FDIC Chair Gruenberg faces the heat on Capitol Hill

May 17

The Buzz on the Hill

FDIC Chair Gruenberg faces the heat on Capitol Hill
Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg testified before the U.S. House and Senate this week. While the hearings were scheduled to focus on oversight of federal regulators, Gruenberg became the center of attention after a damning report about toxic workplace culture at the FDIC was published last week. Members of both parties grilled Gruenberg about details in the report, including claims of sexual harassment and fostering an unsafe environment for women and minority groups. There were also reports that Gruenberg was aggressive and had outbursts toward employees in meetings. The House Financial Services Committee and Senate Banking Committee questioned Gruenberg’s leadership and debated whether he should be in charge of overseeing reforms at the FDIC. Many Republican members publicly called on Gruenberg to resign, as did Rep. Bill Foster (D-Ill.). Gruenberg testified that he accepted the findings of the report but believed he should remain in charge and was the best person to implement changes to the FDIC.

President Biden signs off on FAA reauthorization bill
On Thursday, President Joe Biden officially signed the Federal Aviation Administration’s (FAA) new five-year reauthorization package into law. After months of debate, the final package came together with relative ease. It passed the Senate last week and cleared the House on Wednesday without much opposition. The new bill approves $105 billion in funding, including $66.7 billion for FAA operations, $19.4 billion for airport infrastructure grants, $17.8 billion for facilities and equipment, and $1.6 billion for research and development. The bill also included several key provisions, such as automatic cash refunds instead of vouchers for canceled flights, hiring and training more air traffic controllers, raising the pilot retirement age from 65 to 67, updating safety measures for aircraft, and new measures to accommodate passengers with disabilities. It also includes five new slots at DCA for long-distance flights that go beyond the 1,250-mile flight perimeter.

Presidential debates set for June and September
Mark your calendars. President Joe Biden and former President Donald Trump are officially locked in for two Presidential debates. The first will take place on June 27 on CNN, with a second to come on September 10 on ABC. On Wednesday, President Biden posted a video on social media challenging former President Trump to debate him. He soon responded on Truth Social to tell him the time and place, and that he would “be there.” Within hours, the debates were set. Traditionally, the debates are held in September and October and sponsored by the Commission on Presidential Debates. But in yet another move that breaks from a traditional election year, President Biden’s campaign team chose to ignore the commission and set the debate schedule on their own. Moving the first debate up to June was part of a strategy by the Biden Campaign to target the growing number of Americans who participate in early voting. The commission responded in a statement on Wednesday, still hoping to hold their debates, “Our 2024 sites, all locations of higher learning, are prepared to host debates on dates chosen to accommodate early voters. We will continue to be ready to execute this plan.”

This Week’s Takeaways

House Appropriations Committee Chair Tom Cole (R-Okla.) released his proposed FY 2025 allocations on Thursday. Chair Cole’s proposal includes $1.6 trillion in total spending with increased budgets for defense and major cuts for non-defense spending. The House Appropriations Committee will begin marking up bills on May 21 and is scheduled to mark up the final bill on July 10. According to a Punchbowl report, Democrats took issue with the proposal, saying it violates the Fiscal Responsibility Act and last year’s debt limit, as well as a budget deal between President Biden and former Speaker Kevin McCarthy (R-Calif.). Chair Cole does not intend to honor those deals, and House Majority Leader Steve Scalise (R-La.) said they intend to pass all 12 appropriations bills before the August recess. However, it is not expected that any budget will be finalized before the results of the election are known. Congress would likely pass a continuing resolution in September that would go through December. This is just the beginning of what will be another arduous appropriations season.
U.S. Supreme Court ruled the Consumer Financial Protection Bureau’s (CFPB) funding structure is constitutional. In a 7-2 ruling, the Supreme Court determined the CFPB could be funded directly by the Federal Reserve, rather than through the appropriations process. Conservative Supreme Court Justices Samuel Alito and Neil Gorsuch dissented. The case reached the Supreme Court after the Louisiana Fifth Circuit ruled in October 2022 that the CFPB’s funding structure violated the U.S. Constitution. This decision overturns that ruling and sets the precedent that executive agencies can be funded independently. President Biden supported the ruling, calling it “an unmistakable win for American consumers.”
TikTok and its parent company, Byte Dance, are suing the U.S. government. On April 24, President Biden signed into law a $95 billion foreign aid package, including legislation that would ban TikTok in the U.S. app store if they are not sold to an approved company within a year. TikTok has shown it won’t go down without a fight. The lawsuit, officially filed last week, called the law unconstitutional and claimed it unfairly singled out the platform and was an unprecedented attack on free speech. On Tuesday, eight TikTok content creators filed an additional lawsuit that challenged the law, claiming it violates users’ First Amendment rights to free speech. TikTok has said it will cover the costs of the lawsuit. In response, the U.S. Department of Justice said the legislation “addresses critical national security concerns in a manner consistent with the First Amendment and other constitutional limitations. We look forward to defending the legislation in court.” The legal fight shaping up over the potential ban could go all the way to the U.S. Supreme Court and will have major ramifications on how national security and the First Amendment interact.

