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PRESENTED BY
BY JOHN BRESNAHAN, ANNA PALMER, JAKE SHERMAN AND HEATHER CAYGLE
WITH MAX COHEN AND CHRISTIAN HALL
THE TOP
Happy Thursday morning from Philadelphia.
After 10 p.m. last night, the House passed a $1.5 trillion omnibus spending package that will keep federal agencies open until Sept. 30. The measure now goes onto the Senate, which is expected to pass it as well, although there may be some opposition from conservative Republicans.
The House has also approved a short-term funding bill that gives the Senate until March 15 to complete work on the omnibus. The Senate will take this up today.
The omnibus package includes more than $13 billion in military and humanitarian funding for Ukraine, which has been invaded by tens of thousands of Russian troops. U.S. aid will go to Eastern European nations dealing with more than 2 million Ukrainians who have fled the bloody Russian onslaught, as well as NATO allies now facing a renewed security threat.
But there was also a lot of drama Wednesday over $15 billion in Covid preparedness funding, money that had been requested by the White House. That was eventually stripped from the package following a revolt by rank-and-file Democrats. We have a lot more on that episode below.
The other subplot on Wednesday – although far less important ultimately – was whether House Democrats would still hold their party retreat in Philadelphia. They did, although Democrats were forced to cancel their first day. We’re already on the ground here.
Inside what happened yesterday
Here’s a question that’s bouncing around House Democratic circles right now: How did leadership get blindsided by this uprising in their ranks? And what does it mean?
We spent much of yesterday trying to figure this out.
Here’s the background: House and Senate appropriators have been working for months on an omnibus FY 2022 spending package. Late in the game, the White House requested $22.5 billion in new Covid preparedness money. This was less than what many on Capitol Hill were expecting, but for Senate Republicans, it was still too much. They wanted it to be offset by cuts elsewhere.
House and Senate Democratic leaders, with White House approval, decided to claw back expired Covid relief money to cover the request. They settled on a new total – $15 billion. With government funding expiring on at midnight Friday – and House Democrats set to leave town for their retreat – Speaker Nancy Pelosi scheduled a vote on the omnibus package for Wednesday afternoon. The leadership fully expected the measure to pass, despite the fact that members had less than 12 hours to review the 2,741-page bill.
But then rank-and-file Democrats – egged on in some cases by blue-state governors – revolted. Pelosi was forced to abruptly shift gears and strip the Covid funding out of the larger omnibus package. There’ll now be a vote on a standalone Covid-funding bill in the House next week, although it faces a dim outlook in the Senate.
There are a few ways to look at what happened.
Let’s be clear: There’s plenty of blame to go around. Right now, there are fingers pointing in every possible direction.
But let’s start on the Hill.
Pelosi didn’t make this decision alone. Although the speaker’s critics say that the leadership team has become too insular, that her circle of close confidants has become too small for her own good. In this case, the White House, House and Senate had all signed off on a plan, yet no one thought this budgetary offset could prove problematic.
The theory goes like this: After nearly two decades running the House Democratic Caucus, Pelosi has concentrated too much power in the speaker’s office. Important decisions are made on the fly without much buy-in from rank-and-file Democrats or even members of her leadership team. And Pelosi has to be involved in every matter that occurs inside the caucus. This places enormous demands on the speaker and her staff, and further slows the process down. Yes, in theory, her leadership table is the biggest it’s ever been. Yet the group with the real power is the smallest ever, her Democratic detractors say.
In turn, Democratic lawmakers are sometimes asked to swallow policies they don’t want or can’t support. They fight back, opposing leadership both in public and private. And then chaos ensues. It has been a recurring theme this Congress. Just look at how many times Democratic leaders tried to pass the bipartisan infrastructure bill before actually succeeding.
Pelosi allies push back hard here, noting the speaker has an exceedingly narrow, four-vote margin to work with on a daily basis. The House Democratic Caucus is also split between two vocal ideological camps that often clash. The small margin also leads to some lawmakers growing emboldened enough to throw their weight around and make demands whenever they can.
Senior Democrats say the House Democratic leadership has a rocky relationship with a coterie of White House aides who seem to favor Senate Majority Leader Chuck Schumer’s strategic insights over the speaker’s. In turn, there’s plenty of griping in the Democratic leadership about the White House. In senior Democrats’ view, the White House okayed the troublesome offset, and then offered no backing when governors and rank-and-file House Democrats threw a fit.
The House and the Senate are constantly on different pages – although Schumer and Pelosi make sure they’re unified publicly. Yet no one on the Democratic leadership on the Hill or at the White House completely trusts each other. That was glaringly evident during the failed struggle to pass the Build Back Better Act. Remember Sen. Joe Manchin’s (D-W.Va.) letter that Pelosi had no idea about?
In this case, Pelosi, Schumer and the White House all signed off on the Covid preparedness plan, they say, but Pelosi alone was left to handle the clean up. And she did; the omnibus is on its way to the Senate after an impressively large bipartisan vote in the House. In looking at her overall record, Pelosi has proven to be the most prolific and successful House legislator in decades.
