Dianne Feinstein, 1933-2023

Our workday started with the news that Senator Dianne Feinstein (D-CA) died last night at her home in Washington, D.C. The first woman elected to the Senate from California, Feinstein spent her life in public service, rising from a seat as a San Francisco County Supervisor to become Mayor of San Francisco. She was elected to the Senate in 1992 and served stints as Chair of the Rules Committee, the Senate Narcotics Caucus, and the Committee on Intelligence. Our sympathies to her family, friends, and staff.
 
Shutdown looms as House rejects continuing resolution
The federal fiscal year ends at midnight on Saturday, along with appropriations that keep the government running. A House bill to keep the federal government open through the end of October failed this afternoon by a vote of 198-232, with 21 Republicans voting against the measure. The Senate is working on its own bipartisan bill to fund the government through November 15, but will probably not be able to vote on it until Sunday. It would be up to Speaker of the House Kevin McCarthy (R-CA) to bring that Senate bill to the House floor, where it would likely pass with Democratic support. Members of Speaker McCarthy’s own party have said they would seek to remove him in response.
 
If the federal government does shut down, essential services such as air traffic control, TSA screenings, federal law enforcement, Medicaid/Medicare, and Social Security payments would continue, but most federal agencies would have to furlough most employees for the duration of the shutdown. Most of those still working will not be receiving paychecks until the shutdown ends. The Office of Management and Budget has posted FAQs about agency closures here. Of particular interest to us:

• The federal banking agencies, since they are generally self-funded, should not be affected by a federal government shutdown.

• The Securities and Exchange Commission and the Commodity Futures Trading Commission will have to furlough almost all of their employees and suspend most activities. (It’s probably not a coincidence that the SEC announced dozens of enforcement actions this week.)

• The Federal Emergency Management Administration has already started to delay payments and reserve funds in case of more immediate need during any disasters that occur during the shutdown.

• The Small Business Administration will not be able to issue any new loans during the shutdown.

• The US Department of Agriculture would not be able to subsidize new mortgages.

• The Department of Housing and Urban Development would have to stop some monthly subsidy programs, along with almost all the agency’s fair housing enforcement work.

Senate Banking approves cannabis banking bill
The Senate Banking Committee voted 14-9 on Wednesday to approve S. 2860, the Secure and Fair Enforcement Regulation (SAFER) Banking Act. The bipartisan bill, introduced by Senator Jeff Merkley (D-OR) and 12 original cosponsors including Senator Steve Daines (R-MT) and Senate Majority Leader Chuck Schumer (D-NY), would create a safe harbor for federally regulated financial institutions that provide services to cannabis-based businesses. “Regardless of how you feel about states’ efforts to legalize marijuana, this bipartisan bill is necessary,” said Committee Chair Sherrod Brown (D-OH). Senator Daines agreed, noting his own opposition to the legalization or decriminalization of marijuana. “This bill is about public safety first and foremost,” he said, and about making sure that “all legal businesses have access to the banking system.”
 
McHenry threatens subpoena at SEC oversight hearing
House Financial Services Committee Chairman Patrick McHenry (R-NC) began Wednesday’s marathon oversight hearing by telling Securities and Exchange Commission Chair Gary Gensler that while he did not want “to be the first Chairman of the Financial Services Committee to issue a subpoena to the SEC,” Gensler’s failure to supply documents was leaving him no option. Committee Republicans have been asking the SEC since February to furnish supporting documentation and data for a wide range of regulatory proposals, but McHenry said the SEC had provided nothing that wasn’t already public. During Wednesday’s hearings, Republicans castigated Gensler for regulatory overreach, while Democrats pointed out that the SEC had finalized fewer rules during Gensler’s time in office than it had during comparable timespans under the last three SEC chairs. Both Republicans and Democrats, however, urged Gensler to withdraw proposed rules on open-end fund liquidity risk and swing pricing, and on conflicts of interest associated with the use of predictive data analytics.
 
Congress must provide full funding for clean water revolving funds, panel hears
At a hearing on clean water infrastructure financing yesterday, witnesses representing state and local water authorities, the private sector, and environmental advocates agreed that the Infrastructure Investment and Jobs Act’s extra funding for the EPA’s Clean Water State Revolving Fund (SRF) was critically important, especially for small and rural communities. They urged Congress to appropriate the full amount authorized by the IIJA, and to fund any earmarked projects separately from the funding designated for the Clean Water SRF. Subcommittee Chairman David Rouzer (R-NC) noted the vast gap between water infrastructure needs and the funding available, but said that the IIJA “just threw money” at the Clean Water SRF program without addressing shortfalls of the program already in place. He called for integrated planning and greater regulatory flexibility to help communities address needs and meet compliance mandates while reducing the financial burdens on ratepayers.
 
