Plurus Strategies Weekly Update: Ukraine, SOTU, and SCOTUS Nomination
War in Ukraine
These days, it seems like everyone is a foreign policy junkie with the Russian war in Ukraine obliterating what we thought would be an agenda focused primarily on domestic issues. Before the recess, a bipartisan group of Senators failed to reach consensus on a Russian sanctions bill, opting instead to pass a nonbinding resolution in support of Ukraine. A similar measure was considered in the House this week. Now that we are a week into a Russian invasion, the U.S. and its allies have rapidly imposed historic sanctions, including elimination of certain Russian banks from SWIFT, squeezing of Russian oligarchs, expulsion of Russian diplomats, implementation of export controls, and a halt on Nord Stream 2 (NS2). Conversations now shift to emergency assistance for Ukraine and other efforts aimed at protecting the U.S. economy and U.S. critical infrastructure from Russian threats.
In particular, the Biden Administration has urged efforts to fortify U.S. cyber defenses and the Federal Communications Commission (FCC) has sought to limit Russia’s ability to redirect internet traffic to the detriment of Americans and allies. U.S. diplomats simultaneously continue to engage with governments around the world, including China, to cut off exports of critical technologies, including semiconductors, computers, telecommunications equipment, and information security technologies to Russia. The Commerce Department has also added 49 Russian military end users to the Commerce Department Bureau of Industry and Security’s (BIS) Entity List. While the world has yet to severely target Russia’s energy sector, we suspect the conflict will continue to drive a wedge between the president’s energy security objectives and environmental goals, especially as calls increase to restrict imports of Russian petroleum products and Republicans call for increased drilling in the U.S. We sort of view this as a “damned if you do, damned if you don’t” situation for President Joe Biden.
The evolving situation in Europe is a critical one for the administration and it has not yet crystallized how the conflict will play out politically for President Biden and Congressional Democrats. While conventional wisdom is that the average voter is not an avid observer of international affairs, the largest conflict in Europe since World War II (WWII) could increase the salience of U.S. foreign policy. President Biden has made clear that the U.S. will not be sending troops into Ukraine. He has also been honest that there will be costs to Americans for imposing penalties on Russia for its aggressive behavior. The war in Ukraine presents another messaging minefield for the administration. The White House is likely to try to capitalize on the president’s ability to build international coalitions and take advantage of the fact that Republicans remain divided over the appropriate level of U.S. involvement in Ukraine, as well as former President Donald Trump’s recent praise for Putin. However, the administration also faces the tricky task of convincing the American public that accepting higher prices during historic inflation is morally the right thing to do. The situation in Europe is fluid and fragile, and it could have ramifications for what gets accomplished in Washington for weeks and months to come.
State of the Union
With recent events on the global stage, drafts for President Biden’s Tuesday night State of the Union (SOTU) speech were largely scrapped and rewritten to strike a new balance between acknowledging the vulnerability of the world order, laying out next steps on stalled domestic policy goals, and touting the administration’s victories to date. President Biden sought to mark progress in the ongoing fight against COVID, highlight economic and employment rebounds since the start of pandemic, and take a victory lap on passage of the bipartisan infrastructure framework (BIF). At the same time, the president acknowledged real concerns about violence in Ukraine, inflation and the supply chain crunch, and the lack of momentum on Build Back Better (BBB).
On the latter, President Biden used his state of the union to reframe BBB as a four-point “Building a Better America” plan to shore up the economy by strengthening U.S. supply chains and moving goods cheaper and faster; reducing everyday costs by addressing inflation and controlling the deficit; promoting competition to lower prices and protect consumers; and eliminating barriers to high-quality jobs. While this new platform was packaged differently and sold as a strategy for combatting inflation, the president continued to advocate for provisions that have been a part of BBB conversations, such as reducing prescription drug costs; making education, healthcare, and childcare more affordable; and providing tax credits for clean energy and energy efficiency. President Biden also used the SOTU to urge passage of a compromise U.S. Innovation and Competition Act (USICA)/America COMPETES Act bill and to call attention to semiconductor manufacturing investments in the U.S.
