Farewell to a friend

The relentless pace of events over the past year has made it hard to stop and note individual losses as they’ve happened. But we would be remiss if we didn’t pay our respects to our dear friend and mentor Richard Bates, Disney’s longtime man in Washington. It would not be an exaggeration to say that this office wouldn’t exist if not for Richard. He was invaluable to The Eris Group, our previous incarnation, and his son Chris worked with Eris for years. We extend our deepest sympathies to Richard’s wife Rose, and to Chris and his brother Ricky, and we share their grief.

The work continues
On Wednesday, friends and former colleagues of ours were evacuated from their offices and the floors of the House and Senate. They were hustled to safety, carrying or wearing disposable gas masks. They waited for hours while armed intruders vandalized the Capitol and House office buildings. And then they went back to work until almost 4:00 in the morning, carrying out Congress’s constitutionally mandated duty to count the votes submitted by electors of the states and territories. We applaud their courage and commitment. We thank them for their service. We hope we never see anything like that again in our lifetimes.

At least 15 Capitol Hill police officers were hospitalized with injuries, and one, Brian Sicknick, has died. Congress will spend the next several months, at least, investigating exactly what happened on Wednesday and how. Senators Gary Peters (D-MI), Rob Portman (R-OH), Amy Klobuchar (D-MN), and Roy Blunt (R-MO) announced today that their committees — Homeland Security & Governmental Affairs, and Rules & Administration — will hold joint hearings and conduct “oversight of security failures.” Capitol Police Chief Steven Sund has resigned that position effective January 16, after Speaker of the House Nancy Pelosi (D-CA) called for him to step down. Pelosi also asked for and received the resignation of House Sergeant-at-Arms Paul Irving. Senate Leaders Mitch McConnell (R-KY) and Chuck Schumer (D-NY) demanded and received the resignation of the Senate Sergeant-at-Arms, Michael Stenger.

Speaker Pelosi and Democratic Leader Schumer issued a joint statement yesterday afternoon calling for Vice President Pence to invoke the 25th Amendment: “The President’s dangerous and seditious acts necessitate his immediate removal from office.” Members of the House Judiciary Committee have drafted articles of impeachment, and committee Chairman Jerry Nadler (D-NY) said he would support bringing that legislation directly to the House floor, bypassing the committee process.

This morning a new seven-foot fence is up around the Capitol, to be left in place through the Inauguration and for at least 30 days.

Georgia run-off gives Democrats control of the Senate
Run-off elections in Georgia on Tuesday will send the two Democratic candidates, Reverend Raphael Warnock and Jon Ossoff, to the Senate. Warnock and Ossoff will not be sworn in until the vote is certified, which must happen by January 15. Incumbent Senator Kelly Loeffler (R-GA) and former Senator David Perdue (R-GA), whose term ended on January 3, have conceded the races to their opponents.

Republicans and Democrats hold an equal number of seats, with Vice President Kamala Harris serving as tie-breaker. Committee chairs will shift from Republican to Democrat, and the membership of some committees may be readjusted to reflect the party split. A power-sharing agreement adopted in 2001, the last time the Senate was evenly divided, is likely to serve as a model for this Congress, but Democratic Leader Chuck Schumer has said this won’t happen until after Warnock and Ossoff are sworn in.

Biden continues to build administration
This week President-elect Joe Biden announced his choices to lead the Departments of Justice, Commerce, and Labor, and the Small Business Administration.

For the Department of Justice, Biden chose Merrick B. Garland, currently a U.S. Circuit Court Judge for the US Court of Appeals for the District of Columbia Circuit, to serve as Attorney General. Garland, who was a federal prosecutor in the Oklahoma city bombing trials, was named to the Supreme Court in 2016 but never received a confirmation hearing. Biden also named Lisa Monaco, who was Homeland Security Adviser to President Barack Obama, as Deputy Attorney General; Vanita Gupta, currently President and CEO of The Leadership Conference on Civil and Human Rights, to the office of Associate Attorney General; and Kristen Clarke, president and executive director of the Lawyers’ Committee for Civil Rights Under Law, as Assistant Attorney General for the Civil Rights Division.

For the Department of Commerce, Biden chose Rhode Island Governor Gina Raimondo, an attorney and Ph.D. economist who co-founded an early-stage venture capital firm before being elected General Treasurer of Rhode Island in 2010. She has served as Rhode Island’s governor since 2015. Don Graves, who was Executive Director of the President’s Council on Jobs and Competitiveness and Deputy Assistant Secretary of the Treasury for Small Business, Community Development and Housing Policy during the Obama Administration, was named Deputy Secretary of Commerce.