SBA seeks feedback on Department of Labor’s proposed changes to overtime rule
The Small Business Administration’s Office of Advocacy held two roundtables this week to collect feedback about the Department of Labor’s notice of proposed rulemaking on exemptions from overtime compensation for executive, administrative, and professional (EAP) employees. Comments are due to the Department of Labor on November 7, sixty days after the proposal was published; the Office of Advocacy will submit its own comment letter based in part on the reactions gathered in this week’s roundtables. DOL proposes to raise the salary threshold for the overtime exemption from its current level of $684/week or $35,568/year to $1,059/week or about $55,000/year, which would be equal to the 35 percentile of earnings of full-time salaried workers in the lowest-wage census region. It would increase the total annual compensation required for “highly compensated employee” designation from $107,432/year to $143,988/year. Roundtable participants said that a 60-day comment period was not sufficient, and that the proposed rule would impose overwhelming administrative burdens on small businesses.
 
Senate Banking Committee calls big bank CEOs to December hearing
If you’re a global systemically important bank (G-SIB), mark your calendar for December 6. Senate Banking Committee Chair Sherrod Brown (D-OH) announced today that the panel will hear testimony from the CEOs of JP Morgan Chase, Bank of America, Citigroup, Goldman Sachs, Bank of New York Mellon, Morgan Stanley, State Street, and Wells Fargo on that date. Brown said it was part of his commitment as chair “to hear directly from the biggest banks that hold too much power in the economy.” This will be the third such hearing Brown has chaired since taking over the Committee in 2021.

The Week Ahead

The House of Representatives had scheduled recess from October 2 through October 16, and the House Majority Leader’s website shows no changes to that schedule as of this afternoon. The Senate is in session next week, but the hearing schedule is light. Next week’s big event is the return of the Supreme Court — which will continue to operate, at least for now, although the Supreme Court Building will be closed except for the Courtroom itself.
 
October 3 at 10:00 a.m. The Supreme Court hears arguments in Consumer Financial Protection Bureau et al. v. Community Financial Services Association of America, a case that will decide whether the CFPB’s funding structure violates the Appropriations Clause of the Constitution.
 
October 4 at 2:00 p.m. Senate Committee on Commerce, Science, and Transportation holds a hearing on “CHIPS and Science Implementation and Oversight.” Secretary of Commerce Gina Raimondo and Dr. Sethuraman Panchanathan, Director of the National Science Foundation, will testify.

October 5 at 10:00 a.m. Senate Committee on the Budget holds a hearing on “The Costs of a Government Shutdown.”

October 5 at 10:00 a.m. Senate Commerce Committee holds a hearing on the nomination of Michael Whitaker to be Administrator of the Federal Aviation Administration.

The Ellis Insight - Jim Ellis on political news

PRESIDENT

ABC/Washington Post Poll: For the second consecutive time, the ABC/Washington Post (9/15-20; 890 US registered voters; live interview) sees former President Donald Trump building a large lead over President Biden. The latest numbers give Mr. Trump a 51-42% national advantage, and a larger 52-39% lead within the Independent segment. In May, the ABC/Washington Post survey found Mr. Trump leading by a similar 49-42% margin. 

Once again, the ABC/WaPo poll gives Trump a bigger lead than other polls conducted during a similar time frame. Since September 14, six national surveys have been conducted from six different pollsters, all seeing Mr. Trump holding leads of four and one point, with four ties.

NBC Poll: The new NBC News national poll has been released (Public Opinion Strategies; 9/15-19; 1,000 US registered voters; live interview) and it generally contains bad news for both President Biden and former President Trump. While the ballot test shows both candidates with 46% support, President Biden’s approval rating is 15 points underwater, (41:56% favorable vs. unfavorable). More troubling for the President, 59% of sampled Democrats want to see a candidate challenge Mr. Biden for the party nomination.

Though Republicans are viewed at a record high positive in dealing with crime, the economy, immigration, and protecting democracy, the ballot test is still tied, and Mr. Biden has an 18 point lead among those who somewhat disapprove of his job performance. This latter category has proven key in projecting the outcome of recent campaigns. 

SENATE

California: The Public Policy Institute of California conducted another of their statewide polls (8/28-9/5; 1,671 CA adults; 1,414 CA registered voters; online) and sees Rep. Barbara Lee (D-Oakland) seriously falling off the pace in the crowded open US Senate field. Though only one candidate even reaches the 20% support mark, there is a clear break between the top two poll finishers and the rest of the candidates.