Our main takeaway from the president’s speech was that he seems to be moving from the left back towards the center of the political spectrum. We question if the pivot is too late. To the extent international affairs will allow him to do so, we suspect President Biden will now hit the road to get the message out on his achievements and to make the case for action on his agenda ahead of November. It remains to be seen how any momentum from the SOTU will influence the midterms, especially as Republicans continue to attack Democrats on inflation, spikes in crime, and culture war issues.
FY22 Appropriations/Emergency Supplemental/FY23 Budget
There are just eight days remaining until the current continuing resolution (CR) expires on March 11. At this point, it is feeling increasingly likely an omnibus will be enacted next week. In the beginning of the week, we had been hearing the appropriations subcommittees had finished their work, sending "a healthy list of unresolved issues" to the “four corners” for resolution. It is our understanding that matters which cannot be negotiated amongst Sens. Patrick Leahy (D-VT) and Richard Shelby (R-AL) and Reps. Rosa DeLauro (D-CT) and Kay Granger (D-TX) will be sent to Senate and House leadership for a final decision. As talks continue, we are hearing House Majority Leader Steny Hoyer (D-MD) would like to be able to put an omnibus on the floor as soon as March 8. This morning, we attended an event with two Democratic House appropriations cardinals. These Members were optimistic about the omnibus getting done next week and emphasized there is a desire to pass the bill before Thursday’s Democratic retreat.
Discussions also continue around emergency supplemental appropriations. While appropriators had previously hesitated to wrap emergency spending into the spending package, the White House’s formal request for financial assistance for Ukraine seems to have shifted minds and hearts. House Speaker Nancy Pelosi (D-CA) has said that Congress is ready to provide financial assistance to Ukraine and Senate Majority Leader Chuck Schumer (D-NY) has expressed support for including emergency funding on the $1.5 trillion spending bill. Democratic appropriators tell us that emergency assistance will be a separate package that will ride on the omnibus.
At the end of last week, the White House formally requested $6.4 billion in new funding, including $2.9 billion for the State Department and the U.S. Agency for International Development (USAID) to assist Ukraine and support European allies, and a $3.5 billion increase for the Department of Defense (DoD) to deploy additional resources to Central and Eastern Europe. Some Members expressed interest in providing as much as $10 billion in emergency assistance for Ukraine. The initial emergency request also resulted in some disagreement regarding whether additional DoD funding must fall under the topline number for defense spending negotiated by appropriators.
As of this morning, the White House has now updated its request for supplemental emergency appropriations, requesting $10 billion for Ukraine assistance, including $5 billion for the State Department, $4.8 billion for DoD, and other funding to support the Treasury Department, Commerce Department, Department of Justice (DOJ), and Department of Energy (DOE). Specifically, the request seeks $1.8 billion for troop deployments to Europe, $1.25 billion for cybersecurity and intelligence, $1.75 billion for supplies for Ukraine, $2.75 billion in humanitarian aid, $1.75 billion in economic assistance, and $500 million for military aid. The request also includes funding for implementation of export controls and sanctions, support for Ukraine’s electrical grid, and a DOJ task force to go after Russian oligarchs. The White House made clear this funding should not be included under the negotiated topline for defense spending, which improves the odds of the omnibus crossing the finish line next week.
The administration’s emergency funding request also includes $22.5 billion in additional funding for COVID. Specifically, the White House is seeking $12.2 billion for vaccine procurement, $2 billion for testing, $2.6 billion to expand vaccinations abroad, and $1.7 billion for sending treatments, tests, and supplies overseas. With Democratic messaging this week around the administration’s efforts that have brought the pandemic to a new moment, our instincts tell us that repurposing of previously appropriated COVID relief dollars might be a safer bet than new spending. This was reinforced by a letter that Sen. Mitt Romney (R-UT) led on behalf of 36 Republicans to the White House on Wednesday indicating they would oppose additional emergency COVID relief funding being attached to the omnibus without more oversight of previous pandemic relief funds.