Outstanding Achievements

The National Asphalt Pavement Association and National Sand, Stone, and Gravel Association were in D.C. this week as part of the Transportation Construction Coalition’s (TCC) annual fly-in. TCC members met with members of Congress to ensure the needs of the transportation and construction industries are being met in the Infrastructure Investment and Jobs Act.

Preparing for the Week Ahead

Wednesday, May 22

House Financial Services Subcommittee on Housing and Insurance Hearing: PHA Oversight: How Scandals and Mismanagement Harm Residents and Taxpayers
Small Business Committee Hearing: Burdensome Regulations: Examining the Biden Administration’s Failure to Consider Small Businesses
Senate Banking Subcommittee on Economic Policy Hearing: Protecting Consumers’ Pocketbooks: Lowering Food Prices and Combatting Corporate Price Gouging and Consolidation
Senate Appropriations Committee Hearing: FY 2025 Request for the U.S. Department of Energy
House Energy and Commerce Subcommittee on Energy, Climate, and Grid Security Hearing: Green Building Policies: Jeopardizing the American Dream of Homeownership

Thursday, May 23

House Appropriations Budget Hearing: FY 2025 Request for the FAA

The Ellis Insight

PRIMARY RESULTS

Maryland: The big story coming from the week’s Maryland primary is Prince George’s County Executive Angela Alsobrooks defeating US Rep. David Trone (D-Potomac) for the open Democratic US Senate nomination despite him spending what some believe will total $62 million for his campaign. The spending imbalance led to Trone’s defeat, and the margin was substantial at 53-42%.

The over-spending apparently backfired and coupled with several Trone gaffes in the final three weeks led to a shift in momentum. As we had been saying for weeks in this race, turnout within the state’s large African American communities would be a key indicating factor if Ms. Alsobrooks had a chance to win. This, and her strong support from the congressional delegation and Gov. Wes Moore (D) helped her overcome the huge financial imbalance.

The new Democratic nominee will now face former Gov. Larry Hogan in the general election. He won the Republican primary with approximately 62% of the vote. This is a strong showing, but not overwhelmingly so. It is indicative of the strong conservative GOP flank not embracing the former Governor’s eight-year record in leading the state, and his outspoken position against former President Donald Trump.

Mr. Trone, however, was not the only big spender to lose in Maryland last night. Former Capitol Police officer Harry Dunn, who gained notoriety for his role in the January 6th controversy, raised over $5.4 million for his attempt to replace retiring Rep. John Sarbanes (D-Baltimore). It was state Senator Sarah Elfreth (D-Annapolis), however, who would record the victory.

The open 2nd District, as expected, easily went to Baltimore County Executive Johnny Olszewski who won the Democratic primary going away with 78% of the vote. He will be a prohibitive favorite to replace retiring Rep. Dutch Ruppersberger (D-Cockeysville) in the general election.

In District 6, also as expected, former US Commerce Department official April McClain Delaney, the wife of former Congressman John Delaney (D), won the plurality primary in Rep. Trone’s open seat. On the Republican side, the primary winner was two-time congressional nominee and ex-state Delegate Neil Parrott. Though both parties can win this district, Ms. McClain Delaney will be a clear favorite based upon Mr. Parrott’s poor previous performances.

