Plurus Strategies Weekly Update: COVID Aid, Ukraine Relief, Reconciliation and Other Activity in Washington
COVID Aid
Members are back from recess but the path forward on enacting the deal struck before the break on additional COVID relief remains uncertain. As you know, earlier this month, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Mitt Romney (R-UT) reached agreement on a $10 billion package of additional money for domestic COVID programs. Many thought the bill would be on a glide path leading up to the recess. However, things quickly unraveled when Republicans demanded a vote on an amendment that would block the Biden Administration from lifting Title 42 immigration restrictions, which were imposed earlier in the pandemic to allow migrants and asylum seekers to be expelled at the border. With several vulnerable Senate Democrats aligned with Republicans in opposition to the White House’s position, tensions over Title 42 ultimately forced Leader Schumer to scrap a vote.
While the immigration policy change is due to go into effect on May 23, recent developments have made it difficult to forecast if this will be the case. On Tuesday, shortly after White House officials were set to brief chiefs of staff and committee staff directors on the administration’s plans to ease up on deportations, a federal judge in Louisiana issued a temporary restraining order to prevent the Biden Administration from shifting border policy. At the very least, the court order likely means a delay. However, the murkiness of the situation gives Republicans space to continue to attack the White House and potentially force vulnerable Democratic incumbents who are essential to the Democratic Senate majority to take tough votes.
Another complicating factor is whether additional COVID appropriations can move on their own or will need to be attached to another moving vehicle to secure enough votes for passage. This week, Leader Schumer suggested that Democrats might try to pair COVID monies with additional Ukraine assistance in an effort to fast track both. By midweek, however, Republicans made clear they will resist the initiatives being tied together. Senate Minority Leader Mitch McConnell (R-KY) also indicated his caucus will continue to insist on a vote on Title 42 as part of any vehicle including COVID relief. We anticipate the White House will continue to highlight the importance of refilling COVID coffers, especially in light of Vice President Kamala Harris testing positive this week.
In our view, COVID relief is stalled for now. However, one senior Democratic staffer who thinks COVID funding and Ukraine assistance may be linked believes Democrats might be able to get around the vote on immigration policy by appropriating more money for agencies to “address the flood of folks about to cross the border.” If we were the betting types, we would say that Democrats will find a way to advance additional funding for COVID testing, vaccines, therapeutics, and pandemic preparedness, and potentially more global COVID assistance. However, we are not holding our breath that the Senate will take up the $55 billion aid package the House passed before the recess to help restaurants and other industries that were disproportionately impacted by the pandemic.
War in Ukraine
The war in Ukraine continues to top the agenda for the administration and Congress. Over the weekend, Defense Secretary Lloyd Austin and Secretary of State Antony Blinken made a visit to Kyiv, marking the highest-level U.S. visit to Ukraine since the start of the Russian invasion. As part of the trip, Secretaries Austin and Blinken announced a total of $713 million in foreign military financing for Ukraine and 15 allied partner countries in the region. This includes over $300 million in weapons for Ukraine and another $165 million for ammunition, which is consistent with the administration increasingly focusing its messaging on degrading the Russian military.
A White House request for additional Ukraine assistance is expected today. Building on the previous $13.6 billion Ukraine supplemental, this $33 billion request will include $20.4 billion in military and security assistance for Ukraine, $8.5 million in economic assistance to support the Ukrainian government in Kyiv, and $3 billion for humanitarian and food security. This follows the $670 million in food aid the White House announced on Wednesday to address food insecurity in Sub-Saharan Africa brought on by the conflict in Europe. The White House envisions this next Ukraine supplemental to fund U.S. support to Ukraine through September 30. The administration has also expressed its view that this emergency spending does not have to be paid for. There appears to be an appetite in Congress to move another assistance package as quickly as possible in order to help Ukraine defend Mariupol and put up a fight against Russian troops elsewhere.
