Latest news from Washington, D.C. produced by Total Spectrum/SGA exclusively for members of the Arizona Chamber of Commerce & Industry
Thanks for your interest in Washington, D.C., and for reading This Week in Washington.
Heard on the Hill covers national politics, caucus elections in both the House and the Senate, the end (finally) of the Georgia runoff and the start of the 2023-24 campaign cycle, and the progress of the lame duck legislative agenda. Total Spectrum’s Senior Partner John McKechnie is our financial expert, and he wrote an article about the recent failure of a major cryptocurrency exchange and the fallout on related policy. In this week’s Defense Update, Al Jackson dives into the National Defense Appropriations Act, the bill passed annually to fund defense spending. Ramona Lessen reports on the December 6th hearing of the Senate Agriculture Committee that focused on the 2023 Farm Bill and Research Programs.
In this week’s Total Spectrum Spotlight, Congressman Erik Paulsen sat down last Friday with Congressman Kevin Brady (TX-8), the former Chairman and current Ranking Member of the Ways & Means Committee. Congressman Brady was Chairman of the Ways & Means Committee when the Tax Cuts and Jobs Act was passed – and many people contend that the bill could never have been passed unless Kevin Brady had his hands on the steering wheel. It’s a relatively short but a meaningful interview with an excellent legislator and a very good man.
This concludes our sixth year of This Week in Washington, and the second full year of Total Spectrum Spotlight. It takes a lot of time and it takes a lot of great people to put these products together on a regular basis. Each of us – Congressman Erik Paulsen, Michael DiMaria, Patrick Robertson, John McKechnie, Al Jackson, Dana Marston, and Ramona Lessen – join me in thanking you for your interest and wish you the very best this holiday season. Merry Christmas and all best wishes for a healthy and successful New Year.
Steve Gordon
Total Spectrum Managing Director
Total Spectrum Spotlight is very pleased to bring to you Congressman Erik Paulsen’s exclusive interview with Congressman Kevin Brady of Texas’s 8th District.
Kevin Brady was elected to the U.S. House of Representatives in November 1996 and is retiring from Congress after the new year. Widely recognized as a national economic leader, Congressman Brady is only the third Texan in history to chair the powerful House Ways & Means Committee – considered to be the most influential committee in Congress – with control over taxes, international trade, health care, Medicare, Social Security, and welfare.
Congressman Brady served as Chairman of the Joint Committee on Taxation, Chairman of the Joint Economic Committee of the House and Senate, and has chaired both the Health Care and Trade Subcommittees of Ways and Means.
Prior to his election to Congress, Kevin worked as a Chamber of Commerce executive for 18 years and served six years in the Texas House of Representatives, where he was named Top Ten Legislator for Families & Children and one of Five Outstanding Young Texans.
Erik Paulsen and Kevin Brady served together in the U.S. House of Representatives. In this Spotlight interview, they discuss the legislation affecting tax, trade, and health care that may advance during this year’s lame duck session. They also look back at benefits delivered to businesses and individuals in the five years since passage of the Tax Cuts and Jobs Act, and the next Congress’s plan to renew some of its provisions that will soon begin to expire.
By Steve Gordon, Total Spectrum Managing Partner
As we expected, the lame duck session is moving at a snail’s pace. Every realistic estimate assumes that the lame duck will conclude right before Christmas Eve. We’ll cover the legislative work that needs to get done in the lame duck, but let’s deal first with some important items.
Senate Republican Leadership
It was widely reported that Senator Mitch McConnell beat back Senator Rick Scott (FL) and continues as Republican Senate Leader. We neglected to note that Senator John Thune (SD) was unanimously reelected to be Minority Whip and Senator John Barrasso (WY) was reelected to be Chair of the Republican Conference. Senator Roy Blunt (MO) had been Chair of the Republican Policy Committee, but he is retiring at the end of the month. Senator Joni Ernst (IA) was elected by her peers to replace Senator Blunt at the Policy Committee.
Georgia Runoff – and Beyond
Democratic Senator Raphael Warnock beat back Republican Herschel Walker in Tuesday’s Georgia runoff. The final numbers are not yet tabulated, but the winning margin should be around 100,000 votes. The percentage of the win appears to be around 2.8% — 51.4% for Senator Warnock and 48.6% for Herschel Walker.
