Plurus Strategies Weekly Update: Ukraine, FY23 Appropriations Season, KBJ Confirmation & Other Activity in Washington
War in Ukraine
Today marks the start of the fourth week of Russia’s war in Ukraine. With reports suggesting that Russia may be contemplating chemical or biological warfare, as well as turning to China for military assistance, the stakes may now be higher than ever before. Biden Administration officials have warned China against taking any action to provide military support to Russia or to help the Russians circumvent Western sanctions. However, the situation on the ground makes clear that Ukraine is putting up more resistance than Russia anticipated and potential exit ramps for Russian President Vladimir Putin might be dwindling. Russia has also now introduced its own sanctions against President Joe Biden and other senior U.S. officials.
The highlight of the week was Ukrainian President Volodymyr Zelensky’s virtual address to Congress, which the Ukrainian leader used to call on the U.S. to fulfill its role as a global superpower by enforcing a no-fly zone over Ukraine and providing weapons systems to help counter Russian aircraft. To date, President Biden has resisted both requests, warning that either might be perceived by Russia as an escalation that could draw the U.S. and other NATO members directly into the conflict. Following the address, President Biden announced an additional $800 million in new military assistance for Ukraine to build on the $13.6 billion Ukraine assistance package included in the FY22 omnibus package. The new aid will provide 800 anti-aircraft systems to combat Russian planes, 9,000 anti-armor systems to attack Russian tanks, 7,000 machine guns and shotguns, and 20 million rounds of artillery and mortar. Earlier this week, President Biden also announced import restrictions on Russian alcohol, seafood, and diamonds, along with additional sanctions targeting individuals in Russia and Belarus.
President Zelensky’s emotional appeal was met with a standing ovation from Congress, which so far has been effective in strong-arming the president to take various actions in support of Ukraine, including the implementation of an executive order banning the import of Russian oil, gas, and coal into the U.S. If Putin has succeeded in anything, it might be that he has brought Democrats and Republicans in Congress together to assert the legislative branch’s role in foreign policy, as evidenced by the flurry of activity this week.
For example, both the House and Senate are keen to swiftly pass legislation formalizing the end of normal trade relations with Russia and permitting and increase in tariffs on Russia imports. The House is expected to vote on this bill today, with the Senate quickly to follow. The Senate is also attempting to advance a bipartisan resolution calling for Putin to be investigated for war crimes, although this effort has been delayed due to Sen. Rand Paul (R-KY) requesting amendments before the resolution can move by unanimous consent. Sen. Ron Wyden (D-OR) has put forward legislation that would deny tax credits to U.S. companies with ties to Russia or Belarus and the House Financial Services Committee marked up five Russian sanctions bills this week. Democrats also continue to talk about opportunities to fill the void in Russian energy resources with U.S. renewable energy, while Republicans keep dropping bills aimed at promoting domestic drilling.
As it appears the war in Ukraine is entering a phase that could continue over the next several weeks or months, we anticipate this is an issue that will continue to top the agenda for both the Biden Administration and Congress. Next week, President Biden will travel to Brussels to join a NATO summit on efforts to deter and defend against Russia’s aggressive behavior in Ukraine, impose economic costs on Russia, and provide humanitarian relief to Ukrainian refugees. We also would not be surprised to see Congress pass another emergency aid package once the House returns from recess next week. This next Ukraine supplemental could ultimately become a legislative vehicle for other non-Ukraine-related policy provisions.
COVID Aid
As you know, Democrats were forced to strip $15.6 billion in additional COVID funding out of the FY22 omnibus last week when Members revolted after learning that new relief monies would be paid for, in part, by redistributing $7 billion of earlier COVID funding allocated for state and local relief. The proposal that was yanked last week included $9.9 billion for Biomedical Advanced Research and Development Authority (BARDA) to purchase existing COVID treatments and vaccines, $750 million for the development of new vaccines, $4.5 billion for global health efforts, and $500 million for humanitarian needs.
