All about AI

The promises and risks of artificial intelligence (AI) were the focus of work at both ends of Pennsylvania Avenue this week.
 
On Monday, President Biden issued a sweeping Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. The order sets new standards for AI safety and security, including requirements that AI developers share safety test results and other information with the government in accordance with the Defense Production Act. It directs the National Institute of Standards and Technology (NIST) to set standards for “red-team testing” before AI systems are released to the public, and orders the Department of Homeland Security to create an AI Safety and Security Board. It directs the Department of Commerce to develop guidance for content authentication and watermarking to identify AI-generated content.
 
President Biden also called on Congress to pass bipartisan data privacy legislation and provide additional support for the development of privacy-preserving technologies. He said that Congress should evaluate how the federal agencies collect and use commercially available information, and strengthen privacy guidelines.
 
The following day, the Senate HELP Subcommittee on Employment and Workplace Safety held a hearing that highlighted the potential benefits of AI for the future of work. Subcommittee Chairman John Hickenlooper (D-CO) said he felt optimistic about the opportunities presented by AI, which he sees as a technological transformation of greater magnitude than the dotcom boom. Witnesses emphasized the need for a federal regulatory framework and guardrails, in part to preempt the emerging patchwork of state and local regulations.
 
GrayRobinson’s Lily Israel assembled a summary of the President’s Executive Order; email her if you would like a copy or find the summary here. 
 
A rough week for the SEC
The U.S. Court of Appeals for the Fifth Circuit ruled on Tuesday that the Securities and Exchange Commission’s Share Repurchase Disclosure Modernization Rule is “arbitrary and capricious,” and told the SEC to correct the rule’s deficits within thirty days. The Court found that the SEC had not responded to the U.S. Chamber of Commerce’s comments on the rule, nor had it conducted a proper cost-benefit analysis. It did not vacate the rule because, the Court said, they recognized “at least a serious possibility that the agency will be able to substantiate its decision given an opportunity to do so.”
 
Also on Tuesday, the nonpartisan U.S. Government Accountability Office published its findings that the SEC’s Staff Accounting Bulletin No. 121, issued in April 2022, was actually rulemaking for the purposes of the Congressional Review Act (CRA). The CRA requires agencies to submit rules to both the House and the Senate before they take effect, so that Congress has the opportunity to block them. The SEC did not submit Staff Accounting Bulletin 121, which deals with custody of crypto assets, to Congress for review.
 
Yesterday the House Financial Services Subcommittee on Capital Markets held the last in a series of hearings on the SEC’s aggressive regulatory agenda under Chair Gary Gensler. Subcommittee Chair Ann Wagner (R-MO) said that Chair Gensler’s “rush to implement his unprecedented rulemaking agenda” was “jeopardizing the health of our capital markets.” Most of the hearing’s witnesses agreed, including two former senior SEC officials. Dalia Blass, a 14-year veteran of the SEC who left the agency as Director of the Division of Investment Management, said that the unprecedented number of substantive regulatory proposals in the past two and a half years could fundamentally change the capital markets, how investors interface with the markets, and the availability of products to meet investors’ financial goals.
 
FSOC approves new guidance for designating nonbank companies as systemically risky
This afternoon the Financial Stability Oversight Council (FSOC) unanimously approved a new analytic framework for financial stability risk identification, assessment, and response, and revised interpretive guidance on whether and how the Council will use its authority to designate nonbank financial institutions as potential threats to financial stability. The new guidance overrides guidance the FSOC approved in 2019 that would have made it almost impossible to designate a nonbank as systemically risky. Secretary of the Treasury Janet Yellen said the 2019 guidance included “several prerequisites to designation . . . that were not contemplated by the Dodd-Frank Act and that are based on a flawed view of how financial risks develop and spread.”
 
FHA updates appraisal requirements for certain manufactured home loans
Yesterday the Federal Housing Administration (FHA) issued new appraisal requirements for valuing manufactured homes certified under Fannie Mae’s MH AdvantageTM and Freddie Mac’s CHOICEHome® programs. The new requirements bring the FHA’s standards into alignment with other industry participants, and are part of the FHA’s broader efforts to increase the availability and affordability of manufactured housing as part of the Administration’s Housing Supply Action Plan.

Confirmations, Nominations, Departures

Rep. Earl Blumenauer (D-OR) announced on Monday that he will not seek reelection, ending his Congressional service after fourteen terms.