Nebraska: The state’s two US Senators hovered around the 80% mark in their individual Republican primaries on Tuesday night. Sen. Deb Fischer (R), who faces no Democratic opposition in the general election, is the in-cycle Senator, while appointed incumbent Pete Ricketts (R) must win the right to serve the final two years of the current term, and then be on the ballot again in 2026 when he will compete for a full six-year stint. The strength of Mr. Ricketts’ win, and his familiarity with the voting public after serving two terms as Governor, means he will skate to an easy victory in the general election.

Reps. Mike Flood (R-Norfolk) and Adrian Smith (R-Gering) recorded easy renomination wins in their respective 1st and 3rd Districts with 81 and 74% vote totals, respectively. Rep. Don Bacon (R-Papillion/Omaha), who represents the most competitive seat in the state, clinched renomination with 62% vote preference. Mr. Bacon will again face his 2022 opponent, state Sen. Tony Vargas (D-Omaha) whom he defeated in a close contest two years ago.

West Virginia: The open Senate and Governors’ races were the key battles in the Mountain State. As expected, Gov. Jim Justice (R) scored a landslide 62-27% victory over US Rep. Alex Mooney (R-Charles Town) to clinch the Republican Senate nomination. Gov. Justice now becomes the prohibitive favorite to defeat the newly crowned Democratic nominee, Wheeling Mayor Glenn Elliott. Sen. Joe Manchin (D) is retiring, which gives the Republicans their strongest conversion opportunity in the country.

In the open Governor’s race to replace the term-limited incumbent, Attorney General Pat Morrisey, as polling correctly predicted, defeated former state Delegate Moore Capito, businessman Chris Miller, and Secretary of State Mac Warner, 34-27-20-16%, to capture the Republican nomination. Mr. Morrisey will now be a heavy favorite to turn away the new Democratic nominee, Huntington Mayor Steve Williams, who was unopposed in his party’s primary.

In Rep. Mooney’s open 2nd District, also as expected, state Treasurer Riley Moore, nephew of Sen. Shelley Moore Capito (R) and cousin to gubernatorial candidate Moore Capito (R) is the new Republican nominee. Mr. Moore captured 45% of the plurality vote in a field of five candidates. He is now considered a lock to win the general election in the state’s northern seat.

PRESIDENT

Robert F. Kennedy, Jr.: Robert F. Kennedy, Jr. (I) announced that he is finalizing the ballot qualification process for the general election in 13 states. Included within the list are the key swing domains of Michigan, Nevada, and North Carolina. New Hampshire and Utah, states that lie within the sphere of potential competitiveness, are also on the list of Kennedy qualified states. The remaining places are: California, Delaware, Hawaii, Idaho, Iowa, Nebraska, Ohio, and Oklahoma.

Mr. Kennedy also indicated that he will meet the qualifications for national debate participation. If debates are actually held, and Mr. Kennedy does in fact break the requirement threshold, he will be the first non-Democrat or Republican to earn a debate podium since the Reform Party’s Ross Perot did so in 1992.

SENATE

Florida: Cherry Communications was in the field testing several Florida races for the state Chamber of Commerce (4/28-5/7; 609 FL likely general election voters; live interview) and despite claims from Democratic Senate candidate Debbie Mucarsel Powell in fundraising messages that her race is even, this poll confirms otherwise. In reality, Sen. Rick Scott (R) has a major advantage over the likely Democratic nominee. According to the Cherry/Chamber poll, Sen. Scott commands a 54-39% lead.

The Scott performance is even larger than former President Donald Trump’s showing in the same study. On the presidential ballot test, Mr. Trump holds a 51-42% edge over President Biden. Additionally, when Sen. Scott was last on the ballot in 2018 and won by just over 10,000 votes statewide, the Democrats had a voter registration edge. Now, the Republican registration advantage has soared to over 900,000 individuals.

Polling: The New York Times and Siena College again teamed to survey some of the key Senate races. The polls were conducted within the April 28 – May 9 period and interviewed between 614 and 1,023 likely voters in Arizona, Nevada, Pennsylvania, and Wisconsin. The top Republican targets of Maryland, Michigan, Montana, and Ohio were not included in this series.