Rep. Rosa DeLauro (D-CT) introduced a standalone measure last week to appropriate the $15.6 billion in COVID monies, however only $8.6 billion is paid for, calling into question whether the bill can move through both chambers. House Speaker Nancy Pelosi (D-CA) has said she would like the House to vote on COVID funding this week, but it is now clear that will not happen. Republicans continue to demand that the Biden Administration justify that additional COVID spending is needed, including by providing insights into how much previously appropriated COVID relief has yet to be spent.
Throughout the week, the Biden Administration has reiterated that its total COVID emergency funding request was $22.5 billion. White House officials have also continued to sound alarms about why additional COVID funding is necessary, warning that federal supplies of monoclonal antibody treatments will run out by May, antiviral pills will run out by September, and testing capacity will need to be limited due to resource scarcity. There are also rumors the administration may be going through an exercise to identify which COVID activities will need to be paused without an immediate injection of funding.
There are a few ideas about how things might play out. First, Congress could consider a relatively smaller COVID package that is entirely paid for, though it remains uncertain if this approach could garner enough votes or satisfy the White House. Second, Congress could scramble to identify additional offsets. It remains unclear, however, if Republicans will back a larger COVID bill, even if it is paid for.
FY23 Budget and Appropriations
Congress will continue to work to resolve the need for additional COVID relief as Fiscal Year 2023 (FY23) appropriations season now begins. We are hearing that a skinny FY23 budget could be out next week, although we anticipate the full FY23 budget to be released in early April.
Given the looming midterm elections, there is also already pressure to reach agreement on FY23 topline defense and nondefense spending levels. House Majority Leader Steny Hoyer (D-MD) has said he wants an agreement on topline numbers by the end of this month. While Appropriations Committee leaders have signaled that they are talking, we question if this timeline might be too ambitious. Given that we have yet to see the FY23 president’s budget request (PBR), it seems even more unrealistic that Congress will be able to advance many of the 12 funding bills by Leader Hoyer’s end of June target.
SCOTUS Confirmation
SCOTUS nominee Judge Ketanji Brown Jackson continued courtesy meetings on both sides of the aisle this week ahead of the start of her confirmation hearings next week. Since the ideological balance of the court is not up for grabs, and because it does not seem there is much they can do to halt Judge Jackson’s impending confirmation, we anticipate Republicans will be respectful throughout the confirmation process.
While GOP Senators are expected to conduct themselves in a manner that allows them to draw contrast to Democratic participation in Justice Kavanaugh's confirmation hearings, we believe they will still question Judge Jackson’s past representation of Guantanamo Bay detainees and attempt to paint her as too liberal. Republicans are also likely to take aim at the rapid pace with which Democrats hope to advance Judge Jackson to the bench. Democrats’ goal is to confirm Judge Jackson before the start of the two-week Easter recess.
USICA/America COMPETES Act Conference
During last week’s retreats, we understand that a China competitiveness package is something President Biden said he would like to see Democrats run on in November. While the House and Senate have yet to officially go to conference on the U.S. Innovation and Competition Act (USICA) and the America COMPETES Act, informal efforts aimed at preparing for the conference process continue.
We have been told that more formal conference proceedings could kick off in the coming weeks and that conferees could be named just ahead of the Easter recess. Foreign policy and trade provisions are likely to be the biggest sticking points in negotiations. Our instincts tell us that Memorial Day could be an appropriate target for finalizing a compromise bill, although it is possible negotiations will take even longer.
Build Back Better/Building a Better America
While many Democrats had hoped that last week’s retreats would resuscitate the President’s domestic policy agenda, readouts we got from both the House and Senate retreats make it seem that Build Back Better (BBB), Building a Better America, or the Democrats' reconciliation package by any other name remains on life support. The impression was that President Biden is now more focused on the war in Ukraine and solidifying Democratic messaging for the midterms that highlights achievements like the American Rescue Plan (ARP) and the Bipartisan Infrastructure Framework (BIF).