Rep. Ken Buck (R-CO) posted a video on Wednesday announcing that he will not run for a sixth term, and warning that “too many Republican leaders are lying to America” about the 2020 Presidential election and the January 6, 2021 attack on the U.S. Capitol.

Rep. Kay Granger (R-TX), Chair of the House Committee on Appropriations, announced on Wednesday that she will retire from the House at the end of this Congress.

The Week Ahead

November 7 at 10:00 a.m. House Financial Services Subcommittee on Financial Institutions and Monetary Policy holds a hearing on “The Tangled Web of Global Governance: How the Biden Administration is Ceding Authority Over American Financial Regulation.”
 
November 7 at 10:00 a.m. House Committee on Ways & Means holds a hearing on “Ensuring that ‘Woke’ Doesn’t Leave Americans Broke: Protecting Seniors and Savers from ESG Activism.”
 
November 7 at 10:00 a.m. Senate Commerce Subcommittee on Tourism, Trade, and Export Promotion holds a hearing on “Sustainable Tourism for a Thriving Economy.”
 
November 8 at 9:30 a.m. Senate Committee on Homeland Security & Governmental Affairs holds a hearing on “The Philosophy of AI: Learning from History, Shaping Our Future.”
 
November 8 at 10:00 a.m. House Financial Services Committee holds a hearing on “A Review of Our Sanctions Regime and Efforts to Combat Terrorist Financing.”
 
November 8 at 10:00 a.m. House Committee on Small Business holds a hearing on “Burdensome Regulations: Examining the Effects of Department of Energy Regulations on America’s Job Creators.”
 
November 8 at 10:00 a.m. Senate Committee on Environment & Public Works holds a hearing on “Accessing Clean Water Infrastructure Assistance: Small, Rural, Disadvantaged, and Underserved Communities.”
 
November 8 at 2:00 p.m. House Oversight Subcommittee on Cybersecurity, Information Technology, and Government Innovation holds a hearing on “Advances in Deepfake Technology.”

The Ellis Insight - Jim Ellis on political news

PRESIDENT

Mike Pence: At the Republican Jewish Coalition event in Las Vegas, former Vice President Mike Pence, saying it is evident that “now is not my time,” suspended his 2024 presidential campaign. Mr. Pence follows former U.S. Rep. Will Hurd and commentator Larry Elder in dropping out of the presidential race. Upon his exit, Mr. Pence did not endorse another candidate. Mr. Hurd now supports former UN Ambassador Nikki Haley, while Mr. Elder is backing former President Donald Trump.

Iowa: According to the new Selzer & Company poll for the Des Moines Register newspaper (10/22-26; 404 IA likely Republican Caucus attenders; live interview), former President Donald Trump is still enjoying a healthy lead over the Republican field, but his support level appears stationary. 

According to this survey, he has 43% of the impending Iowa Caucus vote, scheduled for January 15, 2024. This is a one point increase from Selzer’s August survey. Tied for second place are Florida Gov. Ron DeSantis and ex-UN Ambassador and South Carolina Governor Nikki Haley. Both record 16% support. 

New Hampshire: A group of leading Democrats, including the state’s two Senators and their pair of U.S. House members, as well as all ten Democratic state Senators and most of the party’s large delegation to the state House of Representatives, are forming an organization to qualify President Biden as a write-in candidate for the still unscheduled Democratic presidential primary. Mr. Biden is choosing to bypass New Hampshire because the state did not agree with the new Democratic National Committee presidential primary scheduling recommendations. 

Though the show of internal Democratic strength is positive for the Biden campaign, their move also increases the stakes for the New Hampshire primary. U.S. Rep. Dean Phillips (D-MN) is a candidate and will secure a ballot position. Therefore, the pressure would be on the Biden write-in effort to defeat Phillips, otherwise his national campaign would begin with a major political black eye.

Quinnipiac Poll: A new national Quinnipiac University survey (10/26-30; 1,772 US Adults; 1,610 US registered voters; live interview) finds Robert F. Kennedy, Jr., running as an Independent general election candidate, securing 22% support in a ballot test featuring he, President Joe Biden, and former President Donald Trump. The Kennedy presence dragged both President Biden (39%) and Mr. Trump (36%) below the 40% mark. Mr. Kennedy’s strongest groups were voters aged 18-34 (38%), Independents (36%), and Hispanics (33%).