These kinds of deals – messy legislative horse trading – are necessary in a political environment with a 60-vote threshold in the Senate and a four-vote margin in the House. In Pelosi’s view, she did what was needed to protect hard-fought wins in the omnibus. Pelosi is an old-school appropriator who understands the give-and-take of legislation and is well accustomed to not getting what she wants all the time.
“You’re telling Noah about the flood,” Pelosi quipped Wednesday during her weekly press conference. “I didn’t get what I wanted either. Yeah, it’s a negotiation and that’s what it is. And look at what is in the bill and what it does for America’s working families, what it does for Ukraine.”
Pelosi later added: “I have the greatest respect for each and every one of my members, their representatives. They represent their districts. That’s their job title. That’s their job description. But right here, we’re in a battle. And what has come out of this legislation … for America’s working families is something quite remarkable.”
Pelosi’s leadership team doesn’t think they have a problem. House Majority Leader Steny Hoyer told us this in an interview Wednesday evening:
“We have meetings all the time with all the members – Frontliners, freshmen. So I think the answer to that, no, I don’t think we’re too insular. But what happens is at the end, you get down to a crunch. And the Republicans or the Democrats say ‘We won’t do this’ and you have to try to move ahead as best as possible.
House Majority Whip Jim Clyburn said he didn’t see the revolt coming. “It was not my call,” Clyburn said. “How do you know how big the problem is going to be? There’s always a problem when you’re cutting.”
Rep. Pramila Jayapal (D-Wash.), the chair of the Progressive Caucus, put it this way:
“I just think that it would have been better to either tell people ahead of time, let us know. [I]t’s a huge bill. It’s a big challenge, but at the end of the day, it’s still the Republicans who are the ones who don’t want to give the money for COVID.”
Reminder: We’re hosting our Cocktails & Conversations event tonight at the Democratic retreat. If you’re attending the conference, join us from 4-6 p.m. for drinks and a fireside conversation with Caucus Chair Hakeem Jeffries (D-N.Y.). See you there!
PRESENTED BY CLIMATE POWER
By investing in clean energy here in America, we can speed up the production of cheaper, cleaner energy, like wind and solar, that isn’t impacted by foreign supply chain disruptions or conflicts overseas.
Speeding up the production of cheaper, cleaner energy – like wind, solar and electric vehicles – will expand our energy supply and lower costs for consumers and businesses.
SOME PERSONAL NEWS
We have a new events director!
We’re super excited to announce that Morgan Pinckney is joining us as our first events director. Pinckney was most recently the events manager at DC Public Library. She also worked at the Leonard Resource Group as their director of event services. Pinckney has two degrees from George Washington University – go Colonials! – and grew up outside of Seattle.
Our event business is booming, so we’re pumped to have Morgan at the helm. In addition to our Cocktails and Conversation tonight in Philadelphia with House Democratic Caucus Chair Hakeem Jeffries, we are having a pop-up Punchbowl News dinner at SXSW in Austin this weekend, bringing leaders in media, tech, business and politics together. We have two events scheduled for next week: separate conversations with Sens. Bill Hagerty (R-Tenn.) and Debbie Stabenow (D-Mich.). And we’re taking the show on the road to Detroit next month. Register for our events hub to stay up to date on all our upcoming events!
INFLATION NATION
New inflation numbers out today
The Bureau of Labor Statistics is releasing the February consumer price index this morning at 8:30 a.m., and needless to say, it’s going to be a big deal.
Some economists are predicting the February report will be even worse than January, which came at an annualized rate of 7.5%. That was the highest inflation rate since 1982, and an enormous problem for the White House. This new report will drop with the Democrats at a retreat here in Philadelphia.
You can read some good previews on what to expect here, here and here.
Inflation has become a huge political issue with voters across the country, especially as they’re hit with record-high gas prices. Republicans have been using it as a club to batter President Joe Biden’s energy and environmental policies, which they blame for much of the increase. It’s a major challenge for House and Senate Democrats in swing races.
Russia’s invasion of Ukraine is causing further spikes in oil, wheat, nickel and other commodity prices, although it came late in the month, so it’s not clear how much impact the conflict will have on February’s CPI report. It will definitely show up in the March report, however.
All of which brings us to the Federal Reserve, which has the lead role in fighting inflation. There’s several points to make on the Fed.
→ | First, the Federal Open Market Committee will meet next week, and it’s certain to approve an increase in interest rates. The only question is whether the FOMC goes for a 25-basis points boost, 50 basis points or even more, as some analysts have suggested. The consensus seems to be 25 basis points now, with more increases coming until prices begin to cool off. |
Yet the Fed has to tread very carefully here. The war in Ukraine is a wild card that will make economic forecasting – already complicated by the Covid pandemic – even more dicey. Federal Reserve Chair Jay Powell is a cautious man by nature, and these times call for that, lawmakers in both parties say.