President-elect Biden named Boston Mayor Martin J. Walsh as Secretary of Labor, noting that Walsh would be the first union member to hold that position (if confirmed) in almost 50 years. Walsh is serving his second term as mayor, and previously headed the Building and Construction Trades Council.

Biden’s choice to head the Small Business Administration is Isabel Guzman, Director of the Office of the Small Business Advocate within the Governor’s Office of Business and Economic Development. Guzman was Deputy Chief of Staff and Senior Advisor in the Small Business Administration under President Barack Obama.

The Senate will hold its first confirmation hearing on a Biden nominee on January 19, when the Armed Services Committee hears testimony from Defense Secretary nominee Lloyd J. Austin.

PPP reopens on Monday
The Small Business Administration and the Department of the Treasury announced today that the Paycheck Protection Program (PPP) will reopen next week to serve new borrowers and some existing borrowers. First Draw PPP loans will be available only from community development financial institutions on Monday, followed by Second Draw PPP loans, which will be available only from CDFIs starting on Wednesday. Both PPP programs will become available through all participating lenders “shortly thereafter.” Earlier in the week, the SBA issued new guidance for the program changes included in last month’s legislation. Under the new guidance, borrowers can set their loan coverage period for any length between eight and 24 weeks, and can use PPP funds for a broader range of expenses, including operations, property damage, supplier costs, and worker protection. Eligible PPP borrowers now include 501(c)(6)s, housing cooperatives, and direct marketing organizations, among other businesses. Businesses that received a First Draw PPP loan can apply for a Second Draw if they have no more than 300 employees and can show a decline of at least 25% in gross revenues between comparable quarters in 2019 and 2020.

Treasury opens rental assistance portal
This week the Department of the Treasury launched the $25 billion Emergency Rental Assistance Program (ERAP), as authorized by last month’s Consolidated Appropriations Act. ERAP will provide funds to states, territories, and local governments with more than 200,000 residents for the purpose of providing rental assistance to eligible households. An “eligible household” is one with household income at or below 80% of the area median, in which one or more household members qualifies for unemployment or has experienced financial hardship due to COVID-19, and can demonstrate a risk of homelessness or housing instability.

Department of Labor finalizes rule on independent contractors
The Department of Labor published a final rule on Wednesday that clarifies the standard for determining whether a worker is an employee or an independent contractor. The final rule reaffirms the “economic reality” test of whether a worker is in business for themselves, or dependent on a potential employer for work, but also provides two “core factors” in making that determination: the nature and degree of control over the work, and the worker’s opportunity for profit or loss based on initiative and/or investment. The rule also identifies three other factors that may guide the determination: the amount of skill the work requires, the degree of permanence in the working relationship between worker and employer, and whether the work is part of an integrated production unit. The final rule takes effect on March 8.

CFPB should license nondepository financial companies, says task force
The Consumer Financial Protection Bureau Taskforce on Federal Consumer Financial Law delivered a report this week that makes approximately 100 recommendations for ways the Bureau, Congress, and state and federal regulators can strengthen consumer protection. Among these is a recommendation that the Bureau issue its own licenses to small-dollar lenders, money transmitters, and nonbank fintech companies. The Taskforce also recommended that the Bureau work with other agencies to create a “unified regulatory regime for new and innovative technologies providing services similar to banks.”

Department of Education announces allocation of new COVID-19 relief funds
On Tuesday, the Department of Education published its allocation table for the $54.3 billion provided for the Elementary and Secondary School Emergency Relief Fund (ESSER II). The department will make grants to state educational agencies for distribution to local educational agencies, including charter schools, in the same proportions that it made those grants last year.

Confirmations, Nominations, Departures

Our colleague Keenan Hale, who has been a Government Consultant in the Washington office, is leaving GrayRobinson to join the global strategic solutions firm of Ian Reid. We will miss him.

Secretary of Education Betsy DeVos and Secretary of Transportation Elaine Chao have resigned their positions.

The Week Ahead

Both House and Senate are in recess next week, but Speaker of the House Nancy Pelosi has said that she will call the House back into session to vote on articles of impeachment if the Vice President does not invoke the 25th Amendment.

January 12-13 The Federal Reserve Board hosts a virtual Symposium on Artificial Intelligence and its use in banking. Registration is open to the public.

The Ellis Insight – Jim Ellis on political news

SENATE
Georgia: Democrats Raphael Warnock and Jon Ossoff won the Georgia Senate runoff elections on Tuesday, defeating Sen. David Perdue (R) and appointed Sen. Kelly Loeffler (R), and now more is known. There is no question the team concept worked, as particularly Messrs. Warnock and Ossoff jointly ran their campaigns.