As has been the case with other polling, Mr. Kennedy draws slightly more support from the Trump/Republican coalition than he does from the Biden/Democratic voter group. In this particular survey, 14% of Republicans and 12% of Democrats support Kennedy.

SENATE

New Jersey: New Jersey First Lady Tammy Murphy (D) may be joining the U.S. Senate race. Rumored to be a candidate once the scandal involving incumbent Sen. Bob Menendez (D) broke, Ms. Murphy had not taken any official step to create a formal campaign. That changed this week as she filed a senatorial exploratory committee with the Federal Election Commission but stopped short of declaring her candidacy. An announcement may be coming soon.

Ms. Murphy may have a difficult time in the Senate Democratic primary. Sen. Menendez, though faring poorly in early polling, has not indicated that he will resign or retire. Rep. Andy Kim (D-Moorestown) immediately announced his Senate primary entry upon the Menendez indictment becoming public and has jumped out to an early lead. 

An early October Data for Progress poll showed Mr. Kim leading an entire proposed candidate field, including Sen. Menendez, by a large margin. Ms. Murphy stood at just 4% support.

Texas: YouGov, polling for the University of Texas, conducted a new statewide poll of the Lone Star electorate (10/5-17; 1,200 TX registered voters; 568 likely Republican primary voters; 409 likely Democratic primary voters; online; weighted sample). 

In testing the Senate Democratic primary, the pollsters found U.S. Rep. Colin Allred (D-Dallas) leading state Sen. Roland Gutierrez (D-San Antonio), 2022 congressional candidate Sherri Taylor, former Nueces County District Attorney Mark Gonzalez, and state Rep. Carl Sherman (D-Dallas) 21-10-3-2-2%, respectively. Nine additional names were also included on the ballot test question.

Though Rep. Allred, the Democratic establishment backed candidate, has a lead in polling and certainly fundraising, the large field and his underwhelming early support total suggests it will be difficult for him, or any other candidate, to win the primary outright on March 5. Therefore, advancing to a May 28 runoff election between the top two Democratic primary finishers appears a likely result.

HOUSE

AL-1: The recently completed court-driven Alabama congressional map creates a new majority minority district anchored in the capital city of Montgomery, but then stretches southwest to encompass downtown Mobile. Now we see that the draw results in a pairing of two Republican Congressmen. Two-term Rep. Barry Moore (R-Enterprise) announced that he will challenge Rep. Jerry Carl (R-Mobile), also serving his second term, in the state’s new 1st District. The seat now spans the entire width of southern Alabama from the Mississippi border to Georgia.

This will be a short-term paired campaign in that the Alabama state primary is held concurrently with the Super Tuesday presidential vote on March 5. Should no one receive majority support, the top two finishers will advance to an April 2 runoff election. This version of AL-1 favors Rep. Carl in that he already represents 59% of the new territory as compared to 41% for Rep. Moore. 

AZ-8: Trent Franks (R), who was elected eight times to the House but was forced to resign when discovered that he was asking two female staff members to be surrogate mothers for him and his wife, announced that he will enter the open 8th District race next year with the goal of succeeding his successor. Rep. Debbie Lesko (R-Peoria), who won the seat in a 2018 special election after Franks’ resignation, is retiring. 

Mr. Franks’s reappearance in Arizona politics is a surprise, and he is certainly no lock to win the August 2024 Republican primary. Already, nine other Republicans have declared their candidacies, including 2022 U.S. Senate nominee Blake Masters, state House Speaker Ben Toma (R-Peoria), 2022 Attorney General nominee Abe Hamadeh, and state Sen. Anthony Kern (R-Paradise).

CO-4: Five-term Colorado U.S. Rep. Ken Buck (R-Windsor) announced that he will not seek re-election next year, saying, “I always have been disappointed with our inability in Congress to deal with major issues and I’m also disappointed that the Republican Party continues to rely on this lie that the 2020 election was stolen and rely on the 1/6 narrative.” 

Rep. Buck has been an outspoken critic of his party in recent weeks, and his retirement is unsurprising. He had been rumored to be looking at potential media commentator openings as a Republican on the liberal CNN and MSNBC channels. 

The 4th District, which covers most of eastern Colorado, is the strongest Republican seat in the state. The FiveThirtyEight data organization rates the seat as R+26. Former President Trump carried the district with a 58-40% margin in 2020. The Daily Kos Elections site ranks CO-4 as the 115th most vulnerable seat in the 222-member Republican Conference.