Regarding the FY23 budget, we learned that the Office of Management and Budget (OMB) locked its system for the president’s budget request (PBR) late last week and are now working on finalizing their narratives and budget justifications. Rep. John Yarmuth (R-KY) has reported that White House officials would like to release the PBR within one week of the SOTU, but this seems ambitious. While Congress has yet to receive a precise date for President Biden’s Fiscal Year 2023 (FY23) budget release, most staffers continue to tell us they expect we will see the PBR in late March/early April.
SCOTUS Confirmation
At the end of last week, President Biden announced Ketanji Brown Jackson, a federal judge on the U.S. Court of Appeals for the D.C. Circuit, as his SCOTUS nominee. Judge Jackson began courtesy meetings this week in anticipation of what we expect to be a six-week confirmation process. Sen. Dick Durbin(D-IL) has now announced that confirmation hearings will be held March 21-24, potentially resulting in a full Senate vote on Judge Jackson’s nomination as soon as the first week of April.
While some conservatives expressed disappointment that Judge Jackson was likely one of the more liberal candidates under consideration, we anticipate Republicans will treat her with respect during the confirmation process to draw contrast with Justice Brett Kavanaugh’s confirmation hearings. As you might recall, the Senate confirmed Judge Jackson for her current position on a 53-44 vote last summer. Assuming Senate Democrats stick together and have perfect attendance, she is likely to be confirmed.
Of particular interest, Judge Jackson has a bit of a record on telecom issues. In her previous role on the District Court for D.C., Judge Jackson rejected a lawsuit from EPIC related to a Freedom of Information Act (FOIA) request to obtain information on government surveillance of electronic communications. It is also worth noting that Judge Jackson has received an endorsement from Assistant Attorney General for Antitrust Jonathan Kanter, with whom she enjoys a close personal friendship.
Build Back Better
As alluded to above, BBB may have received a fresh breath of life, albeit by a new name, in the President’s SOTU address. As you may have seen, heading into the SOTU, leaders of the New Democrat Coalition, Congressional Progressive Caucus, Congressional Black Caucus (CBC), Congressional Hispanic Caucus (CHC), Congressional Asian Pacific American Caucus (CAPAC), Democratic Women’s Caucus, Congressional LGBTQ+ Equality Caucus, and Sustainable Energy and Environment Coalition issued a joint statement urging renewed work on a reconciliation package to address economic challenges including disparities and inequities, rising prices, and the climate crisis.
Frontline Democrats appear especially interested in resurrecting BBB, so much so that a group came together during the recess week to begin compiling a framework for a reworked bill. Led by Reps. Josh Gottheimer (D-NJ) and Abigail Spanberger (D-VA), the group has expressed interest in advancing legislation that lowers the costs of prescription drugs, food, and utilities and addresses the rise in crime. The group recently presented the plan to White House Chief of Staff Ron Klain.
Following the SOTU, Sen. Joe Manchin (D-WV) continued to express skepticism about using the BBB bill to help get inflation under control and reiterated there are no formal talks taking place to par down the BBB proposal. In fact, on Wednesday, Sen. Manchin articulated that he might only be able to support a reconciliation package that rolls back Tax Cuts and Jobs Act (TCJA) tax cuts, lowers the cost of prescription drugs, and splits revenues between new spending on climate change and deficit reduction and efforts to control inflation. It’s unclear that such a proposal could advance, as Sen. Kyrsten Sinema (D-AZ) has said she will oppose corporate tax increases. As a reminder, the reconciliation vehicle expires on September 30.
Political Tidbits
Retirements
In a surprise announcement, Rep. Ted Deutch (D-FL) became the 31st House Democrat and third Florida Democrat to join the exodus, making it the largest since 1992. Florida Democrats are scrambling to secure a frontrunner for the race with the names of several state representatives and Fort Lauderdale Mayor Dean Trantalis being thrown around as contenders. Following the recent finalization of Pennsylvania’s redistricting putting two Republican incumbents in the 15th district, Rep. Fred Keller (R-PA) also announced this week he will not seek re-election, saying he did not want to run against his colleague Rep. Glenn Thompson (R-PA). Rep. Van Taylor (R-TX) announced yesterday he was ending his campaign in light of a personal scandal. And in Minnesota, Rep. Jim Hagedorn (R-MN) passed away from cancer just before the recess. A special election for his MN-1 seat is scheduled for August 9, coinciding with the state’s primaries.