In addition to requesting additional financial assistance for Ukraine, the White House is also proposing a series of measures to tighten sanctions enforcement on wealthy allies of Russian President Vladimir Putin and to seize assets that can be transferred to Ukraine to support the country’s rebuilding. In another sign of the U.S. stepping up its engagement on the war, this week President Joe Biden named Bridget Brink has his nominee to serve as U.S. ambassador to Ukraine, making her the first candidate to fill the position since President Donald Trump removed former Ambassador Marie Yovanovitch in 2019. Brink’s nomination was sent to the Hill on Tuesday and Leader Schumer has indicated the Senate will make its consideration a priority.
Meanwhile, the House has continued to advance pro-Ukraine legislation, including several bills that have moved under expedited floor procedures. This week, the House passed bills that would require the State Department to report to Congress on any Chinese contributions to Russia’s invasion of Ukraine, establish an interagency working group to address semiconductor supply chain issues exacerbated by the war, and launch a working group tasked with determining how to seize the U.S. assets of sanctioned Russian entities benefitting financially from corruption of political support linked to Putin. The Rules Committee also marked up the Senate-passed Ukraine Democracy Defense Lend-Lease Act, which would aid Ukraine and neighboring countries against the Russian military’s advances by waiving statutory requirements on the president’s ability to transfer military equipment to Kyiv under the WWII lend-lease program. This bill is expected to receive a vote in the House today.
Aside from Ukraine assistance and other Ukraine-related bills moving through Congress, we understand the administration is also continuing to explore ways it might ramp up sanctions on Russian individuals and potentially implement secondary sanctions. The administration is also seeking to boost efforts to support Europe’s transition off Russian gas, especially given Russia’s decision to cut off natural gas flows to Poland and Bulgaria in retaliation for their refusal to pay for energy in rubles.
BBB/Reconciliation
With less than 200 days to go until the midterm elections, Democrats are hopeful there may be a way to revive work on a reconciliation vehicle that addresses some of the party’s domestic policy priorities. While Build Back Better (BBB), or whatever it is being referred to as these days, is not in the spotlight, several Democrats have reassured us that the White House is talking privately with Sen. Joe Manchin (D-WV) and trying to reach consensus on a slimmed down deal.
In the meantime, Sen. Manchin has kicked off an effort to work with Sens. Lisa Murkowski (R-AK) and Kevin Cramer (R-ND) and other Democrats, including Sens. Brian Schatz (D-HI), John Hickenlooper (D-CO), Mark Warner (D-VA), Tom Carper (D-DE), and Mark Kelly (D-AZ), on bipartisan energy and climate legislation. Our sense is that Sen. Manchin is looking across the aisle to see if there might be a bipartisan route, as opposed to reconciliation. Following a meeting on Monday night, the group suggested a proposal could come together to reform the federal oil and gas leasing process, increase near-term domestic energy production, and create incentives for longer-term climate change investments. On both sides of the aisle, there is skepticism that a deal may be at hand. However, the group is already committed to meeting twice next week. We would have to agree that, even with the war in Ukraine creating an opening for discussions on energy security and transition, bipartisan energy legislation may not be possible in an election year.
On Tuesday, Sen. Manchin met with Leader Schumer to discuss potential strategies to combat inflation. Consistent with the arguments he has been making over the past several months, Sen. Manchin reiterated that any reconciliation bill should be focused on addressing inflation and reducing the deficit. He has previously said these goals can be achieved through tax reform, legislation to control prescription drug costs, and spending on energy programs. Specifically, Sen. Manchin has outlined a tax proposal that would increase the corporate tax rate, potentially jeopardizing Sen. Kyrsten Sinema’s (D-AZ) support for a framework. Additionally, Sen. Manchin has been very clear that any reconciliation package must be completely paid for, which may be a tall order given that many easily identifiable offsets were used to pay for the infrastructure bill.
