World Bank and IMF’s Spring Meetings

Congress was out of town this week, but the streets of DC were full of limousines and Town Cars carrying participants in the World Bank and IMF’s Spring Meetings. International debt resolution, sanctions against Russia, and modernizing the multilateral development banks topped the official agenda, but these events are always full of side meetings and speeches that can make news on their own.
 
The news platform Semafor held a day-long World Economy Summit on Wednesday that featured talks and discussions from international finance ministers and Administration figures. White House Senior Advisor & Infrastructure Coordinator Mitch Landrieu described the interagency process for distributing federal infrastructure money, which has so far provided $210 billion for 25,000 projects in 4,500 communities nationwide — matched by $435 billion in private sector investments, he said.
 
National Economic Council Director Lael Brainard, who was most recently Vice Chair of the Federal Reserve Board, reassured listeners about the fundamental soundness and stability of the US banking system. Deposit outflows have stabilized, she said, and banking industry indicators have improved. She also expects that forthcoming industry earnings reports will further improve consumer confidence. Brainard was a vocal opponent of the Fed’s rules to implement S. 2155, which reduced compliance requirements for regional and mid-sized banks; while she did not say that the new rules had contributed to the failure of Silicon Valley Bank, she said the regulators’ move to “lighter touch” supervision, “In retrospect, we know that was a mistake.”

“Living will” requirements didn’t help with SVB resolution, says FDIC Vice Chair
Elsewhere in DC on Wednesday, FDIC Vice Chairman Travis Hill made his first public speech, addressing “Recent Bank Failures and the Path Ahead” at a Bipartisan Policy Council event. In response to a question, Hill said that Silicon Valley Bank’s “living will” — the insured depository institution (IDI) resolution plan required by the FDIC — had not been especially helpful in resolving the bank once it failed. Instead, he said, these plans should focus on the information the FDIC needs to sell a failed bank as quickly as possible. Regulators will be “thinking deeply” about how best to supervise for interest rate risk and liquidity risk, but Hill rejected arguments that the regulatory tailoring required by S. 2155 might have contributed to the failures of Silicon Valley Bank and Signature Bank.
 
Treasury, IRS announce plan to “transform” tax collection and enforcement
Last week the Treasury Department and the Internal Revenue Service published a 150-page Strategic Operating Plan that details how the IRS will deploy the $80 billion provided by the Inflation Reduction Act. The plan’s first priority is taxpayer service — “better customer service, clearer guidance on how to correctly file taxes, increased options for filing electronically, and robust online accounts.” The agency will also “devote resources to enforcing the tax laws against taxpayers who attempt to avoid paying their tax obligations.” The IRS believes these efforts will generate more than the Congressional Budget Office’s estimate of $180 billion over the next ten years. IRS Commissioner Daniel Werfel will discuss the plan at a hearing before the Senate Finance Committee next week.
 
Treasury report highlights illicit finance risks of DeFi
A report issued last week by the Department of the Treasury found that hostile governments, cybercriminals, ransomware attackers, and scammers are using decentralized finance (DeFi) to transfer and launder criminal proceeds. Many DeFi services fail to comply with anti-money laundering and countering the financing of terrorism (AML/CFT) requirements or sanctions obligations. The study recommends stronger regulatory supervision for AML/CFT compliance, considering additional guidance about DeFi services’ obligations, and evaluating any regulatory gaps.

CDFI Fund makes $1.73 billion in grants
Vice President Kamala Harris and Deputy Secretary of the Treasury Wally Adeyemo announced $1.73 billion in grants to 603 community development financial institutions (CDFIs) around the country through the CDFI Equitable Recovery Program (ERP), created in 2021 to help low- and moderate-income communities recover from the COVID-19 pandemic. The ERP is the largest CDFI grant program to date, and includes “significant investments” in Native CDFIs, CDFIs in Puerto Rico, and CDFIs that serve minority-owned small businesses.

Confirmations, Nominations, Departures

Senator Dianne Feinstein (D-CA), who will be 90 in June, has asked to be replaced on the Senate Judiciary Committee while she recovers from shingles. She has been away from the Senate because of illness since mid-February, and fellow Democrats have begun to call for her resignation.

Senate Minority Leader Mitch McConnell (R-KY), 81, will return to the Senate next week after his recovery from a March 9 fall that caused a concussion.

Danny Werfel was sworn in as Commissioner of the Internal Revenue Service on April 4.

The Week Ahead

April 18 at 10:00 a.m. House Committee on Financial Services holds a hearing on oversight of the Securities and Exchange Commission. SEC Commissioner Gary Gensler will be the only witness.

April 18 at 10:00 a.m. House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies holds a hearing on the Department of Housing and Urban Development’s 2024 budget request. Secretary Marcia Fudge will be the only witness.

April 18 at 10:00 a.m. Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on nominations to the Council of Economic Advisers and the Departments of Treasury and Housing and Urban Development.

April 18 at 2:00 p.m. House Committee on Small Business holds a hearing on “Paying Their Fair Share: How Tax Hikes Crush the Competitiveness of Small Businesses.”