In the Senate, Sen. Jim Inhofe (R-OK) announced his retirement over the recess, endorsing his former chief of staff, Luke Holland, who will join a growing list of potential contenders for Inhofe’s seat, including Reps. Markwayne Mullin (R-OK) and Kevin Hern (R-OK). As of today, here is the breakdown of retirement/not seeking re-election announcements:
1 Senate Democrat: 1 full committee chair
5 Senate Republicans 5 full committee ranking members
31 House Democrats: 4 full committee chairs
15 House Republicans: 2 full committee ranking members
Musical Chairs
Rep. Deutch chairs the Ethics Committee in the 117th Congress. No successor has been named, but next in line is Rep. Susan Wild (D-PA), who currently faces an uphill battle in her district. Sen. Inhofe is the current ranking member of the Senate Armed Services Committee (SASC). Sen. Roger Wicker (R-MS), next in line, announced his intention to give up his spot as the top Republican on the Commerce, Science, and Transportation Committee in favor of assuming the most senior GOP slot on SASC. Sen. Ted Cruz (R-TX) is in line for the top spot on Commerce.
Texas Primaries
On Tuesday, the Texas primaries kicked off midterm season. Texas’ maps have been in litigation since DOJ filed a lawsuit in early December, citing violations of the Voting Rights Act. While 14 incumbents faced no primary opposition, there was still plenty to see.
The race of the night—TX-28, in which incumbent Rep. Henry Cuellar (D-TX) faced progressive candidate Jessica Cisneros—will remain undecided as neither candidate reached 50 percent of the vote, forcing a runoff. Rep. Cuellar has represented the Laredo area in Congress since 2005 but was at the center of a Federal Bureau of Investigation (FBI) raid in January. Cisneros boasts endorsements from progressive and women’s groups. Cook Report labels the race as leaning Democrat, and Republicans certainly have their eyes on the district. Retiring Rep. Eddie Bernice Johnson’s (D-TX) district, which includes Dallas and its suburbs, also faces a runoff between Jessica Crockett and Jane Hope Hamilton. Crockett, who has been endorsed by both Rep. Johnson and progressive groups, garnered 48 percent of the vote to Hamilton’s 17 percent. The primary in Texas’ 3rd Congressional District was set to be another runoff, but Rep. Taylor's surprise announcement means former Collin County Judge Keith Self secured the Republican nomination.
Other, more solidly Democratic or Republican districts have their nominees for November. We spoke to the head of a progressive organization this week who identified Austin’s TX-35 and Dallas’ TX-30 as their top opportunities for open seats in the state. No longer cut up like a pizza, Austin now has its own Congressional district. Former Austin City Councilmember and Democratic Socialist Gregorio Casar won the primary in TX-35. In the Republican primaries, candidates supported by President Trump did far better than in other states, although some have noted that many of these races had no challengers. 32 of 33 of President Trump's endorsed candidates won on Tuesday, and the 33rd candidate, Ken Paxton, is advancing to the Attorney General runoff. One race the former President did not play in was retiring Rep. Kevin Brady’s (R-TX) race in TX-8. Reps. Marjorie Taylor Greene (R-GA) and Madison Cawthorn (R-NC) recently traveled to this district to back Christian Collins against Minority Leader Kevin McCarthy’s (R-CA) endorsed Morgan Luttrell. The primary went to Luttrell on Tuesday, and his win is seen as part of an effort to ice out far right incumbents like Rep. Greene.
Beto O’Rourke and incumbent Gov. Greg Abbott (R-TX) have secured spots as expected in gubernatorial primaries, setting the stage for major clashes in the coming months. O’Rourke, as you will remember, energized young voters back in 2018 and leading up to 2020 presidential elections. However, Texas hasn’t had a Democratic governor since Gov. Ann Richards in the early 1990s, and the Cook Report has rated the race as a likely Republican hold.