The PPIC survey finds Rep. Adam Schiff (D-Burbank) leading fellow Rep. Katie Porter (D-Irvine) by a 20-15% count. Rep. Lee trails with just 8% support. All other candidates are in low single digits. California features an all-party top two jungle primary format. The pair of top finishers in the March 5th primary regardless of party affiliation and percentage attained will advance into the November general election. This poll suggests we will see an eight month Double-Democrat bruising campaign between Reps. Schiff and Porter.

New Jersey: Garden State Senator Bob Menendez (D), who is in-cycle next year, was indicted late last week along with his wife and three others. All five defendants were charged on two counts: bribery, and honest services fraud, as it relates to an Egyptian foreign affairs funding issue. Senator and Mrs. Menendez were also indicted on a conspiracy to commit extortion charge. How this affects the 2024 Senate election remains to be determined. 

Sen. Menendez beat a different set of federal charges in 2015. In response to this latest indictment, he said, “For years, forces behind the scenes have repeatedly attempted to silence my voice and dig my political grave. To my supporters, friends and the community at large, I ask that you recall the other times the prosecutors got it wrong and that you reserve judgment."

New Jersey is a strong Democratic state, so the June 2024 primary election may be the Senator’s toughest obstacle. Many Garden State Democratic leaders, however, are calling upon Sen. Menendez to resign. Among them are Gov. Phil Murphy, Attorney General Matt Platkin, and Reps. Donald Norcross (D-Camden City), Andy Kim (D-Moorestown), Josh Gottheimer (D-Wycoff), Frank Pallone (D-Long Branch), Bill Pascrell (D-Paterson), and Mikie Sherrill (D-Montclair). At this point, the lone House member making a public statement in Mr. Menendez’s favor is Rep. Rob Menendez (D-Jersey City), the Senator’s son.

Rep. Kim wasted no time and announced that he will challenge Sen. Bob Menendez (D) in next year’s Democratic primary. Other Democrats following suit would make this contest quite crowded, which would actually help Menendez because the anti-incumbent vote would be split. Those mentioned as possible candidates include New Jersey’s First Lady Tammy Murphy, and US Reps. Norcross, Gottheimer, and Pallone. Only Rep. Kim has made a firm declaration.

HOUSE

Alabama: The US Supreme Court this week affirmed the three-judge panel ruling that will allow a special master to draw the new Alabama congressional map after the legislature and Governor’s map was rejected. The resulting redraw will likely pair Reps. Jerry Carl (R-Mobile) and Barry Moore (R-Enterprise) and create a new black majority district anchored in Montgomery County. This will almost assuredly mean a one-seat gain for the Democrats in the 6R-1D Alabama congressional delegation.

AL-7: State Senate Minority Leader Bobby Singleton (D-Greensboro), who represents a western Alabama legislative district, announced that he is forming a congressional exploratory committee to launch a Democratic primary challenge against seven-term Rep. Terri Sewell (D-Birmingham). 

Since his district lies in the heart of Rep. Sewell’s seat, the state Senate’s top Democrat said, "I’m not running in the new district. I’m running in Congresswoman Sewell’s ... I want the big fish."  The new district will likely be drawn with Montgomery County as the population anchor, which will encompass much of the southeastern side of the state.

Sen. Singleton won’t have much time to weigh his chances. The candidate filing deadline is November 10 for the March 5, 2024, Alabama primary. The new redistricting map will likely be completed next week.

FL-9: In a seat that should be solid for Democrats, former Kissimmee City Commissioner and ex-congressional candidate Wanda Rentas surprisingly became the sixth Republican to enter the 2024 GOP primary. Though the FiveThirtyEight data organization rates the district D+16 and the Daily Kos Elections site ranks FL-9 as the 85th safest Democratic seat in the House, the local Republicans think the district can be won. In 2022, Rep. Darren Soto (D-Kissimmee) secured a fourth term with a lower than expected 54-46% victory margin. 

Among the six GOP candidates we find former state Representative and ex-Osceola County Commissioner John Quinones. It is likely that the race will winnow down to a contest between Mr. Quinones and Ms. Rentas, but both would still begin the general election as a clear underdog to Rep. Soto.

NJ-7: Democratic leaders are still trying to find the top candidate they believe can unseat freshman Rep. Tom Kean, Jr. (R-Westfield), but two of their key prospects have both declined to run. Former state Senator, ex-Assemblyman, and previous gubernatorial candidate Ray Lesniak said he will not enter the 7th CD race, as did Dr. Tina Shah, a veteran of both the Obama and Biden Administrations. In the race are Roselle Park Mayor Joe Signorello, who left the Senate race to run here, former State Department official Jason Blazakis, and political organizer Sue Altman. 