April 18 at 2:30 p.m.  Senate Environment & Public Works Subcommittee on Clean Air, Climate, and Nuclear Safety holds a hearing on “Cleaner Vehicles: Good for Consumers and Public Health.”

April 19 at 10:00 a.m. Senate Committee on Finance hears testimony from IRS Commissioner Danny Werfel on the President’s FY 2024 budget for the IRS and the IRS’s 2023 filing season.

April 19 at 10:00 a.m. House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion holds a hearing on “Understanding Stablecoins’ Role in Payments and the Need for Legislation.”

April 19 at 2:00 p.m. House Financial Services Subcommittee on Capital Markets holds a hearing on “A Roadmap for Growth: Reform to Encourage Capital Formation and Investment Opportunities for All Americans.”

April 20 at 10:00 a.m. House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies holds a hearing on the Department of Transportation’s FY 2024 budget request. Secretary of Transportation Pete Buttigieg will be the only witness.

April 21 The Financial Stability Oversight Council (FSOC) will meet to discuss proposed guidance on nonbank financial company designations, among other agenda topics.

The Ellis Insight - Jim Ellis on political news

PRESIDENT

President Biden: In an interview with NBC’s Al Roker, President Biden confirmed that he “plans to run” for re-election, though is not yet ready to make a formal announcement. It is again surprising that the 2024 presidential race on both sides is not coming into form more quickly. With no one launching a serious Democratic primary challenge to the President, he certainly is under no pressure to formally announce his re-election candidacy anytime soon. 
 
Sen. Tim Scott: South Carolina Sen. Tim Scott (R) announced the formation of a presidential exploratory committee, which is likely his first official step toward becoming a national candidate. It’s hard to see a Republican nomination victory path for the Senator, however. South Carolina is obviously the heart of his support base, but with the state’s former Governor, Nikki Haley, already in the race even that is diminished.
 
Donald Trump: Former President Donald Trump continues to make inroads from Gov. Ron DeSantis’ home state of Florida. Rep. Cory Mills (R-New Smyrna Beach) announced his endorsement of former President Trump yesterday, as did his colleague, Byron Donalds (R-Naples/Ft. Myers). Previously, Reps. Matt Gaetz (R-Ft. Walton Beach) and Anna Paulina Luna (R-St. Petersburg) had publicly announced their support of Mr. Trump.

SENATE

Arizona: Pinal County Sheriff Mark Lamb (R) announced his US Senate candidacy this week. Most of the attention so far has been upon whether 2022 Arizona gubernatorial candidate Kari Lake would enter the race. She has yet to say whether another campaign is in her immediate plans. 

Democratic Rep. Ruben Gallego (D-Phoenix) is an announced candidate and has been leading in the most recent polling. Sen. Kyrsten Sinema (I) appears to be preparing to seek a second term but has not yet said whether she will run on the No Labels Party ticket after leaving the Democrats. 

Florida: As has been expected for weeks, independent businessman Keith Gross announced his US Senate candidacy against Sen. Rick Scott (R). Mr. Gross, a multi-millionaire, will challenge Sen. Scott in the Republican primary. He is clearly running as a conservative, based upon the rhetoric in his announcement video, but it will not be easy getting to the right of Sen. Scott. 

Though Mr. Gross is capable of self-financing his campaign, resources will not be an issue for Sen. Scott. Then, as Florida’s Governor, Mr. Scott, not counting money raised, spent $64 million of his own money for the 2018 Senate campaign. The primary challenge could, however, spur a potentially stronger Democratic opponent to come forth, thinking the nomination battle might weaken the incumbent. Therefore, this August 2024 Republican primary will draw national attention.

Michigan: In 2022, retired Detroit Police Chief James Craig (R) had planned to enter the Michigan Governor’s race but failed to submit the required number of valid petition signatures. Now, reports are surfacing that Mr. Craig is considering entering the open US Senate race. At this point, Michigan School Board member Nikki Snyder is the only Republican current or former elected official to declare for the race. Rep. Elissa Slotkin (D-Lansing) is the most well-known Democrat to step forward. 

Nevada: Nevada political sources indicate that both former GOP US Senate candidate Sam Brown and defeated 2022 congressional nominee April Becker may both soon announce 2024 US Senate campaigns. 

Mr. Brown became more of a factor in the 2022 Senate primary than originally expected due to impressive fundraising, but still lost to former state Attorney General Adam Laxalt who would then lose a close general election contest to Sen. Catherine Cortez Masto (D). Ms. Becker lost a 52-48% decision to Rep. Susie Lee (D-Las Vegas) in the 3rd Congressional District battle. 

Meanwhile, incumbent Sen. Jacky Rosen (D) has been hard at work on the fundraising trail. Her campaign indicates the Senator will report $2.4 million raised for the quarter ending March 31st, with more than $6 million cash-on-hand. Expect another close race here, but Sen. Rosen must be considered the favorite to win a second term.