The results found tight races in all but Wisconsin. The most vulnerable within this group appears to be Nevada where disabled Afghan War veteran Sam Brown (R) has pulled into a 41-41% tie with Sen. Jacky Rosen (D). In Arizona, Rep. Ruben Gallego (D-Phoenix) leads 2022 gubernatorial nominee Kari Lake (R) by just three points, 46-43%.

The Pennsylvania result is similar. Here, NYT/Siena sees a 46-44% split in favor of three-term incumbent Sen. Bob Casey, Jr. (D). Finally, the Democrat from this group in the best position is Wisconsin Sen. Tammy Baldwin (D). She leads businessman Eric Hovde (R) by seven percentage points among the likely voters, 49-42%.

HOUSE

ND-AL: As part of their statewide polling project, DFM Research (5/6-8; 550 ND likely Republican primary voters; live interview & text) tested the open Republican primary for the state’s at-large US House seat. Three-term incumbent Rep. Kelly Armstrong (R-Bismarck) is running for Governor thus leaving a competitive GOP congressional primary in his wake.

The contest, heading for a June 11th primary election, appears too close to call. The DFM results find former state Rep. Rich Becker leading Public Service Commissioner Julie Fedorchak by a 29-26% margin with former Miss America Cara Mund trailing at 14%. Thus, between Becker and Fedorchak, the race appears as a toss-up. The plurality primary winner will have the inside track toward winning the seat in November.

Nevada: On Friday, the Nevada state Supreme Court upheld a lower court ruling striking down two proposed ballot initiatives that would have allowed citizens to determine if a redistricting commission would be created. The court ruled that the propositions did not include provisions to demonstrate how the initiative would develop a revenue stream to pay for the program as required in Nevada law.

Therefore, no redistricting changes will be on the ballot in 2024. Also under Nevada election law, in order to become law, propositions must receive majority support in two separate elections. Thus, time remains for proponents to qualify a pair of propositions in future elections to change the redistricting system before the 2030 census.

NY-3: Four Republican candidates attempting to challenge returning New York US Rep. Tom Suozzi (D-Glen Cove) have been disqualified. This leaves former state Assemblyman Mike LiPetri, the local party endorsed candidate, as the lone Republican contender. None of the others submitted the proper number of valid petition signatures, which is the typical reason candidates fail to make the ballot.

Mr. LiPetri has yet to initiate a fundraising mechanism for his campaign, but now he will be unopposed for the party nomination in the June 25th Republican primary. Though expelled Rep. George Santos (R) won the seat in 2022, the district leans Democratic. The Dave’s Redistricting App statisticians calculate a 51.9D – 47.4R partisan lean for the new district adjusted in the 2024 redistricting round.

NY-3 was one of four Democratic districts that went Republican for the US House in 2022 which, along with a similar four seats in California, will go a long way to determining whether Democrats or Republicans claim the majority in the 2024 general election.

GOVERNOR

North Dakota: DFM Research and Guidant Polling & Strategy returned Republican primary survey data on the impending North Dakota open Governor’s race which is headed for a June 11th nomination election. Both find Rep. Kelly Armstrong (R-Bismarck) posting major, and almost identical, leads over Lt. Gov. Tammy Miller.

DFM Research (5/6-8; 550 ND likely Republican primary voters; live interview & text) posts Rep. Armstrong to a 56-18% advantage. Guidant (5/4-8; 500 ND likely Republican primary voters; live interview & text) sees virtually the same result favoring Mr. Armstrong, 60-19%. The eventual Republican nominee will be a heavy favorite in the general election to replace retiring Gov. Doug Burgum (R).

Vermont: Incumbent Gov. Phil Scott, the one Republican who has found the key to winning statewide elections in Vermont, formally announced that he will run for a fifth consecutive term this year. Vermont and New Hampshire are the only two states to limit their Governors to two-year terms.

While Gov. Scott has a high favorability index and already appears headed for re-election, he is likely to face a comeback challenge from former Governor and 2004 presidential candidate Howard Dean. The latter man last won the Governor’s office in 2002 but held the position for seven consecutive two-year terms.

Renee Leta