Our instincts tell us that given the very public breakdown in BBB negotiations between the White House and Sen. Joe Manchin (D-WV) in December, Democrats are cautiously talking to Sen. Manchin, but trying to keep BBB conversations private. Sen. Manchin continues to appear open to considering a narrow reconciliation measure that decreases prescription drug prices, reforms the tax code, combats climate change, and reduces the deficit. Work on this type of package could be a priority for the work period between Easter and Memorial Day. Though it’s not clear anything gets done, it remains possible President Biden could attempt to move pieces of the BBB agenda as possible by executive order.
While BBB will remain a partisan issue, it is worth pointing out that the 50/50 Senate has functioned well in recent weeks, especially since Democrats’ failed efforts to move voting rights legislation through the chamber. The upper body recently has several legislative victories it can point to, including the FY22 omnibus and Ukraine assistance package, postal reform, and a Violence Against Women Act (VAWA) reauthorization bill, among other legislative cats and dogs. However, we question how long this spirit of bipartisanship can continue and think that any forward movement on BBB will probably mark a partisan shift into midterms campaign mode.
Political Tidbits
This week we heard from a senior Democratic House Member about his outlook for November. This Member broke the midterms down into three concepts: apportionment, redistricting, and the political environment. Because the margins were so close, Republicans had thought they would secure a majority on new allocations of House seats alone. However, apportionment didn’t play out the way it was expected. New York was believed to lose two Democratic seats before only losing one, Rhode Island was expected to lose a seat but ended up not losing any, Texas gained two new seats, but one will almost surely be a Democratic seat and the other a Republican seat, and West Virginia lost a Republican seat.
Redistricting also hasn’t favored Republicans as much as previously expected. Take for example President Barack Obama’s 2012 reelection, where he won Ohio, Pennsylvania, and Florida but saw overwhelming Republican wins at the state level. This redistricting cycle isn’t favoring Republicans as much as even 2012 due to Democratic governors, with their veto power and court rulings, acting as backstops, as seen in Louisiana, North Carolina, Pennsylvania, Michigan, and Wisconsin, the latter of which is the most recent state to approve a map on March 3. The maps have ended up being more favorable to Democrats. Even New York, which has had a Democratic governor for most of the 21st century, now has a Democratic-controlled Senate, boosting their map. As of today, four states are without enacted Congressional maps. These include Florida, Louisiana, Missouri, and New Hampshire. The lack of agreement among stakeholders in these four states indicates it could be a while before maps approved. The Ohio courts just struck down their maps on Wednesday, and we will be watching to see how this impacts the primaries currently scheduled for May 3. Come November, it's anticipated the total number of swing districts will end up around 30.
The final factor, the political environment, can change wildly between now and November. Right now, inflation, COVID, and Ukraine are the issues on voters’ minds, but it is hard to predict what issues will dominate when the voters go to the polls in November. GOP leadership at the federal level has been promoting talking points targeting inflation, gas prices, and crime to win swing voters. The Republican Legislative Campaign Committee has centered its messaging on crime, education, and the economy. However, some of the more conservative candidates, like Georgia’s GOP Senate candidate Herschel Walker, have attempted to tap evangelical voters, expressing doubt in the theory of evolution and assistive reproductive technology. This is unlikely to resonate with swing voters in the fall.
Breaking with the trend since the beginning of the year, there have been no new retirement announcements for almost three weeks. Current House numbers stand at 31 Democrats and 16 Republicans who are retiring, seeking a different office, or have been defeated in their party’s primary. The Senate retirements remains one Democrat and five Republicans. Based on election cycles from 2018 and 2020, where we saw retirement announcements level roughly eight months out, these numbers are likely to hold.
As candidates get ready for the November ballot, it remains an open question whether the trifecta of apportionment, redistricting, and environment will align for Democrats this fall. It is also important to keep in mind that the party of the president in power loses an average of 27 seats in a midterm election year. However, this historical trend may be misleading in that the Democrats and Republicans have both gotten wiped out two times each.