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PRESENTED BY

BY JOHN BRESNAHAN, ANNA PALMER AND JAKE SHERMAN
WITH MAX COHEN AND CHRISTIAN HALL

THE TOP

Happy Wednesday morning.

Some big news: Speaker Nancy Pelosi and House Democratic leaders are working on a ban on members of Congress and senior staff trading stocks, according to multiple sources directly involved in the discussions.

Rep. Zoe Lofgren (D-Calif.), chair of the House Administration Committee, is taking the lead on compiling recommendations for the leadership on how to enact such a ban. The leadership — namely Pelosi — will then have the final decision on how to proceed. 

The House Democratic leadership intends to amend the STOCK Act, the 2012 law governing how members disclose the purchase or sale of stocks, to eliminate the trading of individual stocks by members of Congress. Other laws covering members and staff, such as the Ethics in Government Act, will likely be revised as well.

This Democratic package is expected to include new restrictions on investments for federal judges as well, sources told us. In addition, the Democratic leadership is eyeing increases in the fines for lawmakers who are late in filing their annual financial disclosure reports.

Sources involved in these discussions say that the details are still very fluid. But House Democrats plan to move on it this year.

Even proposing this shows how the issue has huge momentum in a pivotal election year, with both the House and Senate up for grabs. 

Several sources told us that drafting the legislation is proving extraordinarily difficult. Some of the complications they are trying to work out include: 

→ What counts as trading? Would a lawmaker be able to hold onto stocks that he or she owned before coming to Congress? Would they just be banned from trading those stocks while in Congress?

→ Capital gains. The executive branch allows a waiver or deferral on capital gains tax when incoming employees sell stock before coming into an administration. Congress will have to decide whether it will do the same for lawmakers. But if a wealthy candidate wins a seat in Congress and is forced to sell off stocks and other equity positions to comply with new restrictions, an exemption from capital gains taxes could be a massive financial boon.

→ Family members. Congress will have to craft rules to dictate whether family members of lawmakers can trade stocks. Some spouses of members of Congress are executives at publicly traded companies. It is an open question as to whether the spouses would be permitted to retain their stock holdings, or whether they would have to forgo it. This could have a massive impact on the family of members of Congress and could prove a major impediment for running for office at all.

Furthermore, if a member of Congress marries while in office, would their spouse be forced to sell their stock? How about a dependent child or a step child? What if a teenage child gets stock as a gift. Would they be forced to turn down the gift? What if someone’s spouse’s job is quite literally a stock trader. Would they be forced to stop trading stocks if their spouse went to work on Capitol Hill?

→ What would qualify? Would lawmakers have to sell their shares in family-owned companies? How about in cryptocurrencies or commodities?

→ 529 accounts. Would lawmakers be able to hold 529 education savings accounts for their children? These are often invested in stock funds and mutual funds.

→ Inheritances. Would lawmakers, their spouses and their wives have to forgo inheritances that include stocks?

→ Blind trusts. If Congress decides to force lawmakers to hold their stocks and investments in a qualified blind trust, there will be questions as to who would pay for their administration. Furthermore, the House may have to increase its capacity to monitor these QBTs. The Senate already has rules on blind trusts. You can read about them here.

→ Staff recruitment. Don’t underestimate this issue. Congress already has trouble recruiting and retaining top-tier staffers. Working for a member or senator is a tough, often thankless job with long hours and lower pay than the private sector. Politicians sometimes make really horrible bosses. Experienced aides or those involved in key policy areas can go to K Street or corporate jobs to make multiples of what they get paid on the Hill. Perhaps some will decide it’s not worth the hassle of having to liquidate a portfolio to serve as an aide on Capitol Hill.

Our sources tell us these complications are all solvable. But we wanted to illustrate just how difficult this issue is.

So let’s talk about the politics of this issue right at the moment. It’s clear that there’s a good chance Congress may enact this ban, which, of course, has to pass both chambers and get signed into law. There are multiple House bills calling for this. Senators are also getting into the act. Sens. Jon Ossoff (D-Ga.) and Mark Kelly (R-Ariz.) have dropped their own bill. Even the Senate odd couple of Sens. Elizabeth Warren (D-Mass.) and Steve Daines (R-Mont.) have a plan, according to Axios: “Warren and Daines have reached a deal on a bill banning lawmakers and their spouses from owning and trading individual stocks, people familiar with the conversations told Axios… Members would still be able to own stock included in widely held and diversified vehicles such as mutual funds.”