The FiveThirtyEight organization rates NJ-7 as R+3. The Daily Kos Elections site ranks the seat as the 16th most vulnerable seat in the 222 member House Republican Conference.

NJ-8: While Sen. Bob Menendez (D) is publicly defending himself over a new indictment brought against he, his wife, and three other associates, freshman Rep. Rob Menendez (D-Jersey City), the Senator’s son who has defended his father, may be looking at a serious primary challenge. New Jersey’s 8th Congressional District is solidly Democratic. 

The FiveThirtyEight data organization rates it as D+47. The Daily Kos Elections site ranks NJ-8 as the 167th safest seat of the 212-member House Democratic Conference. Therefore, Rep. Menendez’s more significant re-election obstacle is renomination.

Hoboken Mayor Ravi Bhalla (D) confirmed earlier in the week that he is considering launching such a primary challenge. Hoboken, with a population just over 53,000 residents, represents about 7% of the 8th District’s population but is a considerably larger share of a Democratic primary vote. 

OH-13: Attorney Greg Wheeler (R), who had declared his candidacy for Congress months ago, announced that he would suspend his campaign. This leaves Hudson City Councilman Chris Banweg as the lone Republican candidate hoping to challenge freshman Rep. Emilia Sykes (D-Akron). 

Mr. Banweg then announced that Sen. J.D. Vance (R) is endorsing his candidacy, which may be a precursor to the party establishment soon following suit. For a time, it was believed that former Ohio Republican Party chair and 2022 US Senate candidate Jane Timken might enter the race, but she has since removed her name from consideration.

Rep. Sykes defeated Republican Madison Gesiotto Gilbert (R) in last November’s election by a 53-47% margin. Originally, Ms. Gilbert, too, was planning to run in 2024, but last month withdrew to accept a spokesperson’s position with the Republican National Committee. The FiveThirtyEight data organization rates OH-13 as D+2. The Daily Kos Elections site ranks the district as the 13th most vulnerable seat within the Democratic conference.

PA-10: The third Democratic challenger hoping to face six-term Rep. Scott Perry (R-Dillsburg/Harrisburg) this week announced his candidacy. International business consultant John Broadhurst has joined the Democratic primary field that includes 2022 nominee Shamaine Daniels, a member of the Harrisburg City Council, and Carlisle School Board Member Rick Coplen. Former Lancaster television news anchor Janele Stelson is also expected to soon become a Democratic congressional candidate. 

The FiveThirtyEight data organization rates PA-10 as R+9. The Daily Kos Elections site ranks the seat as the 37th most vulnerable district in the Republican Conference. Therefore, the data again favors Rep. Perry regardless of who wins the upcoming Democratic primary.

TX-28: For the second time, a former staff member of Texas US Rep. Henry Cuellar’s (D-Laredo) is challenging him for re-election. Jose Sanz, who left Rep. Cuellar’s staff as his District Director earlier in the year, is returning as a Republican candidate to hopefully challenge his ex-boss in the 2024 general election. Previously, a former office intern has twice opposed the Congressman in the Democratic primary. Jessica Cisneros ran two close primary campaigns against Mr. Cuellar. In 2022, she forced him into a runoff before losing by just under 300 votes in the secondary election. 
 
Ms. Cisneros says she is contemplating a third run. Rep. Cuellar is favored for re-election. The FiveThirtyEight data organization rates TX-28 as D+7. The Daily Kos Elections site ranks the district as the 53rd most vulnerable seat in the 213 member House Democratic Conference.

STATES

Montana: The Montana Libertarian Party has made a significant change to their party bylaws. Beginning immediately, the MLP may now officially endorse a member of another party even if a Libertarian is in the same race. This is significant because the single-digit Libertarian vote has been a thorn in the Republicans’ side since their candidates tend to draw from GOP candidates. 

This causes certain close races, such as in Sen. Jon Tester’s (D) past campaigns, to allow a Democrat to win with a plurality or small majority support. Should the Montana Libertarian Party decide to endorse the Republican candidate in the upcoming Senate race and not file their own contender, such would be a plus for the eventual GOP nominee.

LOCALITIES

San Francisco: Dan Lurie, an heir to the Levi Strauss fortune and cousin to freshman US Rep. Dan Goldman (D-NY), announced that he will join San Francisco County Supervisor Ahsha Safai (D) as 2024 election opponents to San Francisco Mayor London Breed (D). The mayoral campaign, labeled as nonpartisan, will be run concurrently with the regular 2024 election calendar. Both Lurie and Safai are attacking Mayor Breed on her handling of the crime issue, which has led to many businesses and residents leaving the city. Expect this to be a competitive contest.