Democrats, especially those who find themselves in tight races, are ramping up rhetoric on the need to pass a bill by Memorial Day so that the rank and file has time to campaign on it ahead of the midterms. For now, Sen. Manchin seems to be waving off any pressure to commit to a timeline. Sen. Manchin’s toughness on the president’s domestic policy agenda seems to be benefiting him politically, especially given recent indications that he will run for reelection in 2024 and the fact that President Biden remains unpopular in West Virginia.
USICA/America COMPETES Act Conference
During the recess, we connected with Democratic and Republican staffers in both the House and Senate on the U.S. Innovation and Competition Act (USICA)/America COMPETES Act conference. Unanimously, staffers were hopeful that the Senate would complete the procedural process required to officially launch the conference this week. However, the Senate now appears on track to miss that deadline. Delays came about as a result of Senate Republicans seeking more than 25 non-binding motions to instruct conferees on a range of issues. While Democrats had hoped to narrow that list down to ten, Leader Schumer has solidified a path forward that will allow the Senate to invoke cloture on the motion to go to conference today in exchange for teeing up a vote on 28 non-binding motions to instruct conferees early next week.
While informal pre-conference negotiations have been taking place for weeks, staffers cautioned that there are likely to be major hurdles once the conference formally commences. In particular, we continue to hear that the gap between the Senate Finance Committee and the House Ways and Means Committee in regard to the trade titles of the respective bills will be difficult to navigate, making it possible that trade provisions fall out of the bill entirely. At a more granular level, we have been told that House and Senate leadership have identified more than 1,000 provisions to be reconciled that span the jurisdictions of more than two dozen committees. As you know, more than 100 conferees were identified before the Easter recess, and we have been told to expect each Member to show up to the conference with his or her own personal list of grievances to be addressed.
Following House passage of the America COMPETES Act in early February, there was some optimism that a compromise bill would find its way to the president’s desk before the Memorial Day recess. However, that ambition now seems to be fading. We were with a few House Members this morning who told us they think the bill gets done, but one vulnerable House Democrat said her fear is that final passage won’t happen until right around her early August primary. We had one staffer tell us he thinks the conference report could even be slipping to the lame duck.
Assuming the conference committee can work out the differences between the competing House and Senate bills, there is general consensus that the final product will look more like the Senate bill than the House bill. This makes it possible that House progressives who voted for the America COMPETES Act could withdraw their support, leaving House Speaker Nancy Pelosi (D-CA) to make up for this in her whip count by adding votes from House Republicans. While there is one school of thought that a lame duck vote could free up Republicans to vote to give President Biden a win, a red wave in November could also make Republicans reluctant to pass any legislation that they might prefer to tackle on their own once they are in the majority.
Yesterday, Commerce Secretary Gina Raimondo testified before the Senate Commerce committee on the agency’s Fiscal Year 2023 (FY23) budget request. She used her testimony to urge Congress to quickly pass appropriations for the CHIPS Act that were included in both USICA and the America COMPETES Act, arguing that other countries have implemented policies that are attracting semiconductor investments that could otherwise be made in the U.S. While CHIPS funding was always intended to be a motivator for passing broader China competitiveness legislation, we are hearing the contentious nature of the conference could mean that CHIPS provisions are stripped out and moved on their own.
Appropriations
This week, both chambers hosted cabinet secretaries for hearings on the president’s FY23 budget request, with testimony from State Department, Commerce Department, Department of Justice (DOJ), Department of Homeland Security (DHS), Department of Energy (DOE), Department of Education, and Interior Department leadership. While some believe this is just the start in what could be an extended budget cycle, one very senior Democratic Senate Appropriations Committee staffer who we connected with is fairly confident all 12 spending measures will be enacted this year.