Mr. Walker’s campaign outperformed its efforts in rural Georgia during the recent general election, due in large part to the help provided by Governor Kemp’s ground game organization. But Senator Warnock’s campaign dramaticallyoutperformed its efforts in Georgia’s four metro areas during the general election.
National Republicans are going through would have, could have, should have, and what went wrong questions – and the finger pointing has begun. Senator Steve Daines of Montana is the new chairman of the National Republican Senatorial Committee for 2023-2024. He starts with a favorable map but rampant disappointment and disillusionment. Senator Daines’ first job will be to learn the lessons of this off-year campaign, reset the agenda, and then turn the page.
Many national Democrats know that they dodged a bullet in the off-year elections, and they also know that the 2024 map will be particularly challenging. Senate Democrats will be defending a one-seat advantage, and vulnerable Democratic incumbents in ruby-red Montana, West Virginia, and Ohio will be up for reelection.
House Republican Chairmen
The House Republicans are scheduled to meet this week to decide on non-contested Chairmen. They had originally planned to lead with contested Chairmen positions, but the order was reversed.
The most contentious race is the chairmanship of the Ways & Means Committee, where Congressman Vern Buchanan (FL) is being challenged by Congressman Jason Smith (MO). Congressman Buchanan started early and had the early pole position, but Congressman Smith came charging back and appeared to lead in October and November. Congressman Buchanan has gained a little of the momentum back, but the race is too close to call.
Many House Republicans expect that the election for the Ways & Means chair will be delayed until after the election of the Speaker. Congressman McCarthy has extra votes as the Republican Leader, but he cannot afford to antagonize supporters of either candidate.
Speaker
The Democratic majority in the current House of Representatives is six seats – 219 Democrats and 213 Republicans. The majority will be almost perfectly reversed in the next Congress – 220 Republicans and 213 Democrats.
Congressman McCarthy needs 218 votes from the entire House of Representatives to become Speaker, and at least five Republicans are a hard no. He is currently meeting with a number of Congressmen to solidify supporters or pull unsure votes over to his side. The Republican Governance Group – moderate members – sent a letter on December 1 supporting Congressman McCarthy.
Congressman McCarthy could also win with less than 218 votes if some members of the House vote present. I asked a member of the Republican caucus if there was another way Congressman McCarthy could win. “If he doesn’t win on the House Floor, Republicans will go back into their caucus and have it out. One way or another, there’s a pretty good chance that McCarthy prevails. No other significant member wants the headaches that will come daily for the Speaker with a razor-thin majority.”
Lame Duck Issues
Appropriations. The current continuing resolution expires on December 16. Congress could pass another to expire sometime deep into 2023, but that would continue funding for some important items at last year’s levels, which can be problematic. Another option is to pass an omnibus as opposed to trying to pass 12 annual spending bills. Individual Senators and Members of Congress don’t like omnibus legislation because it’s impossible to know what’s in the bill. Majority Leader Schumer believes that he has more power by holding up the individual bills and passing one large omnibus. A third option is to pass a short CR that would fund the government into the early part of 2023. This option would give the new Republican majority more leverage to reduce spending for this current fiscal year.
As of today, there is not much progress on negotiating the top line for government spending in FY2023. Senate Appropriators can’t move without knowing what the top line number is, and Democratic and Republican negotiators are billions of dollars apart.
The holdup is over the split between defense and non-defense spending. Both Democrats and Republicans agree that there should be a kick-up on the defense side, but Senator McConnell argues that Democrats got a ton of money for their social agenda as part of the Inflation Reduction Act – and he doesn’t want to budge. Senator McConnell also knows that it would be House Republicans’ worst nightmare to have to deal with funding in the next Congress.
The safest bet is to expect a short continuing resolution that will keep the government open beyond December 16th. Hopefully the sounds of Christmas will bring a resolution to the appropriations process, but Senator Thune did encourage his colleagues to bring their favorite Christmas songs back next week to sing.
