Plurus Strategies Weekly Update: War in Ukraine, SCOTUS Confirmation Hearings & Other Top Agenda Items

War in Ukraine

Russia’s aggression in Ukraine continues for another week. With the use of hypersonic weapons, President Joe Biden has said that Russia’s military campaign has entered a phase of desperation, though it’s unlikely the Russians retreat back across the border any time soon. Yesterday, President Biden departed for Europe, where today he joined a NATO leaders' summit in Brussels focused on strengthening deterrence, a G-7 meeting to coordinate on sanctions, and a European Council summit to discuss humanitarian efforts to assist Ukrainian refugees. The meetings coincided with the announcement of new U.S. and E.U. sanctions targeting more than 300 members of the Russian Duma and other Russian entities. President Biden also announced $1 billion in humanitarian assistance for refugees and $320 million for democracy and human rights funding for Ukraine and its neighbors. Tomorrow, President Biden is expected to visit Poland, though he will not set foot in Ukraine.  

Ukraine continues to suck up tremendous oxygen not only in the executive branch, but also in Congress. We continue to see a number of Congressional delegation (CODEL) trips to Europe to show support for Ukraine. During this House recess, Reps. Stephen Lynch (D-MA), Mark Green (R-TN), Lori Trahan (D-MA), Chellie Pingree (D-ME), Jake LaTurner (R-KS), Pat Fallon (R-TX), and Nancy Mace (R-SC) paid a visit to the Poland-Ukraine border to meet with Ukrainian refugees. Also this week, all members of the House Intelligence Committee wrote to Director of National Intelligence (DNI) Avril Haines requesting that the intelligence community declassify information that could show evidence of war crimes committed by Russia in Ukraine. The Biden Administration announced on Wednesday that Russia has, in fact, committed war crimes. 

Congress is also focused on advancing legislation in support of Ukraine. Before departing for its recess, the House voted 424-8 to strip Russia and Belarus of normal trade relations with the U.S. until 2024 and to expand authorities for the president to issue human rights sanctions under the Global Magnitsky Act. Senate Majority Leader Chuck Schumer (D-NY) attempted to hotline the bill today, but was blocked by Sen. Mike Crapo (R-ID) and other Republicans who want to package the trade bill with House-passed legislation banning Russian oil and gas imports. While President Biden has already implemented both policies via executive order, the legislation would go a step further by allowing Congress to block any administration effort to lift the Russian energy embargo prematurely. We’d be surprised if Democrats did not ultimately allow both bills to go through, especially given the momentum in support of Ukraine. However, adding the energy piece to the package will require another vote in the House.  

There are a number of other issues related to the war in Ukraine that could be addressed by Congress, including efforts to pressure American companies to cease business ties with Russia. For example, Sen. Ron Wyden (D-OR) is pushing legislation that would eliminate tax credits for U.S. companies that choose to continue doing business in Russia and Belarus and target Russian and Belarusian individuals who get tax breaks stateside. Additionally, Rep. Carolyn Maloney (D-NY) has recently introduced a bill that would prohibit the U.S. federal government from contracting with companies operating in Russia. We are also expecting the White House to request, and Congress to approve, another Ukraine assistance package in the coming weeks. This bill could become a vehicle for other legislative priorities.  

Also this week, the administration warned U.S. companies about potential retaliation by Russia in the form of cyberattacks. Both President Biden and Deputy National Security Advisor for Cyber and Emerging Technology Anne Neuberger warned new intelligence suggests that Russian cyberattacks are coming and urged the private sector to beef up their cybersecurity. The calls for a more robust defensive cyber posture follow more than 100 meetings the Federal Bureau of Investigation (FBI) conducted with companies last week related to the cyber threat. The warnings follow the passage of a provision in the fiscal year 2022 (FY22) omnibus that would require critical infrastructure operators to report significant cyber incidents to the federal government. However, interim rules for cyber incident reporting are not expected for 18 months and it could take more than three years before the rulemaking process is completed.  

SCOTUS Confirmation 

The ongoing conflict in Europe stole some of the thunder from this week’s Senate Judiciary Committee confirmation hearings for SCOTUS nominee Judge Ketanji Brown Jackson. Democrats used the confirmation proceedings to highlight the historic nature of Judge Jackson’s nomination. The majority of committee Republicans kept their questioning limited to Judge Jackson’s view of the Constitution and the role of the Supreme Court, with presumptive presidential candidates scoring some of their best jabs on issues related to Judge Jackson’s representation of Guantanamo Bay detainees, past rulings in child pornography cases, views on critical race theory, and philosophy around court packing.  

Admittedly, this week’s hearings went much how we expected. The Judiciary Committee is scheduled to meet on Monday to vote on Judge Jackson’s nomination, but as is tradition, the vote will likely be held over one week to April 4. All signs point to Judge Jackson being confirmed by the full Senate during the first week of April, especially as she has previously been confirmed by the chamber three times. This timeline should position her to take the reins from retiring Justice Stephen Breyer as soon as his departs this summer.  