We believe it’s possible Leader McConnell will direct Sen. Richard Shelby (R-AL) to see if he can reach a deal with Democrats on topline numbers. Our thinking is that if Republicans win control of both chambers in November, they are really going to want to focus on tax policy and regulatory rollbacks and “won’t want to be messing around on a $1 trillion appropriations bill.” It might also benefit Republicans if the last budget passed under Democratic control has a high topline number. Leader McConnell has now publicly expressed support for good faith efforts to establish the toplines for defense and non-defense spending in the near future so that appropriators can aim to work on the 12 spending bills under regular order. House Majority Leader Steny Hoyer (D-MD) has also indicated he believes there is a willingness among the “four corners” to reach swift agreement on 302(a)s.
Three of the “big four” could be in line with this approach. With Sens. Patrick Leahy (D-VT) and Shelby retiring, both should be inclined to finish this appropriations cycle before they depart. Similarly, Rep. Rosa DeLauro (D-CT) should be on board, even if she rejected striking a deal on FY22 toplines because she did not want to go along with the spending increase for defense. However, this time around, Rep. DeLauro might “see the writing on the wall and will want to get to a deal that’s good.” A “good deal” might be dollar-for-dollar increases for defense and non-defense spending or “50/50 parity.” Rep. Kay Granger (R-TX) may not be predisposed to cut a deal now, but the process could move forward even without her buy-in.
The goal is to reach an agreement on a topline number within the next three weeks or so, which will then allow the committees and subcommittees to get to work. Sens. Leahy and Shelby and Reps. DeLauro and Granger will be meeting today to begin negotiations on topline figures for the FY23 appropriations cycle. The House Appropriations Committee plans to hold its FY23 subcommittee markups June 13-22 and full committee markups June 22-30. This means the House could potentially begin considering appropriations measures on the floor as soon as they return from the July 4 recess. The Senate Appropriations Committee would also aim to markup all its bills in June and July, although “they will just sit there and never go to the floor.” In other words, the bills will come to the floor in an omnibus after the election. This means there is likely to be a short-term continuing resolution (CR) into the lame duck.
Political Tidbits
While we are keeping a watchful eye on what Congress can and will do this calendar year, Plurus has also been digging into the next Congress, including potential changes in party and committee leadership. We normally put out such analysis closer to the election, but given the number of retirements, particularly by the heads of committees, we are excited to present our Senate and House Committee Musical Chairs in Anticipation of the 118th Congress. We hope this coverage on next year’s dynamics will provide insight into the nuances and motivations for this session. You can view the analysis here.
Of course, party and committee leadership depend upon both the political environment and election results. To that end, although no Members announced retirements over the recess, the two-week break has given Washington time to take polls and release forecasts as primary season gets into full swing.
Redistricting
Florida became the most recent state to enact maps last Friday. The Republican-led legislature pushed through a highly contested map that aligns closely with a version created by Republican Gov. Ron DeSantis back in January. Rep. Al Lawson’s (D-FL) district has been refigured as solidly Republican, but he has indicated his intention to remain on the ballot. Reps. Charlie Crist’s (D-FL) and Stephanie Murphy’s (D-FL) districts are leaning Republican, although both are retiring. The map also splits Orlando’s Black community between retiring Rep. Val Deming’s (D-FL) 10th district and Rep. Dan Webster’s (R-FL) 11th district. Several voting groups have already filed to sue, with some taking the constitutional route and arguing that the map violates the Fair Districts Amendment in the state’s constitution.
Florida is not the only state facing legal challenges. On Wednesday, New York’s top court threw out the previously approved map, which was in Democrats’ favor. This move will likely delay state primaries from late June to sometime in August. Other states could also pursue pathways to throw out maps currently in place. To date, 45 states, including those with only one district, have now finished their maps.
House Outlook
The House is increasingly looking like it will flip. Back in 2006, Democrats flipped the House and added seats two years later in the 2008 election. Democrats entered 2010 with a majority, but Republicans quickly reversed the trend in midterms that year, ending unified Democratic control of Congress. In stark contrast, Democrats are entering the 2022 midterms with a slim majority – an estimated 4-6 seats – which will remain a moving target until the outcome of special elections in the coming months. Polling indicates the Democratic party’s popularity is sliding pretty steeply.