Defense. The National Defense Authorization Act is a must-pass piece of legislation that’s consistently been approved since the 1960s. The negotiated final package is $857 billion, and a number of controversial items have been eliminated. It will be passed, as negotiated, by both the House and the Senate and should be signed by the President.
Tax Extenders. Congressman Kevin Brady (TX) – the former Chairman and now ranking member of the House Ways and Means Committee – talks to Congressman Erik Paulsen in today’s Total Spectrum Spotlight about the items that are being discussed for inclusion in a tax package. I don’t sense that Leader McConnell or Congressman McCarthy are excited about including this tax package in lame duck activity.
By John McKechnie, Total Spectrum Senior Partner
A combination of the collapse of a major cryptocurrency exchange and a lackluster performance by Republicans in the midterm elections has silenced many digital currency advocates in Washington and raised significant questions about the legal and financial future of that industry.
First, the major development in the crypto sector: BTX, the multi-billion-dollar crypto exchange founded by entrepreneur (and political megadonor) Sam Bankman-Fried collapsed after it experienced severe liquidity problems and was unable to meet customer withdrawals. Rival platform Binance initially offered to purchase BTX, then abruptly backed out of the deal less than 24 hours later. BTX declared bankruptcy shortly after. This capped a week in which the expected Republican majority, stocked with pro-market, pro-innovation digital currency advocates failed to materialize.
The crypto economy shed more than $230 billion in value during the week of November 6.
Prior to the crypto upheaval, Republican allies on Capitol Hill such as incoming House Financial Services Chairman Patrick McHenry (NC), and incoming Senators Katie Britt (AL), J.D. Vance (OH), and Ted Budd (NC) were prepared to advocate for looser federal oversight and broader product offerings by the nascent digital currency exchange industry. Budd, as a House Member in the 117thCongress, had even led an effort to stymie a Treasury attempt to gain new crypto oversight; he now is quoted as recommending a “go-slow, measured approach” to crypto currency in the near future.
Even though the industry’s most outspoken friends in Washington were Republicans, in the lead-up to the 2022 elections the crypto lobby appeared determined not to let the technology become a partisan issue. A group of Democratic House lawmakers, led by Josh Gottheimer (NJ) had tried to mute some liberal concerns about the potential volatility of digital assets, but he is now also signaling a need for stronger federal supervision and new limits on crypto offerings, according to several House Financial Services staffers.
Additionally, Senate Agriculture Committee Chair Debbie Stabenow and a handful of Committee Republicans are working on legislation, most likely to be acted upon in the next Congress, to give the Commodity Futures Trading Commission oversight of crypto exchanges. At one time this was considered by digital asset advocates to be an approach that was preferable to having the Security and Exchange Commission involved; now both regulators are expected to ratchet up their regulatory involvement in digital currency transactions.
And speaking of the SEC, another telling sign of concern was expressed by SEC Commissioner Hester Peirce, a strong free-market voice and outspoken ally of the crypto industry. In the aftermath of BTX’s failure, Peirce, who had resisted SEC Chairman Gary Gensler’s attempt to regulate cryptocurrency as a security under the Commission’s purview, is now saying that “given the upheaval in the crypto markets the better approach would be for Washington to come to a consensus on the agency’s jurisdiction over digital assets. If you can’t figure that part out, it’s hard to figure out a lot of the rest.”
November 2022 may become known as the end of the emerging crypto financial infrastructure, or at least the first major stumble in the move to a digital future. As one senior Senate Banking Committee staffer commented, “BTX was considered the gold standard in the industry. That went from being accepted wisdom to ridiculous in less than a week.” The speed and size of its failure gives everyone, friend and foe alike, pause as both Congress and federal regulators figure out next steps.
By Al Jackson, Total Spectrum Strategic Consultant
The Congress is in the final stages of passing their defense policy bill, the FY2023 National Defense Authorization Act (NDAA). The authorization bill will increase funding for the military by 8% over FY2022 levels. Several Republican lawmakers, led by Senator Rand Paul (R-KY), threatened to delay passage of the legislation unless the bill contained language to rescind the military’s COVID-19 vaccine mandate for service members. Thus far, more than 8,000 active-duty service members have been dismissed from the ranks for refusing the vaccine.