Party leaders are also staking out positions. Senate Majority Leader Chuck Schumer announced Tuesday that he was in favor of banning stock trades as well. Here’s Schumer:

“I believe in it, and I’ve asked – we have different bills from a variety of different members. And I’ve asked our members to get together and try to come up with one bill but I would like to see it done.”

House Minority Leader Kevin McCarthy is all for a stock-trading ban. He told us last month that he’d look into that if Republicans win back the House in November. 

Senate Minority Leader Mitch McConnell, however, is non-committal on the issue.

“I haven’t given that any serious thought yet,” McConnell told reporters on Tuesday. “I don’t own any individual stocks. Everything is in a mutual fund. That’s what I advise members to do because I think it prevents such suggestions that you’re going to be engaged in insider trading. We’ll take a look at that kind of legislation and see what may be appropriate.”

Impact: This bill, if it passes – and that’s a big if still –  would mark a massive change for Congress. It could deter some candidates from seeking office or staffers from working on Capitol Hill. But clearly the House Democratic leadership believes the politics of the current situation is untenable. 

Happening soon: Anna is interviewing Rep. Ro Khanna (D-Calif.) this morning at 9 a.m. ET on cybersecurity and the future of privacy in technology. RSVP to tune in here!

Reminder: Are you a senior figure on K Street? Sign up for our new anonymous tracking poll, The Canvass: K Street, powered by the Locust Street Group.

EYE ON THE LEFT

Rep. Cori Bush on the Supreme Court

This is interesting: Rep. Cori Bush, a leading new voice on the progressive left, is staying out of choosing a potential nominee for the Supreme Court. 

Christian Hall caught up with Bush during a roundtable Tuesday, and here’s what she said:

“I don’t think we should be pitting Black women against each other for this SCOTUS seat,” the Missouri Democrat said when asked if she’s aware of any consensus within the Congressional Black Caucus around a particular candidate. 

Since President Joe Biden announced his plan to nominate the first Black woman to the Supreme Court, there’s been a ton of speculation focused on a group of top-tier Black women with elite educations and diverse experiences on and off the bench. 

Although Bush avoided naming a candidate to serve on the Supreme Court, the first-term lawmaker was very clear on the qualities she wants to see in a nominee. 

“Getting a Black woman in the seat is necessary, but we want to make sure that it’s a Black woman who’s strong on criminal justice reform, has that type of history, strong on worker protections,” Bush said. “I don’t have a name. I want the person who has those qualifications to rise to the top.”

House Majority Whip Jim Clyburn is pushing J. Michelle Childs, a federal judge in South Carolina, as a potential nominee. But some progressives have expressed opposition to Childs, citing her work at a corporate law firm before former President Barack Obama nominated her to the federal bench.

When asked about Our Revolution, a progressive political action organization that has announced opposition to Childs as a nominee, Bush said “I’m not going to go after any particular person. I don’t know her. I don’t know her background well enough to be able to say so.” 

Nominees to the federal bench have typically worked as prosecutors or corporate lawyers. We asked Bush if she would support a nominee who had a prosecutorial background. Bush said: “Support is one thing, but me coming against someone is another. I mean will I go against them and be vocal? I don’t know about that.”

It’s clear that while Bush has thoughts on what the right qualifications are for the job, she doesn’t plan on speaking against potential nominees to the bench yet. This demonstrates the extraordinary sensitivity of the behind-the-scenes jockeying going on right now over this historic nomination. Pushing for your own candidate is one thing, but openly denigrating or attacking another candidate may not be acceptable.

JOB MOVE

GM hires Biden’s niece

GM, the U.S. auto giant, has hired Missy Owens, President Joe Biden’s niece, to be its director of ESG policy. 

GM told us Owens will “continue her work in sustainability and lead policy efforts on ESG stewardship, coalition building and collaboration in partnership with General Motors’ expanding Sustainability team.”

ESG – environment, sustainability and governance – is a growing part of large corporations and is aimed at amplifying the company’s societal values.

