Washington Weekly: Supreme Court Nomination Hearings

The Senate confirmed various Biden administration judicial appointees. The House was out of session.

The Senate is expected to vote on House-passed bills to revoke Russia’s favored trade status with the US and ban energy imports from Russia. The House will vote on legislation to decriminalize cannabis.

Russia, Ukraine and Washington.

Lawmakers this week offered a few new ideas on how to further pressure Russia. Senator John Barrasso (R-WY) suggested a ban on uranium imports from Russia, while Senate Finance Committee Chairman Ron Wyden (D-OR) proposed the elimination of certain tax credits for US companies still operating in Russia. Neither proposal is likely to be acted on anytime soon. Democratic lawmakers generally have followed President Biden’s lead on this crisis and want to give him freedom to take whatever executive actions he believes are necessary to further isolate Russia and assist Ukraine. While Republican lawmakers also support many of the actions taken by President Biden, they want him to do more to help Ukraine fight the Russians (particularly with respect to supplying more military equipment). More noteworthy than this light partisan sparring is the fact that the leadership of both parties have yet to call for a direct US role through troops in Ukraine or a no-fly zone.

Supreme Court Nomination Hearings.

After a solid performance over several days of hearings in the Senate Judiciary Committee this week, we think Judge Ketanji Brown Jackson will have enough support to be confirmed by the Senate in the upcoming weeks. No Senators disputed her credentials and temperament for the job. Judge Jackson, however, did face persistent questioning from a few committee Republicans regarding her rulings in child pornography cases. Ultimately, she didn’t satisfy those Republicans, but nor did she lose ground with any Democrats on the committee. Her confirmation vote will require at least 50 votes in the Senate (with Vice President Kamala Harris as a tie-breaking vote). At this time, we believe all 50 Democrats will support Judge Jackson and thereby ensure her confirmation. The vast majority of Republicans will vote against her for philosophical reasons, although she may get the support of one or two. We expect Judge Jackson to be confirmed in the next couple of weeks, though the exact timing will be dependent on the availability of all Democratic Senators (several were absent this week due to Covid).

Gas Prices.

With gas prices at record levels (48% higher than a year ago), Democratic lawmakers have floated a variety of ideas to provide Americans some relief at the pump. One bill would provide individuals with a $100 rebate check each month the national gas price average exceeds $4 per gallon in 2022. Another would provide quarterly payments funded by a tax on large oil companies (a 50% tax on the difference between the current price of a barrel and the average price between 2015 to 2019). A third proposal would establish a rebate by further taxing oil companies’ profits for this year. In all three proposals, support only would be provided to individuals making under $75,000 per year and couples making under $150,000. Another proposal still on the table is a temporary waiving of the federal gas tax through the end of the year. Republican lawmakers argue that significant federal spending increases have been a root cause of inflation and oppose these measures. While one or more of these proposals could be approved in the House in the next few weeks, none will be able to muster the 60 votes needed to advance in the Senate. Despite this reality, Democrats hope that their efforts on these bills will at least provide a political advantage in showing voters that they feel their pain at the pump.

Biden Budget for 2023.

The submission of a budget proposal for the upcoming fiscal year is an annual exercise required by law. In line with that requirement, President Biden is expected to submit his spending plan for federal agencies and activities for fiscal year 2023 (which begins on October 1) on Monday. While Congress doesn’t often act on a president’s budget, the proposal does have significance as a statement of President Biden's budget priorities for the federal government. Not surprisingly, President Biden's budget priorities are expected to include health care, education, IRS enforcement and a wide array of domestic spending initiatives. The budget proposal will likely call for a lower increase in defense spending. More broadly, the two parties’ disagreements about the proper size and function of government and the acceptability of deficit spending will continue to be important political issues on display in the 2022 mid-term and 2024 elections

Climate Disclosure.

The SEC this week issued its long-awaited proposal to mandate corporate disclosure of climate risks. The Commission approved the proposal in a 3-1 vote, with the lone Republican commissioner raising strong objections. Under the proposal, companies would be required to disclose information about the physical and transition risks of climate change, how those risks impact their business, and how they are managed and overseen. They also would be required to disclose their greenhouse emissions and specific information about efforts to reduce emissions or meet other climate risk reduction goals. Importantly, companies would need to disclose direct and indirect emissions from their business operations, but also indirect emissions by suppliers and customers in their value chain, which can be hard to quantify. Concerns about the proposal will be voiced not only in the formal comment process, but also in eventual nomination hearings for two open spots on the Commission (one is an open seat for a Republican, while the other is for a Democratic commissioner who recently announced her intent to leave). The administration and Democrats see climate risk as an urgent issue and SEC Chair Gary Gensler will want to move quickly in finalizing this rule proposal, though the personnel movement at the Commission could be a complicating factor. Moreover, with Republicans and some business groups questioning the legal authority for the SEC to mandate some of these disclosures, this issue likely will end up in the courts

Voting from the House (Literally).

As a response to Covid in May of 2020, House Speaker Nancy Pelosi (D-CA) established a temporary rule in the House allowing members to cast their votes via proxy. Through a process put in place by the Speaker, members can provide another Representative with instructions for how their vote should be cast if they felt their health was threatened by physically being in Washington, DC to cast their vote. In 2021, 351 of the 435 House members utilized this proxy vote option at least one time; nine percent of all House votes last year were made remotely. While considered temporary, this voting option is still in place although it is scheduled to lapse on March 30. The Speaker could further extend it or let it lapse. Some members have understandably grown fond of the rule and want to see it become permanent, though we don’t think this will happen. Our review of last year’s voting records indicates that just shy of 50 members cast more than 100 votes remotely. House Republican leadership has vowed to reimpose mandatory voting from the Capitol next year if they have a majority, but in the meantime, we think there is a pretty good chance that the Speaker and House Democrats will extend the March 30 deadline and allow for proxy voting into the summer.

Donor Advised Funds (DAFs).

DAFs, which allow investors to donate to a charitable fund while maintaining control over the assets, have become more popular in recent years. In fact, an estimated $160 billion is currently invested in DAFs. While lawmakers generally appreciate the support DAFs provide to philanthropic causes, some lawmakers are concerned about their lack of a payout requirement. This contrasts with private foundations, which must make annual contributions exceeding five percent of their assets. Senators Chuck Grassley (R-IA) and Angus King (I-ME) introduced a bill last year that would require DAFs to provide funding to charities within 15 years in order to receive the full tax benefit. A House companion to this bill was introduced last month. This issue also was spotlighted at a recent Senate Finance Committee hearing. Despite the uptick of activity, we are skeptical that these proposed changes to DAFs will be enacted into law this year. However, we will be keeping a close eye on the issue given the potential for it to be tucked into a year-end legislative package.

First in the Nation.

Most voters think of Iowa and New Hampshire when they think of the states that vote early in the presidential primary election process since those states have held pole positions for the past half century. This week, national Democratic Party officials circulated a draft plan for the 2024 Democratic primary nomination process that could change which states hold early elections in their primary elections. This draft would base eligibility off of the diversity of the electorate, competitiveness of the state in general elections and the ability of the state to administer a “fair, transparent and inclusive” election process. No more than five states would be allowed to hold their contests before the first Tuesday in March (currently Iowa, New Hampshire, Nevada and South Carolina all do). While the draft plans are far from final, they do reflect Democrats’ efforts at changing the process after reporting glitches during the 2020 Iowa caucuses as well as a broader belief that the early nominating states should be more reflective of the party as a whole. There will be many changes made along the way, but it seems that a state like Iowa’s status as the first state in the nation for primary voting is in jeopardy.