The $858 billion plan, which includes $817 billion in Department of Defense spending, also includes plans for a 4.6% pay raise for servicemen and women starting next month and nearly $19 billion in additional funding to offset increased inflation costs on construction, fuel prices, and other military purchases. The $817 billion authorized for military funding is $45 billion above the initial President’s request, and includes additional funding for both personnel and equipment priorities.
The $858 billion topline is higher than both the House version ($839 billion) and Senate version ($847 billion). The Department of Energy is authorized to receive from that topline number $30.3 billion for nuclear activities. The House of Representatives is expected to pass this legislation by the end of the week, which would allow the Senate to take up the bill next week. If the legislation passes both chambers, it could be signed into law before the end of the month, which would continue a six-decade (61 years) streak of passing NDAA.
For the second consecutive year, the Senate did not pass its own version of the bill, opting instead to make adjustments to the House-passed version from this summer rather than taking amendment votes on their own military policy priorities.
The bill authorizes $32.6 billion to increase the U.S. Naval fleet, including 11 battle force ships. For the Army, it authorizes funding increases for the CH-47 heavy lift helicopter, the UH-60 Blackhawk medium lift helicopter and the MQ-1 Gray Eagle drone. The bill also authorizes funding for five additional F-35A aircraft above the President’s request, as well as F-22 modernization. It does allow the administration to proceed with plans to retire the A-10 aircraft, a move that Congress, namely the Arizona and Georgia delegations, have long opposed.
Even with apparent agreement on the authorization bill, the Congress still needs to pass an appropriations bill for FY2023 in order for the Defense Department to receive and allocate the money outlined in the $817 billion NDAA. Government agencies have been operating on a temporary budget since Oct. 1.
The House and Senate have until December 16 to pass a full-year FY2023 budget. If that cannot be accomplished, another continuing resolution would need to be passed to avoid a government shutdown. Both Houses of Congress are optimistic a compromise will be reached in the next few days. As it relates to defense spending, the difference between the House ($762 billion) and Senate ($850 billion) is significant.
By Ramona Lessen, Executive Director, Total Spectrum
Senate Agriculture Committee Hearing on the 2023 Farm Bill Focusing on Research Programs
Tuesday, December 6, 2022; 10:00 a.m.
To view a livestream of the hearing please click here.
Senator Debbie Stabenow (D-MI), Chairman
Majority Statement
Senator John Boozman (R-AR), Ranking Member
Minority Statement
Witnesses:
The Honorable Chavonda Jacobs-Young
Under Secretary for Research, Education, and Economics
United States Department of Agriculture
Washington, D.C.
Testimony
Dr. Jason Rowntree
CS Mott Chair of Sustainable Agriculture; Director, MSU Center for Regenerative Agriculture; Professor
Michigan State University
East Lansing, MI
Testimony
Dr. Felecia Nave
President
Alcorn State University
Lorman, MS
Testimony
Dr. Katy Rainey
Associate Professor; Director, Purdue Soybean Center
PurdueUniversity
West Lafayette, IN
Testimony
Mr. Steve Ela
Partner and Manager
Ela Family Farms
Hotchkiss, CO
Testimony
Dr. Deacue Fields
Vice President for Agriculture
University of Arkansas System Division of Agriculture
Little Rock, AR
Testimony
Monday, Dec. 5
Tuesday, Dec. 6
Wednesday, Dec. 7
Thursday, Dec. 8
Flu season swings into full force as Covid-19 cases tick back up
What you need to know about the lame duck government funding deal
Congress’ lame duck to-do list
The committees set to lose the most members in the new Congress
Latest news from Washington, D.C. produced by Total Spectrum/SGA exclusively for members of the Arizona Chamber of Commerce & Industry More Info: Michael DiMaria | Partner and Vice President of Business…
Latest news from Washington, D.C. produced by Total Spectrum/SGA exclusively for members of the Arizona Chamber of Commerce & Industry More Info: Michael DiMaria | Partner and Vice President of Business…
Latest news from Washington, D.C. produced by Total Spectrum/SGA exclusively for members of the Arizona Chamber of Commerce & Industry More Info: Michael DiMaria | Partner and Vice President of Business…
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