) has cut an ad for Gabe Amo, who is running for former Rep. David Cicilline’s (D-R.I.) seat. The special primary election is today. Kennedy’s ad has photos of his uncles, former President John F. Kennedy and Sen. Bobby Kennedy (D-N.Y.), and his father, former Sen. Ted Kennedy (D-Mass.).
Amo is facing off in a crowded primary field, the winner of which is almost certain to triumph in the special general election in November. Amo’s main competitors are Lt. Gov. Sabina Matos, former state Rep. Aaron Regunberg and state Sen. Sandra Cano.
– Jake Sherman and Max Cohen
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