Dispatch from Washington: February 2024

House Speaker Mike Johnson (R-LA) is facing intense criticism following several embarrassing setbacks, and the hard-right flank of the Republican Conference is pondering open revolt. For the first time in over 150 years, the House has impeached a Cabinet Secretary, Homeland Security Secretary Alejandro Mayorkas—his upcoming trial in the Senate will put the brakes on any legislative business in the upper chamber at a critical time with a potential government shutdown looming. Following the failure of the bipartisan border negotiations, Senate Majority Leader Chuck Schumer (D-NY) advanced new foreign aid legislation to provide funding for Ukraine, Israel, and Taiwan, setting up a showdown with the House. The Federal Reserve held interest rates steady following the latest Federal Open Market Committee meeting. The most recent Labor Department data shows a white-hot jobs market far exceeding expectations but complicating potential interest rate cuts. The House passed a $78 billion bipartisan tax package, but the measure faces an uncertain future in the Senate. Recent comments from former President Donald Trump draw into question his commitment to NATO’s collective defense provision under Article V of the North Atlantic Treaty, which states that an armed attack on any member will be considered an attack on all. Leaders from the United States and European Union met in Washington for the fifth U.S.-EU Trade and Technology Council ministerial meeting. Former President Trump will get his day in (criminal) court with his first criminal trial starting March 25 in New York—meaning he will spend weeks in court instead of on the campaign trail this spring. He was also ordered to pay over $350 million in a civil fraud case.

House of Chaos

Speaker Johnson suffered a series of strategic blunders and embarrassments in February as successive measures brought to the floor failed to pass. First, the impeachment of Department of Homeland Security Secretary Alejandro Mayorkas, a high-level priority for the House GOP, led by the impeachment’s chief sponsor, Congresswoman Marjorie Taylor Greene of Georgia, failed epically. The GOP leadership knew it had three no-votes going into the highly awaited showdown, and the Speaker spent several frantic minutes huddled on the floor with members and aides before the vote, a sign of the trouble ahead, which erupted into a noisy and rowdy scene. Ultimately, it failed as one widely expected Democratic no-show, Congressman Al Green of Texas, who briefly left the hospital after emergency surgery, made it to the vote, resulting in a 215-215 tie—meaning the resolution would fall short. The House would take up the impeachment measure again, passing by a single vote (see next section), but the whole episode illustrated Johnson’s weak hold on power and a deficient whip operation. The second embarrassing moment for Johnson came just hours later when a bill to provide an additional $17 billion in aid to Israel was brought up and failed. This measure was presented to the House under “suspension of the rules” due to the hard-right composition of the House Rules Committee, meaning it needed a two-thirds majority for passage. A third blunder happened when Johnson scheduled a vote on a bill to expand deductions for state and local taxes, desired by New York Republicans who are increasingly politically endangered. However 18 Republicans blocked the measure from consideration by voting against the “rule” for debate, further demonstrating a whip operation left wanting. This was also the sixth time during this Congress that a “rule” has failed. Speakers John Boehner, Nancy Pelosi, and Paul Ryan never lost a rule vote during their tenures, and a “rule” hadn’t failed in over 20 years before this Republican-led Congress. 

Johnson will be tested again very soon as Senate Majority Leader Schumer forced through a foreign aid package for Ukraine, Israel, and the Indo-Pacific. Mr. Johnson will then decide whether to bring up the aid package (see section on supplemental foreign assistance). Additionally, in the coming weeks, Congress will need to pass FY2024 spending bills—the first tranche of federal spending expires on March 1 and the second on March 8 (see section on the looming shutdown threat below). 