The latest numbers suggest that the turnout difference between the two races was only 69 voters of more than 4.44 million who cast their ballots. It also appears that all of those 69 who voted in the special election but not in the in-cycle contest all cast their ballots for Rev. Warnock. The latest published numbers find Mr. Ossoff defeating Sen. Perdue by 35,615 votes. Rev. Warnock topped appointed Sen. Loeffler by 73,404 tallies.

Despite losing the statewide vote, the Republican team carried 128 of the state’s 159 counties, but only one where more than 70,000 people voted. The Democratic team won in every county where the aggregate vote total exceeded 125,000 ballots. The Democrats will now assume the Senate majority on a 50-50 split with Vice-President-Elect Kamala Harris breaking the tie.

Oregon: Sen. Ron Wyden (D-OR) yesterday publicly confirmed that he will seek re-election next year. Mr. Wyden was first elected to the Senate in a 1996 special election defeating former US Sen. Gordon Smith (R) in a close race. He has since been re-elected in 1998, 2004, 2010, and 2016, averaging 57.4% of the vote over the five elections.

Prior to winning his Senate seat, Mr. Wyden served all or a part of eight terms in the US House. Sen. Wyden, age 71, will become the Senate Finance Committee chairman with the Democrats winning the two Georgia runoff elections. The Senator will be a heavy favorite for re-election regardless of who eventually challenges him.

HOUSE
House of Representatives: The House was called to order in a rare Sunday swearing-in ceremony, and 433 members assumed office. The 434th seat, NY-22, still has yet to see a certified winner declared as the local court continues to wade through contested ballots.

The margin between Rep. Anthony Brindisi (D-Utica) and former Rep. Claudia Tenney (R) is just a handful of votes that seesaws back and forth as the eight counties produce final tallies… literally two months after the election was held. The death of Louisiana Rep-Elect Luke Letlow (R) means a special election will be called to fill this vacancy, which is the 435th seat.

Reps. Cedric Richmond (D-LA), Marcia Fudge (D-OH), and Deb Haaland (D-NM) will all be resigning shortly to accept positions in the Biden Administration. Mr. Richmond is scheduled to depart on January 15th in order to assume his new position as White House senior advisor and Director of Public Engagement. His appointment does not require Senate confirmation.

Reps. Fudge and Haaland will go through the confirmation process for the positions of Secretaries of Housing and Urban Development and Interior, respectively. They will resign from the House upon earning Senate confirmation.

IA-2: At Sunday’s official House commencement procedure, Iowa Rep. Mariannette Miller-Meeks (R-Ottumwa) was provisionally seated. She is a certified six-vote winner, but opponent Rita Hart (D) has petitioned the House to review 22 ballots that county officials rejected. The number of contested ballots would change the result if added to the final tally.

Should the House Administration Committee change the certified result, the entire House will vote to seat the new winner. Ms. Hart chose not to appeal the state ruling through the Iowa court system, which was her next course of action, but instead came directly to the US House.

LA-2: Louisiana Gov. John Bel Edwards (D) announced late this week that he has received Rep. Cedric Richmond’s (D-New Orleans) formal resignation letter effective January 15th. Mr. Richmond, originally elected to the House in 2010, has been appointed a White House Senior Advisor and director of the Office of Public Engagement.

The Governor confirms that the filing deadline for the March 20th special election will be January 22nd. If no candidate receives majority support in the initial election a runoff between the top two finishers, regardless of party affiliation, will be held on April 24th. The vacant 5th District, due to Rep-Elect Luke Letlow’s (R) death, will be filled on the same schedule.

OH-10: Dayton Mayor Nan Whatley (D) announced earlier this week that she will not seek re-election to her current position later this year. Her move suggests she will make a run at higher office, possibly against Gov. Mike DeWine (R) or Sen. Rob Portman (R), and she specifically didn’t close the door on challenging veteran US Rep. Mike Turner (R-Dayton), himself once a holder of the office Mayor Whatley now occupies.

Redistricting will play a major role in how the Buckeye State districts unfold next year, particularly since Ohio looks poised to lose another of their 16 congressional seats in reapportionment. Mayor Whatley did declare herself a candidate in the 2018 Governor’s race but dropped her bid once former Consumer Financial Protection Bureau director
and ex-Ohio Attorney General Richard Cordray returned from Washington to seek the Democratic gubernatorial nomination. He would go onto lose to current Gov. DeWine by a 50-47% margin despite almost uniform prognostication that he would win the race.

WI-2: Wisconsin Rep. Mark Pocan (D-Vermont/Madison) ended speculation that he would challenge Sen. Ron Johnson (R) next year by publicly stating yesterday that he will remain in the House. Mr. Pocan was first elected in 2012 and has averaged 75% of the vote in his five elections, including running unopposed in 2018. He will have little trouble winning a sixth term in a south-central Badger State district that gave President-Elect Joe Biden a 69-29% margin of victory.