→ | Second, Republicans on the Senate Banking Committee are boycotting five Biden nominees to the Fed’s Board of Governors. Republicans on the panel – led by Sen. Pat Toomey (R-Pa.), the ranking member – are strongly opposed to Sarah Bloom Raskin’s nomination, so they’re blocking multiple nominees. This includes Powell’s nomination to a second term as Fed chair. Powell, of course, is still in the post as chair pro tem. And the FOMC can continue to operate despite the controversy. |
But Banking Committee Chair Sherrod Brown (D-Ohio) and the White House have refused to back down on Raskin, a former top Treasury Department official who has already served on the Fed board once.
Yet the longer this goes on, the more problematic it becomes for both sides and the Fed itself. The only real question is who blinks first?
Here’s a good story on the high-stakes clash between Brown and Toomey by our friend Burgess Everett at Politico.
→ | Third, interest rate increases make it more expensive to service the U.S. government’s massive $30 trillion national debt. A Feb. 10 report by the Committee For a Responsible Federal Budget states that “If interest rates are 50 basis points (0.5 percentage points) higher than projected, average annual interest costs would increase by $94 billion per year.” Higher interest rates means “more debt and more spending needed to service that debt.” It’s a vicious cycle. |
Now, the House just approved a $1.5 trillion omnibus spending package that boosts federal spending by roughly 6% from last year, and it will add to the budget deficit. The Senate is likely to approve it as well.
CBO estimates that the budget deficit for the first five months of FY 2022 – October through February – was $475 billion. This projects out to more than $1 trillion for the year.
That’s down dramatically from the tidal wave of red ink caused by the government’s response to Covid crisis – Biden is bragging about that – yet it’s still a lot of money. This also doesn’t include the trillions in assets the Fed purchased to bolster the economy. The Fed will be trying to reduce its balance sheet while also working to tamp down inflation. This is going to be a very narrow path to walk.
PRESENTED BY CLIMATE POWER
Authoritarians like Putin weaponize oil and gas.
Let’s take that weapon away by speeding up our transition to American-made renewable energy sources, like solar and wind.
FRONTS
Remarkable: All three major American newspapers have the same front-page image this morning.
→ | Pennsylvania Democrat John Fetterman’s second television ad buy in his Senate race focuses on his ties to the western Pennsylvania town of Braddock. The biographical spot portrays Fetterman as a former Rust Belt mayor dedicated to leaving no community behind. This bio spot highlights what Fetterman, currently serving as lieutenant governor, sees as his strength: his connection to small-town Pennsylvania. Watch it below, courtesy AdImpact. |
→ | Arkansas GOP gubernatorial candidate Sarah Huckabee Sanders compares the White House press corps to her unruly children and takes a shot at CNN in her latest ad. |
“As White House press secretary, I had to say no. A lot,” Sanders says in the ad. “Being a mom to young kids was the perfect training.”
Sanders also pledges to oppose President Joe Biden’s “radical” agenda and advocates for “good schools, lower taxes and higher-paying jobs.” Huckabee Sanders will very likely be the next governor of Arkansas, so we’re keeping a close eye on how she positions herself. Check out the ad, thanks to AdImpact.
PRESENTED BY CLIMATE POWER
We Can’t Drill Our Way to Real Energy Independence
MOMENTS
9:30 am: President Joe Biden will get his daily intelligence briefing.
10 a.m.: Biden will speak with Turkish President Recep Tayyip Erdoğan about Russia and Ukraine.
12:45 p.m.: Jen Psaki will brief.
1:40 p.m.: Biden will host Colombian President Iván Duque Márquez at the White House.
7:15 p.m.: Biden will speak to DNC members at their winter meeting.
Note: Vice President Kamala Harris is in Poland.
CLIP FILE
NYT
→ | “Poland’s Fraught Offer: Fighter Jets for Ukraine, but Only Through U.S. Hands,” by David Sanger and Eric Schmitt |
→ | “Judge Will Review Lawyer’s Emails Sought by Jan. 6 Panel,” by Luke Broadwater |
WSJ
→ | “Russian Billionaire Roman Abramovich, Owner of Soccer Club Chelsea, Is Sanctioned by U.K.,” by Max Colchester in London |
CBS
→ |
AP
→ | “Attack on Ukraine hospital kills 3, wounds 17, officials say,” by Evgeniy Maloletka in Mariupol, Ukraine |
→ | “US citizens seek to join foreign fighters in Ukraine,” by Ben Fox |
LA Times
→ | “California gas jumps 13 cents overnight. There’s no telling when prices will drop,” by Lila Seidman |
NPR
→ | “Garland says the Jan. 6 investigation won’t end until everyone is held to account,” by Carrie Johnson |
PRESENTED BY CLIMATE POWER
Putin’s threats to withhold energy from Europe and raise global gas prices should be a rallying cry to the world: we can’t afford to wait on a clean energy economy.
By investing in clean energy here in America, we can speed up the production of cheaper, cleaner energy, like wind and solar, that isn’t impacted by foreign supply chain disruptions or conflicts overseas.
Russia’s invasion of Ukraine is further proof that America needs to swiftly move to a clean energy economy that will lower costs, protect our national security, and secure our energy independence.
Editorial photos provided by Getty Images
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