Mayorkas Impeachment Complicates Government Funding Fight

 After failing in their first attempt, House Republicans narrowly secured a historic vote to impeach Homeland Security Secretary Alejandro Mayorkas. Mayorkas is the first Cabinet official to be impeached since the 1870s. The 214-213 vote is a recovery from an embarrassing episode for Speaker Mike Johnson, whose conference was unable to pass the same articles of impeachment a week prior (see previous section). The case for impeachment was an unusual one, spurring criticism from conservative legal scholars as well as the opposing Republican Representatives who argued their colleagues did not meet the bar for impeachment. The articles are not expected to be approved by the Democrat-led Senate, and it is unclear how much consideration they will get in the upper chamber. Nevertheless, under the Constitution, the Senate must consider articles of impeachment, where the Senate sits as a “High Court of Impeachment” to consider evidence and hear from witnesses. Senate Majority Leader Chuck Schumer (D-N.Y.)’s office announced that Senate President Pro Tempore Patty Murray will preside over the impeachment trial with Senators being sworn in as jurors when the Senate returns to Washington on February 26. Two-thirds of the Senate must vote to convict in order to remove Mayorkas from office—simply impossible in the Democratic-controlled Senate. When the Senate convenes as a Court of Impeachment, it is in a distinct procedural mode, different from legislative session, where it considers bills and resolutions, and executive session, where it considers treaties and nominations. Further complicating the legislative calendar, the trial is set to start the same week that some government funding will expire.

Looming Federal Funding Fight

 Yet again, Congress faces a federal funding fight. Under the stopgap bill passed in January, Congress is staring down two cutoff dates in March to keep the government funded. This was the third Continuing Resolution passed by Congress to prevent a government shutdown this fiscal year. The January-passed measure extended the “laddered” approach from the previous continuing resolution (called a “CR”), with the first set of appropriations bills expiring on Friday, March 1 (covering funding for Agriculture, Energy-Water, Military Construction-Veterans Affairs, and Transportation-Housing and Urban Development), and the second set of appropriations bill set to expire a week later, on Friday, March 8 (covering Commerce-Justice-Science, Defense, Financial Services-General Government, Homeland Security, Interior-Environment, Labor-Health and Human Services-Education, Legislative Branch, and State-Foreign Operations bills).

In early January, Congressional leaders announced a deal on topline appropriations levels for fiscal year 2024, which could pave the way for the completion of appropriations measures. The agreement provided $773 billion in non-defense discretionary spending and $886 billion in defense spending.  While the questions about total spending levels are settled in the $1.66 trillion agreement announced last month, which is in line with the framework of the deal President Biden and former House Speaker Kevin McCarthy struck last spring, the devil is in the details and House and Senate negotiators are far apart on the details of funding legislation. 

Quite simply, there is an agreement on how much to spend but not how to spend it—if they can’t make progress by the deadlines, Congress will probably have to pass another temporary extension this month or face at least a partial shutdown. The possibility of another temporary extension was recently shot down by House Majority Whip Tom Emmer (R-MN), raising the prospect of a government shutdown. Further complicating matters is that Speaker Johnson will likely have to bring funding measures before the House under “suspension” to avoid having to clear legislation through the Conservative-packed House Rules Committee—such measures would need two-thirds support in the House to pass. Time is short—the House and Senate are both currently in recess, and the House isn’t scheduled to reconvene until February 28, barely 24 hours before the government shuts down without congressional action. And the House still has no spending plan. While the U.S. economy is currently quite strong, a government shutdown can drag on U.S. economic activity and rattle markets, complicating the work of monetary policymakers (see next section). 


Supplemental Foreign Assistance Bill Passes in the Senate, Absent Border Measures

While House Republicans tied themselves in knots over aid to Israel and threatened to block further assistance to Ukraine without ill-defined conditions on border policy, the United States Senate broke through a filibuster and passed a $95 billion foreign aid package. The measure includes over $60 billion for Ukraine, $14 billion for Israel, and nearly $5 billion to support partners in the Indo-Pacific. It notably does not include bipartisan border provisions.

The border provisions were the subject of deep bipartisan negotiations over months that were scuttled following Trump’s interventions and the determination that Republicans would rather campaign on border failures than advance and support policy to address the crisis. The lead Senate Democratic negotiator was stunned, and the lead Republican negotiator, Senator James Lankford of Oklahoma, said he received threats from prominent commentators to “destroy” him because he was trying to solve a crisis during a presidential election year. The breakdown of the bipartisan agreement was a blatantly and purely cynical political move by those seeking political advantage over policy settlement to help Trump’s electoral prospects.

Following the breakdown in those talks, Majority Leader Schumer advanced a “clean” foreign assistance bill providing funding for Ukraine, Israel, and Taiwan. Senate Minority Leader Mitch McConnell (R-KY), who is the longest-serving leader in Senate history and who has an increasingly shaky hold on a conference in thrall to Trump, endorsed the measure—putting him on the other side of the issue from a conference that increasingly takes its cues from Trump. The foreign aid package will now head to the House, where its future is uncertain. Speaker Johnson will face a similar crisis of conscience to McConnell in trying to reconcile whether to assist several allies at war or placate his Trumpian base; the more complicating factor is that any single member of Johnson’s conference can call for his dismissal and force a vote of the whole body.  