Owens is the daughter of Valerie Biden Owens, the president’s sister and close confidant. She spent eight years in government relations at Coca-Cola and previously worked in the Obama and Clinton administrations. Owens is a graduate of Georgetown and Brooklyn Law School.

→ Alabama GOP Gov. Kay Ivey is running a new ad with this script: “Growing up, my mom and dad told us if you can’t say something nice, say, don’t say anything at all. Well, here’s what I have to say about Joe Biden.”

There are then eight seconds of silence. Ivey ends the ad by saying: “Poor Joe. Bless his heart.”

The spot is running Montgomery, and Huntsville-Decatur-Florence, Ala., media markets. Thanks to AdImpact for this.

→ The Coalition to Protect America’s Workers – run by former Vice President Mike Pence’s chief of staff Marc Short – has a new 30-second spot going up on broadcast in Richmond targeting Virginia Democratic Rep. Abigail Spanberger ahead of President Joe Biden’s visit to her district.

→ Dave McCormick, who is running for the GOP nomination for Pennsylvania Senate, has nabbed the endorsement of the National Border Control Council. McCormick is going to the U.S.-Mexico border today and, in part, will focus on fentanyl smuggling. Here’s the news release.

FRONTS

MOMENTS

9:30 a.m.: President Joe Biden will get his daily intelligence briefing.

10:45 a.m.: Speaker Nancy Pelosi will hold her weekly news conference

11 a.m.: The Covid-19 team will brief.

Noon: Sen. Ted Cruz (R-Texas) and other GOP senators will talk about crime. … Separately, Democratic Reps. Val Demings (Fla.), Robin Kelly (Ill.), Josh Gottheimer (N.J.), Dwight Evans (Pa.), Adriano Espaillat (N.Y.) and Tom O’Halleran (Ariz.) will talk about the increase in violent crime.

12:30 p.m.: Jen Psaki will brief.

2:30 p.m.: Biden will meet with electric utility CEOs about his “Build Back Better agenda.” CEOs include:

→ American Electric Power’s Nick Akins

→ DTE Energy’s Gerard Anderson

→ Avangrid’s Dennis Arriola

→ Ameren’s Warner Baxer

→ Exelon’s Calvin Butler

→ PNM Resources’ Patricia Vincent-Collawn

→ Southern Company’s Thomas Fanning

→ Duke Energy’s Lynn Good

→ Edison Electric Institute’s Thomas Kuhn

→ Edison International’s Pedro Pizarro

CLIP FILE

NYT

→ “Dropping Indoor Mask Mandate, New York Joins Blue States Easing Covid Rules,” by Lisa Lerer, Luis Ferré-Sadurní and Astead W. Herndon

→ “Government Reveals Trove of Evidence in First Jan. 6 Trial,” by Alan Feuer

→ “Where’s Liz Cheney? The Wyoming Republican’s Exile From Wyoming Republicans,” by Reid Epstein in Rock Springs, Wyo.

WaPo

→ “‘Legitimate political discourse’: Three words about Jan. 6 spark rift among Republicans,” by Josh Dawsey and Felicia Sonmez

→ “Canadian trucker protest spreads to second city, threatening U.S. auto industry lifeline,” David J. Lynch

WSJ

→ “Ukraine’s Zelensky Wants to Fend Off Russia – and America, Too,” by  James Marson and Vivian Salama

→ "U.S. Trade Deficit Hit Record in 2021 as Americans Spent on Computers, Games,” by Yuka Hayashi and Anthony DeBarros

AP

→ “Ukraine projects calm over Russia fears despite US rhetoric,” by Inna Varenytsia, Lori Hinnant and Ellen Knickmeyer in Adiivka, Ukraine

Politico

→ “Left splits over Supreme Court pick pushed by top Biden ally,” by Burgess Everett and Laura Barrón-López

LA Times

→ “D.A. Gascón and police chiefs call on credit card companies to halt ‘ghost gun’ payments,” by Gregory Yee

Chicago Tribune

→ "School mask ruling roils Illinois districts for a second day, prompting more protests as state’s appeal remains pending,” by Karen Ann Cullotta

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Editorial photos provided by Getty Images