Senate Outlook
The Senate seems to be leaning Republican, though there is less confidence that the GOP would gain a landslide in the same way polls have suggested for the House. The 2022 maps are favorable for Democrats. President Biden won all the seats Democrats are on track to defend this year while Republicans are on track to defend two seats in states where President Biden won. Of interest, the key Senate races, with primary dates noted, are:
Ohio (May 3): The state’s primary is just days away and with the open Senate seat already leaning Republican, Democratic challenger Rep. Tim Ryan (R-OH) will likely face a steep challenge, regardless of the GOP nominee. President Trump’s recent endorsement of Republican candidate J.D. Vance has dramatically changed Vance’s lag in the polls, but not everyone is on the same page. Nearly three dozen Trump supporters and convention delegates signed an open letter to the former president this week indicating their “feelings of betrayal” over the endorsement.
Pennsylvania (May 17): Lt. Gov. Fetterman and Rep. Conor Lamb (D-PA) are the current Democratic leads, though Fetterman is likely be the nominee. It is unclear who he will face in the crowded field of Republicans, but President Trump’s recent endorsement of GOP challenger Dr. Oz has been a lifeline, shooting the television personality’s numbers up after falling behind GOP frontrunner Dave McCormick. That being said, it remains to be seen if the ultimate race will come down to Fetterman and Oz. Pennsylvania’s primary is two weeks away and only time will tell if the Trump endorsement has any weight.
Arizona (Aug. 2): Democrats are hopeful that incumbent Sen. Kelly, who campaigned as a former astronaut, can retain his seat in November. Fellow Democratic Sen. Sinema has reportedly made Sen. Kelly’s independent credentials more difficult to leverage in the eyes of voters, a stance that Republicans might use to attack Sen. Kelly. For Sen. Kelly to win, he would need increased funding, the Republican primary to get ugly, and generally, as is the case for all Democrats facing tight races, an improvement in the political environment for Democrats writ large.
Wisconsin (Aug. 9): Incumbent Sen. Ron Johnson’s (R-WI) re-election campaign is turning into an intriguing race. With Sen. Johnson’s low favorability rating, Democrats and a number of Republicans have aligned in their view of Johnson as combative and espousing conspiracy theories, criticizing his failure to run as a moderate in a swing state. Optimistic Republicans believe that voters appreciate Sen. Johnson’s authenticity and that his fundraising and campaigning efforts combined can rectify his ratings. Democrats have a crowded primary, which could grow increasingly contentious and give Sen. Johnson a window to improve his standing.
With more of an eye toward November, we continue to follow three other Democratic incumbent races. Georgia’s race is likely to be between Sen. Raphael Warnock (D-GA) and Herschel Walker. Nevada’s race is looking like it will be between Sen. Catherine Cortez Masto (D-NV) and former Attorney General Adam Laxalt. New Hampshire’s race has put Sen. Maggie Hassan (D-NH) in a statistical tie with four Republican challengers, but that primary is still months away.
Gubernatorial Races
There are 36 gubernatorial seats – 20 Republicans and 16 Democratic – on the ballot in 2022. Eight sitting governors – five Republicans and three Democrats – have announced they will not be seeking re-election, in large part due to term limits. Gubernatorial races in Arizona, Georgia, Nevada, Pennsylvania, and Wisconsin are all being regarded as toss-ups, underlining the alignment with competitive Senate races. Democrats are only defending the governorship in one state that President Trump won in 2020 – Kansas – while Republicans will be faced with defending six governorships in states President Biden won in 2020 – Arizona, Georgia, Maryland, Massachusetts, New Hampshire, and Vermont. At the same time, several incumbent Democratic governors are at risk, including Maine Gov. Janet Mills, Michigan Gov. Gretchen Whitmer, and Rhode Island Gov. Daniel McKee. As Senate races grow more polarized, a similar phenomenon could occur in gubernatorial governor races unless Republicans have a massive wave