MO-1: St. Louis County Prosecuting Attorney Wesley Bell (D), who was challenging for the Democratic U.S. Senate nomination, announced he is ending his statewide bid and will instead launch a primary challenge against Congresswoman Cori Bush (D-St. Louis). Four Democrats opposed Rep. Bush in the 2022 election, two years after she upset veteran Rep. Lacy Clay (D), but she was easily renominated with 69.5% of the primary vote. 

Mr. Bell will be a credible challenger, but Rep. Bush must be viewed as the favorite for renomination and then an easy re-election in a 1st District that the FiveThirtyEight data organization rates as D+52.

NY-16: Pastor Michael Gerald (D) announced that he is putting his Democratic primary challenge against Rep. Jamaal Bowman (D-Yonkers) on hold until Westchester County Executive George Latimer (D) decides whether he will run for Congress. Rep. Bowman has been on the hot seat regarding being found guilty of deliberately pulling a fire alarm in the Cannon House Office Building and could face an expulsion resolution. Obviously, this has generated negative publicity for the Congressman.

Prior to winning the county executive position in the 2017 election, Mr. Latimer served in the New York State Senate and Assembly. Westchester County contains 91% of NY-16, so a Latimer challenge to Rep. Bowman, should it materialize, would become a major campaign.

OR-3: Fourteen-term Oregon US Representative Earl Blumenauer (D-Portland) announced this week that he will retire at the end of the current Congress. Mr. Blumenauer, first elected to the House in a 1996 special election, has served in public office consecutively since 1973, including his time in the Oregon House of Representatives, the Multnomah County Commission, and as a Portland City Commissioner, in addition to his 27 years in Congress. He currently serves on the Ways & Means and Budget Committees.

Rep. Blumenauer leaves a safely Democratic Portland suburban anchored seat that covers Hood River County and parts of Multnomah and Clackamas counties. The FiveThirtyEight data organization rates as D+43. Dave’s Redistricting App calculates a whopping 70.5D – 25.0R partisan lean. The Daily Kos Elections site ranks OR-3 as the 155th most vulnerable seat in the Democratic Conference.

TX-12: U.S. House Appropriations Committee chair Kay Granger (R-TX) declared that she will not seek a 15th term next year. Before winning the 1996 congressional election, Ms. Granger served as Mayor of Ft. Worth. 

The 12th District is anchored in the city of Ft. Worth, which covers approximately 31% of Tarrant County, and then stretches west to annex about 80% of Parker County. The FiveThirtyEight data organization rates TX-12 as R+24. Former President Trump carried the district with a 58-40% margin in 2020. 

The Daily Kos Elections site ranks TX-12 as the 108th most vulnerable district in the Republican Conference. There are now 24 open seats for the next election. Of those, 15 are currently Democratic held, 8 by Republicans, and one Alabama seat that the new redistricting plan created.

GOVERNOR

Utah: State Representative and former San Juan County Commissioner Phil Lyman (R-Blanding), who was jailed at one point for misdemeanor trespassing (in relation to a land use protest) and includes his mugshot in his campaign announcement video, will challenge incumbent Republican Gov. Spencer Cox in next year’s party nominating convention, and possibly the June 25 primary.
 
In Utah, the party convention can send two candidates directly to the primary election with at least 40% delegate support. Candidates can also petition onto the ballot by obtaining 28,000 registered voters’ signatures. Since Mr. Lyman is campaigning against Gov. Cox from the right, he may be able to reach the 40% plateau in a convention where the vast majority of delegates are to the right of the incumbent. Gov. Cox should still be favored to prevail in a primary fight and in the general election.

West Virginia: Though Democrats are viewed as a clear underdog to convert the open West Virginia Governor’s mansion next year, the party now has a candidate capable of running a credible general election campaign. Huntington Mayor Steve Williams (D) announced his candidacy late last week. He is a former state Delegate and ex-Huntington City Manager. 

Republicans are headed for a competitive gubernatorial primary among Attorney General Patrick Morrisey, state Delegate Moore Capito (R-Charleston), Secretary of State Mac Warner, and businessman Chris Miller. Mr. Capito is the son of U.S. Sen. Shelley Moore Capito (R-WV), and Mr. Miller is US Rep. Carol Miller’s (R-Huntington) son.