capitol building

This Week:

The Senate dismissed the articles of impeachment against Department of Homeland Security Secretary Alejandro Mayorkas (see below) and confirmed various Biden administration judicial nominees. It is expected to vote today on the House-passed bill to reauthorize a national security surveillance program that expires today. The House passed several bills to condemn and further sanction Iran for its attack on Israel (see below) and a bill to prevent law enforcement and intelligence agencies from obtaining subscriber or customer records from data brokers. It also plans to vote Saturday on foreign aid bills for Ukraine, Israel and the Indo-Pacific region (see below).

Next Week:

Both the Senate and House will be out of session and return to Washington the week of April 29.

The Lead

Foreign Aid – A Change of Plans.

Iran’s military strikes against Israel over last weekend gave renewed urgency in the House for considering foreign aid funding. Not only are the various aid measures considered more pressing, they are also now more likely to be approved. Rather than combining aid for Ukraine, Israel and Taiwan into a single package, the House will vote Saturday on three separate aid measures, including:

  • Ukraine. The first bill contains $61 billion for military aid to Ukraine. This includes new weapons and replenishment of defense services and articles already provided by the US. There also are funds to enhance US oversight and accountability of aid and equipment provided to Ukraine. Some House Republicans (and former President Trump) have been vocal about opposing this aid, but we believe it will pass with a bipartisan majority.
  • Israel. The second bill contains $26.3 billion to support Israel. It primarily covers funds for the procurement of advanced weapons, artillery, munitions and the replenishment of current US defense services. Importantly, there are no conditions for the use of this aid based upon how Israel conducts war efforts in Gaza and elsewhere. We expect this bill to be approved, though many House Democrats will oppose it because of the lack of these conditions.
  • Taiwan and Indo-Pacific Security. The third bill contains $8.1 billion to help Taiwan strengthen its military and generally enhance US military capabilities in the Indo-Pacific region. This bill is non-controversial and should pass easily as most lawmakers recognize its importance to counter-balance China.
  • Add to the Deficit. The funding in the three bills will not be offset by spending cuts and/or tax increases and while some of the funding to Ukraine is technically a loan, it likely won’t be collected on. All of the other funding will therefore be added to the annual budget deficit and national debt. Some lawmakers have expressed concern over this, but most have cited the emergency nature of the funds and the threatening predicaments the recipient countries are in.

Plus One More.

As a means of appealing to House Republicans that are unhappy with the aid packages, Speaker Mike Johnson (R-LA) is also having a vote on another bill. This bill contains a requirement to use frozen Russian sovereign funds held in the US in the reconstruction of Ukraine. The measure also would require ByteDance to divest its ownership of TikTok within one year in order to avoid having the popular app banned from the US market (this provision is very similar to legislation passed in the House in March). It also contains various new sanctions on Russia, China and Iran. We also expect this bill to be passed, which will serve to fast-track the TikTok legislation into law, which we had earlier predicted would occur after the election. The future use of frozen Russian sovereign funds for Ukraine, meanwhile, will be on a much slower path as the US will consult with allies and try to develop a unified plan on the use of these funds globally, which will be tricky from legal and precedent-setting perspectives.

Why This New Approach?

Speaker Johnson had been struggling to identify the right ingredients of a single bill to provide the military aid without alienating some Republican lawmakers. Iran’s military action against Israel created the urgency he needed to call for a quick vote and pass the bill for Israel without conditioning the aid (as many House Democrats have demanded). We think the new atmosphere is more favorable to passing these bills and that all four of these bills listed above will pass the House tomorrow night.

Will the Bills Pass in the Senate?

We think so. They’ll be combined into one bill and sent to the Senate shortly after House passage. President Biden has signaled his support for them, and a strong bipartisan majority in the Senate understand this is the best and final chance at getting this aid passed into law.

Other Issues in Play

Homeland Security Chief Impeachment in the Senate.

The Senate voted along party-lines to dismiss the House impeachment of Department of Homeland Security Secretary Alejandro Mayorkas. The Democratic-controlled Senate was always expected to acquit Secretary Mayorkas following his impeachment in the House in February, but the surprise was that the Senate didn’t conduct a trial before it was dismissed. Senate trials historically have followed House impeachments, but Senate Democrats dismissed the trial because they believe the case against Mayorkas didn’t meet the standards of impeachment. This action gives the Senate free reign in dismissing future impeachments from the House without a trial (imagine if that had happened following Trump’s two impeachments). This poses constitutional questions, though the lack of a trial at this time helps Senate Democrats avoid a boisterous public debate that would have focused on the Biden immigration record and problems along the southwest border. The Senate action this week adds a little fuel to the fire of the national immigration debate, which continues to be a significant headwind for Democratic lawmakers and President Biden.

Tariffs on China.

President Biden announced his intent to triple tariffs on Chinese-made steel and aluminum into the US, continuing a policy trend that began in the Trump administration to address alleged unfair Chinese trade practices. The President’s US Trade Representative, Katherine Tai, will soon make this development official. She also is likely to increase tariffs in other areas, including solar panels and electric vehicles. The Biden’s administration’s use of tariffs as pillars of its trade policy with China is similar to how President Trump dealt with China on trade issues. President Biden tied his announcement into a campaign event in the swing state of Pennsylvania with the steel union, underscoring trade’s impact on the presidential election. The reality is that much of the US-China trade relationship over the next few years will feature higher tariffs on a growing list of products. The bigger question may be to what extent this policy of tariffs will be applied to other sectors and countries that are perceived to be trading unfairly (think the EU).

Regulatory Review.

The House Financial Services Committee this week held a mark-up featuring several resolutions under the Congressional Review Act (CRA) to try to overturn recent regulatory actions by the Biden administration. These include the SEC’s climate disclosure rule and a rule by the Consumer Financial Protection Bureau to limit credit card late fees. The resolutions passed out of the committee on a party-line basis (and likely will pass the House in the coming weeks). CRA resolutions have a procedural advantage of only needing a majority vote (instead of a super-majority of 60 votes) to advance in the Senate. However, even if these resolutions were to pass narrowly in the Senate, they would face a veto from President Biden. While the CRAs are currently a message vehicle for Republicans to voice objections with Biden administration regulations, they could become impactful if Republicans were to take control of the House, Senate and White House in the November elections. Since rules are subject to the CRA within 60 legislative days of their finalization, regulators have an interest in finalizing pending regulatory proposals in the first half of the year and are currently working hard toward that end.

The Final Word

Young People and America.

We read a lot of polls on policy and politics, but one in particular caught our attention this week. A Harvard Kennedy School’s Institute of Politics poll found that a mere 9% of voters aged between 18 and 29 believe that the US is generally headed in the right direction. Just short of 60% said they believed the country is headed in the wrong direction. The poll didn’t elaborate on the reasons for this glum outlook, but a couple of things come to mind. This age group has fewer experiences in life as adults or near-adults, but one is covid, which was devastating to most and just an ugly time in general for all of society. Also, inflation has hit young people particularly hard, and may be the primary economic condition they have faced as adults. There are surely other reasons, but this dismal outlook from younger people needs to be addressed and reversed.