COVID Aid 

Following the $15.6 billion in supplemental emergency appropriations for COVID aid getting yanked from the FY22 omnibus, Democrats in Congress appear poised to continue to their work on the $22.5 billion request from the White House. The hurdle to advancing any kind of COVID bill will be finding offsets and convincing Congressional Republicans that additional COVID assistance is needed.  

Republicans have argued for reprogramming of previously appropriated COVID funds, rather than new spending. Meanwhile, House Speaker Nancy Pelosi (D-CA) has indicated she is not only open to appropriating the White House’s request, but may even consider doubling it, assuming that Congress can find a way to pay for it. With more COVID money up in the air, some Democrats are seizing on the opportunity to expand the package. Late last week, Reps. Dean Phillips (D-MN) and Mike Quigley (D-IL) led more than 40 Democrats in sending a letter to House leadership urging additional COVID relief for restaurants, gyms, hospitality, live events, the travel industry, and small businesses. 

The White House continues to make its case for therapeutics, vaccines, and testing, but it doesn’t strengthen the message that COVID cases are not surging, even as experts warn they might in the future due to new variants and eased restrictions. The White House is warning of programs that will need to stop without new COVID relief, such as procurement of monoclonal antibody treatments and reimbursements for providers who test, treat, and vaccinate the uninsured. Biden Administration officials have also said that the lack of progress on additional COVID funding means that the government will not have the resources it needs to procure a fourth shot for the entire population, should one become necessary. In an attempt to move Republicans, we are hearing the administration is starting to release dates on which each state is likely to run out of COVID money. The administration feels the situation is so urgent that the White House has been making the case that another COVID package does not have to be paid for.  

At this point, we don’t think there are enough GOP votes for a COVID supplemental to pass as a standalone bill in the Senate. As an alternative, COVID aid could ride on another Ukraine aid package, though our instincts tell us Republicans would likely fight this. On a related note, we are hearing that the next Ukraine supplemental could also serve as a vehicle for the Senate Health, Education, Labor, and Pensions (HELP) Committee’s pandemic preparedness bill, the PREVENT Pandemics Act. Another possibility is that a COVID package gets incorporated into the reconciliation package formerly known as Build Back Better (BBB).   

FY23 Budget/Appropriations 

We hope you get some rest this weekend because Monday is the day when we will finally see President Biden’s FY23 budget request. Just like any other budget, the administration’s FY23 wish list will be viewed as an opening hand in the FY23 appropriations cycle.  

We anticipate the proposal we see on Monday will incorporate the priorities President Biden has been emphasizing for months, including prescription drug pricing reforms, tax breaks for energy efficiency and electric vehicles (EVs), and affordable housing. We suspect the budget could also propose funding for community policy programs, cancer research, and mental health, and recent events in Europe could bode well for a higher topline for defense spending. In fact, we are hearing the topline number for defense spending will be $813.3 billion, a four percent increase above FY22 levels. We’d be surprised if the president’s budget request (PBR) does not outline additional assistance funding for Ukraine and COVID relief monies. It is also noteworthy that the PBR will provide some economic forecasting as the country adjusts to a new normal learning to live with the threat of COVID as well as historic levels of inflation. President Biden has pledged to reduce the deficit by more than $1 trillion. 

While we have yet to see the PBR, appropriators have already initiated talks aimed at reaching agreement on topline defense and non-defense spending for FY23 and the subcommittee cardinals are already looking to schedule their budget hearings. Appropriations Committee and party leaders are projecting optimism that progress can be made on the FY23 spending bills this summer, but we find this hard to believe given that the PBR is late. Further, conventional wisdom is that because it is an election year, we are likely to see a continuing resolution (CR) into the lame duck, if not spring of next year.  

USICA/America COMPETES Act Conference 

The Senate kicked off this week with a procedural vote to begin the process of going to conference with the House on the America COMPETES Act. Earlier this week, the Senate voted 66-20 to invoke cloture on the House-passed bill and now seeks to replace the House text with the language from the Senate-passed U.S. Innovation and Competition Act (USICA). We expect a final vote in the Senate next week to clear the way for conferees to be named. The process has dragged out due to Sen. Rick Scott (R-FL), who has expressed concerns about oversight of education and CHIPS Act funding included in the bill, forcing multiple procedural votes. Sen. Scott’s concerns about providing financial incentives to profitable companies have been echoed by Sen. Bernie Sanders (I-VT).  

As you know, USICA and the America COMPETES Act are both aimed at ensuring the U.S. maintains technological competitiveness with China. Both bills also include $52 billion in appropriations to fund the CHIPS Act and revive U.S. semiconductor manufacturing. On Monday, Commerce Secretary Gina Raimondo convened Congressional champions, including Sen. Todd Young (R-IN) and Rep. Doris Matsui (D-CA), and former Trump Administration national security leaders to continue to beat the drum for swift passage of CHIPS Act funding. Secretary Raimondo also pledged this week that CHIPS Act funding will be used to increase diversity in the U.S. semiconductor workforce. Additionally, multiple Biden Administration officials, including Secretary Raimondo and U.S. Trade Representative (USTR) Katherine Tai, as well a House and Senate leadership, met with Semiconductor Industry Association (SIA) members this week on CHIPS Act subsidies and incentives. 