Federal Reserve Holds Interest Rates Steady

Following the January Federal Open Market Committee (FOMC) meeting, Federal Reserve officials opted to maintain the current target fed funds interest rate range between 5.25% and 5.5%. High-interest rates are meant to weigh on economic demand by making it more expensive to borrow money, and the Fed thinks that its current stance is high enough to weigh on growth meaningfully. Interest rates have been at their highest level in more than two decades, and Federal Reserve Chairman Jerome Powell said that officials wanted to see continued progress on curbing inflation before lowering rates. At a press conference following the FOMC meeting, Powell said, “We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.” There has been relatively good economic news lately—inflation has been coming down (although the latest Consumer Price Index complicates the picture), the jobs market remains strong (see next section), and overall economic growth is solid. Nevertheless, policymakers are attempting to navigate a “soft landing” for the U.S. economy by tightening monetary policy to bring down inflation without tipping it into a recession. The Federal Reserve’s most recent economic forecast, released in December, predicted that officials could lower borrowing costs by three-quarters of a percentage point over the course of 2024—a fresh set of interest rate and economic projections will be released at the next FOMC meeting on March 19-20. While markets are still expecting three rate cuts this year, Power said that he did not think it was “likely” that Fed officials would have enough evidence to cut interest rates by their March meeting, meaning that the May and June meetings may be when policymakers consider their first rate cut. 

Hot Jobs Market Complicates Potential Rate Cuts

 The labor market in the United States is running red hot. According to data released by the Labor Department on February 2, over 350,000 jobs were added to the economy in January—double what many economists predicted. Hiring in December was also more robust than previously thought, with revisions showing that 333,000 jobs were added, 117,000 more than first reported. The unemployment rate has been below 4 percent for two consecutive years, a historic stretch we have not seen in over 50 years. Nevertheless, the hot labor market complicates the Fed’s plans to lower interest rates as officials might fear that signs of a heated labor market will keep inflation challenging, especially as the supply-side factors helping cool price pressures fade away. It is difficult to imagine the Fed cutting interest rates as long as the economy is adding 300,000 jobs a month and wages are reaccelerating.

Hot Jobs Market Complicates Potential Rate Cuts

In January, the House easily passed a $78 billion bipartisan tax package to extend multiple tax breaks that would expire in 2025, should it pass the Senate, teeing up a major tax battle for the next Congress after the 2024 elections. The House-passed package, entitled the Tax Relief for American Families and Workers Act, boosts the child tax credit and reinstates business deductions that were rescinded during the Trump administration. Passing the House with a vote of 357 to 70, the measure awaits an uncertain future in the upper chamber, with some Senate Republicans calling for hearings and others eager to make changes to the bill. Senate Majority Leader Chuck Schumer (D-NY) has expressed support for the tax bill and is working with Senate Finance Committee Chairman Ron Wyden (R-OR) “to figure out the best way forward.” While this is one of the few instances this Congress when a nonessential bill — legislation that is not required to keep the government running — has a chance of being enacted, its future remains in question.

Fifth U.S.-EU Trade and Technology Council Ministerial Held in DC

Leaders from the United States and European Union convened in Washington in late January for the fifth U.S.-EU Trade and Technology Council (TTC) ministerial meeting. The TTC was designed to serve as a biennial gathering of key leaders from both sides of the Atlantic to try and make progress on a range of trade, technology, and security issues. During the joint press conference with European counterparts, Secretary of State Antony Blinken said that the TTC “has been an indispensable tool for transatlantic economic cooperation.” Nevertheless, January’s gathering was somewhat subdued and low-key compared to past Ministerial meetings—there was no official communiqué, no formal readout (just joint press releases), and no overarching theme. The U.S. and European Union also failed to reach a trade deal for critical battery minerals—a matter considered to be a priority. After the talks, European Commission Executive Vice President Valdis Dombrovskis said that there remain some “outstanding issues,” including aspects of the Inflation Reduction Act, a massive piece of legislation providing billions in green energy subsidies that the EU sees as discriminatory. There are significant irritants in the relationship—speaking alongside EU digital chief Margrethe Vestager at a side event hosted by the Atlantic Council, U.S. Secretary of Commerce  Gina Raimondo acknolwedged the points of frustration and friction “but fundamentally what binds us is massively more consequential than the irritants.” Raimondo further argued that the TTC has offered the transatlantic partners another opportunity to build trust, collaborate, and share information. The two sides agreed to hold a sixth ministerial meeting in April in Belgium, expected to be the last before EU and U.S. national elections this year.