GOVERNOR
California: Former San Diego Mayor Kevin Faulconer (R), who just left office at the end of 2020 because he had reached his term limited amount of service, is reportedly about to file a gubernatorial exploratory committee. Mr. Faulconer won election to the second largest office that a California Republican holds. Only Los Angeles County Supervisor Kathryn Barger represents more people than did former Mayor Faulconer.

The California Governor’s race is getting more interesting since a live recall petition against incumbent Gavin Newsom (D) is gathering steam. If the proper number of valid signatures are filed, 1,495,709 in this situation (12% of the total number of votes cast in the 2018 Governor’s election), Gov. Newsom would stand for a recall election.

The last time this procedure was employed occurred in 2003 when then-Gov. Gray Davis (D) was recalled from office on a 55-45% vote. Republican Arnold Schwarzenegger was elected to replace him for the unfinished balance of the term. It is presumed that Mr. Faulconer would become a candidate in the recall election, should such an event occur.

Georgia: The Trafalgar Group released their Georgia US Senate poll, but also reported a test question about the impending 2022 Governor’s race. Steeped in controversy over the election fraud issue in the state, Gov. Kemp is in political freefall within his own party according to the survey.

The poll tested former Rep. Doug Collins (R-Gainesville) against Gov. Kemp in a hypothetical 2022 Republican primary. The survey found Mr. Collins leading the incumbent 46-24% among likely Republican primary voters. When leaners are added, the Collins advantage grows to a whopping 52-32%.

Massachussetts: It has been presumed that Gov. Charlie Baker (R-MA), who has enjoyed some of the best approval ratings of any state chief executive, would seek a third term, but political reporters at the Boston Herald newspaper are speculating differently. Apparently, they have detected that Gov. Baker’s fundraising has significantly slowed, while Lt. Gov. Karyn Polito (R) is aggressively filling her campaign coffers. Massachusetts has no term limit law, so Gov. Baker is eligible to seek a third term.

Michigan: Former Congresswoman and Michigan Secretary of State Candice Miller (R), who is currently the Macomb County Public Works Director, was rumored to be considering a run for Governor next year, but she has now quelled such speculation. Earlier in the week, Ms. Miller announced that she would not challenge Gov. Gretchen Whitmer (D) during the 2022 election cycle.

Minnesota: My Pillow company founder Mike Lindell, who has come to fame with his prolific cable TV advertising, is reportedly readying a campaign to run for Governor. Reports suggest he is 90-95% certain to run for the Republican gubernatorial nomination for a chance to oppose Gov. Tim Walz (D) in next year’s general election. Mr. Lindell made similar political noises in 2018, only to refrain from entering the race. The Minnesota Governor’s campaign is expected to be competitive and Republicans are planning for a crowded primary.

Rhode Island: President-Elect Joe Biden’s nomination of Rhode Island Gov. Gina Raimondo (D) as US Commerce Secretary means that Lt. Governor Dan McKee (D) will assume the state’s top job once the current incumbent is confirmed for her new federal position. Mr. McKee had made it known that he intended to run for Governor in 2022 with the intent of succeeding the term-limited Governor. US Rep. Jim Langevin (D-Warwick) and Providence Mayor Jorge Elorza are also frequently mentioned as potential gubernatorial candidates.

CITIES
Boston: President-Elect Joe Biden has designated Boston Mayor Marty Walsh as his Labor Secretary nominee. Upon confirmation, he will resign from his current position, a post he has held since the beginning of 2014. Mr. Walsh was originally planning to seek a third term this year as Mayor but will now give way to what will be a crowded field of Democrats vying to replace him.

Announced for the Mayor’s race are Boston City Council Member-at-Large Michelle Wu, and 4th District Council Member Andrea Campbell. Current City Council President Kim Janey will become Mayor upon Mr. Walsh’s resignation. It is presumed that Ms. Janey, too, would enter the 2021 campaign.

New York City: One-term Congressman Max Rose (D-Staten Island), who lost his seat to Rep. Nicole Malliotakis (R-Staten Island) in November, had very quickly declared to run for the open New York City mayoral post upon his concession. In a figurative blink of an eye, his campaign has already ended. Due to the crowded field – more than a dozen Democratic candidates are expected to compete for the opportunity of replacing outgoing Mayor Bill de Blasio (D) – Mr. Rose failed to see a clear path to victory, hence his decision to end his campaign before even officially filing for the office.

Former presidential candidate Andrew Yang is expected to soon announce his candidacy for the NYC post. Early polling suggests that he and Brooklyn Borough President Eric Adams are the two leading candidates. The Democratic primary is scheduled for June 22nd with the general election calendared for November 2, 2021.