There are several issues we will be monitoring in the USICA/America COMPETES Act conference. One interesting tidbit is that the National Institute of Standards and Technology (NIST) for the Future Act, included in the House-passed America COMPETES Act, includes privacy research. If this provision is preserved in conference, it would mark the first time in 12 years that Congress has passed a privacy bill. We will also be watching for tax provisions. We are hearing that the R&D tax credit and the FABS Act could potentially ride on the compromise bill. There are also a number of cyber provisions in the bill. In case you missed it, earlier this week, Cyberspace Solarium Commission Co-Chairs Sen. King and Rep. Gallagher wrote to Leaders Schumer and McConnell urging the retention of language related to STEM education, creation of a federal cyber workforce program, and increased funding for the State Department to combat foreign disinformation. 

At the end of the conference process, we expect the final compromise bill will look more like the Senate legislation in order to overcome some of the more partisan sticking points in the House bill and ensure the conference report can ultimately clear both chambers. The first news on the appointment of House and Senate conferees could trickle out next week, as one House Science Committee staffer told us that the goal is to get to a formal conference by the end of this quarter. We continue to hear that a final bill could reach the president’s desk around Memorial Day. President Biden has made clear that he would like to see Democrats run on the China competitiveness package in the upcoming midterm elections.  

BBB/Reconciliation 

Following the recent Senate Finance Committee hearing on lowering prescription drug costs, several Senate Committees may be planning hearings on other elements of President Biden’s BBB framework. This week, the Senate HELP Committee held a hearing on childcare and preschool programs, the Aging Committee convened a panel on home-based care, and the Environment and Public Works (EPW) Committee held a hearing on climate change.  

As you know, Sen. Sen Joe Manchin (D-WV) has emphasized his priorities as drug pricing, pre-kindergarten, and clean energy. He has also been somewhat critical of the lack of hearings and regular order on the original BBB proposal, so the recent spate of hearings might be aimed at luring Sen. Manchin back to the negotiating table. However, Democratic staffers tell us that orders have come down to put BBB on the back burner until President Biden’s SCOTUS nominee is confirmed.  

One Democratic Senate chief of staff who thinks that there will be a smaller BBB package told us that he believes that BBB will need to do something to address inflation. He said the challenge right now is that the Treasury Department is overwhelmed by the April 15 tax filing deadline and struggling to do anything else. However, what we see in BBB for inflation might be some kind of tax cut to help consumers.  

For now, formal work on a reconciliation package is quiet, but things could pick up on a “son of BBB proposal” during the next work period. Most people who we talk to think any action on a reconciliation package will happen between Easter and Memorial Day. 

Political Tidbits 

House Seat Vacancy 

Dean of the House, Rep. Don Young (R-AK), passed away last Friday. He had been in office for just over 49 years but faced tighter elections in the past few cycles, winning between 50-54 percent of the vote since 2014. A special election will be held June 11 and will be conducted almost entirely by mail. The top four candidates will then face each other on August 16 to fill the seat for the remaining months of Rep. Young’s term. That election will be done by ranked-choice voting, the first in the state’s history. August 16 is also the primary election for the at-large district’s seat for 2022, with the top four heading to the November 8 ranked-choice election.  

Redistricting 

Most states have concluded or are wrapping up their redistricting processes, but with only six weeks until the primaries, Ohio’s new maps are still unknown. After the court’s most recent map rejection, Ohio’s secretary of state warned it might be impossible for state House and Senate elections to appear on the ballot. As a result, Republican and Democratic lawmakers are urgently working on a fourth map proposal, with the state’s redistricting commission also hiring map-making consultants who have until Monday to approve a map. If delays continue, it’s possible the Ohio Supreme Court could approve an order to move the May 3 primary date.  

The Senate’s Tight Races 

We’re reminded that in the 1994 election, it hit Democrats late in the game that they were in trouble. Two years after a Democrat had taken the White House, Republicans gained eight seats in the Senate and, in turn, control of the chamber. This time around, no one is surprised by tough races. Democrats know they must hold the four seats currently occupied by vulnerable incumbents in Arizona, Georgia, New Hampshire, and Nevada. Those Members are all battle-tested. Sens. Mark Kelly (D-AZ) and Raphael Warnock (D-GA) are fresh off their races in 2020, Sen. Catherine Cortez Masto (D-NV) is a recent Democratic Senatorial Campaign Committee (DSCC) Chair, and Sen. Maggie Hassan (D-NH) has experience with tight gubernatorial races. These incumbents say they need to see an improvement in President Biden’s approval rating up to somewhere near 45-50 percent.  

For the most part, Democrats’ recruitment has almost all been shored up. States have their de facto candidates, as seen in Florida with Rep. Val Demings (D-FL), North Carolina with Cheri Beasley, and Ohio with Rep. Tim Ryan (D-OH), which means they can pivot to the general.