Trump’s Trials & Tribulations

Former President Donald Trump’s first criminal trial will start March 25 in New York on charges stemming from hush money payments to porn star Stormy Daniels. In this case, Trump faces 34 felony counts of falsifying business records connected to the payments, allegedly arranged through an intermediary in the closing weeks of the 2016 presidential campaign. The schedule for Trump’s hush money case in New York means he will spend weeks in court instead of on the campaign trail this spring. This is the first of Trump’s four criminal prosecutions to proceed to trial as he barrels toward the Republican nomination. The schedules for the other three cases — two for attempting to overturn the 2020 election results and one for hoarding classified documents — remain unclear.

The first election interference trial, being held in Washington, DC, was originally set for March 4, but the movement has been effectively frozen pending the outcome of Trump’s appeal on the legally untested question of whether a former president enjoys immunity from prosecution for actions taken while in office. That question is expected to be taken up by the United States Supreme Court. The second election interference case, brought by Fulton County District Attorney Fani Willis in Georgia, faces additional challenges due to misconduct allegations recently levied at Willis. Trump, meanwhile, also faces dozens of felony charges in Florida accusing him of illegally retaining classified documents at his Mar-a-Lago estate. That case is set for trial on May 20 but could still be postponed.

In addition to the criminal charges, Trump has lost several civil cases, and the mounting legal judgments against him could total hundreds of millions of dollars. In a civil fraud case in New York brought by New York Attorney General Letitia James, Trump was ordered to pay over $350 million and was barred from running a business in New York state for three years—the financial penalty could wipe out all his available cash according to financial filings. In May 2023, a jury concluded that Trump had sexually assaulted writer E. Jean Carroll in a department store dressing room in the 1990s and subsequently defamed her, awarding Carroll $5 million. A second defamation case produced an $83.3 million judgment in January 2024.

“Who’s Who” – Personnel Updates from the Biden Administration

Department of CommerceRose Marie Laughlin is now Deputy Assistant Secretary in the Office of Legislative and Intergovernmental Affairs. Elizabeth Kelly will be the inaugural director of the Artificial Intelligence Safety Institute. 

Department of State Dr. Kurt M. Campbell was confirmed as Deputy Secretary. Nathalie Rayes was confirmed as the U.S. Ambassador to Croatia. Nicole Dayan Shampaine was confirmed as the U.S. Representative at the U.S. Mission to the Organization for the Prohibition of Chemical Weapons. Jasmine J. Wyatt is the Deputy Chief of Staff for Policy at the United States Mission to the United Nations. Jeremy Bernton is the Chief of Staff in the Office of the Special Representative for Ukraine’s Economic Recovery. 

Department of the TreasuryDr. Aviva Aron-Dine is the Assistant Secretary for Tax Policy. Scott Levine is now the Deputy Assistant Secretary for International Tax Affairs. Ted T. Lee is the Deputy Assistant Secretary for Tax Policy.

United States Trade RepresentativeJamila A. Thompson is Chief of Staff to the USTR.

The White HouseAnnie Tomasini was promoted to Deputy Chief of Staff. Stephanie R. Psaki is the U.S. Global Health Security Coordinator and Deputy Senior Director for Global Health Security and Biodefense at Defense Policy on the National Security Council Staff. Jeff Rothblum is Director for Cyber Policy and Plans in the Office of the National Cyber Director. Ben Merkel is a Special Assistant to the President and Senate Legislative Affairs Liaison in the Office of Legislative Affairs. PaaWee L. Rivera is now a Special Assistant to the President and Chief of Staff in the Office of Scheduling and Advance. Brandon Rios is the Associate Counsel in the Office of the Vice President.



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© 2022 Created by ABCPRODUCTION.digital