Ohio: In 2022, wealthy Ohio businessman Bernie Moreno (R) entered the open US Senate race but dropped out before the May primary when it became clear he could not win the race. With state Sen. Matt Dolan (R-Chagrin Falls) as the only 2024 announced candidate to challenge Sen. Sherrod Brown (D), and the lone returning 2022 contender, Mr. Moreno has again chosen to throw his hat into the ring. 

Others are expected to join the race, which will more than likely mean another crowded multi-candidate field, just as we saw a year ago when author J.D. Vance (R) rose to claim the nomination in May and eventually the seat in November. The Ohio race is one of the Republicans’ top national conversion targets.

Pennsylvania: Keystone State Sen. Bob Casey, Jr. (D) indicated his re-election plans were on hold until he received a clean bill of health from his surgeon. Earlier in the year, Sen. Casey underwent surgery to eradicate cancer in his prostate. Apparently, the Senator has received positive reports from his healthcare physicians because this week he announced his re-election effort. Sen. Casey will be favored to clinch a fourth term next year.

On the heels of Sen. Casey announcing that he will run again, Pennsylvania based Franklin & Marshall College went into the field with a statewide survey (3/27-4/7; 643 PA registered voters; live interview). According to these results, Sen. Casey would lead 2022 Senate candidate David McCormick (R), 42-35%. His lead significantly expands to 47-31% if his opponent were 2022 gubernatorial nominee and state Senator Doug Mastriano (R). 

Utah: While this action does not constitute formal candidacy, Utah Sen. Mitt Romney (R) has filed a 2024 campaign committee with the Federal Election Commission. Though not a formal declaration, the act of filing a campaign committee is certainly the first step toward him seeking a second term. 

It is likely that Sen. Romney will be forced to petition his way onto the ballot since the chances of him coming through the conservative Utah Republican Party nominating convention are slim. Such would lead to a June 2024 Republican primary challenge. The most prominent potential opponent being discussed is former Congressman and Fox News contributor Jason Chaffetz. State House Speaker Brad Wilson (R-Kaysville) has formed a US Senate exploratory committee. Attorney General Sean Reyes (R) is also a potential Senate candidate. 

Wisconsin: As expected, Badger State Senator Tammy Baldwin (D) announced during the week that she will seek a third term next year. Ms. Baldwin was first elected to the Senate in 2012 but has been in public office consecutively since 1985. Prior to winning her current position, Sen. Baldwin served in the US House, the Wisconsin state Assembly, the Dane County Board of Supervisors, and the Madison Common Council.

No Republican has formally come forward, but several individuals are considering the race. Unless the congressional map is redrawn, it is doubtful any member of the US House delegation will run. Former Lt. Gov. Rebecca Kleefisch is a potential candidate as is businessman Scott Mayer. While Sen. Baldwin will be favored for re-election, the 2024 Senate race could well become highly competitive.

HOUSE

AZ-6: Last November, freshman Rep. Juan Ciscomani (R-Tucson) defeated then-state Sen. Kirsten Engel (D) by a 50.7 – 49.2% count, a margin of 5,232 votes.  Now, Ms. Engel returns for a second chance. Arizona’s 6th District sits in the southeast corner of the state and contains approximately half of the city of Tucson. The FiveThirtyEight data organization rates it as R+7, but Dave’s Redistricting App sees a closer 50.9R – 47.1D partisan lean. Count on another close finish in this desert congressional district.
 
CA-27: Southern California US Rep. Mike Garcia (R-Santa Clarita) won his most impressive victory in 2022, a 53-47% victory over former state Assemblywoman Christy Smith (D) in a district that the FiveThirtyEight data organization rates as D+8, and Dave’s Redistricting App calculates the district partisan lean at 53.7D – 44.3R. With Ms. Smith now losing three times, Democrats are looking toward other options. We can again expect this to become a national congressional campaign.
 
Former Virgin Galactic CEO and ex-NASA chief of staff George Whitesides (D), who was the first to announce his candidacy earlier this year, is reportedly going to disclose more than $500,000 raised for the 2024 race in the March 31st Federal Election Commission quarterly disclosure report and another $500,000 self-contributed. 

Franky Carrillo (D), who was wrongly imprisoned for 22 years for a murder later proved that he did not commit and was then awarded a $19 million settlement from the state of California, is expected to formally launch his campaign later this month.
 
CA-47: Former Rep. Harley Rouda (D), who held the former 48th Congressional District for one term, had announced a comeback attempt for next year’s political contest in new District 47. Unfortunately, Mr. Rouda was involved in a falling accident in which he sustained head injuries. On the advice of his physicians, Mr. Rouda says that he will not pursue his 2024 candidacy and instead concentrate on returning to full health status.
 
Though the candidate field is crowded, this development likely means we will see an open seat contest between state Sen. David Min (D-Irvine) and 2022 congressional nominee and ex-state Assemblyman Scott Baugh (R). In the previous election, Mr. Baugh lost to incumbent Rep. Katie Porter (D-Irvine) by a 51.7 - 48.3% split. Rep. Porter is leaving the House to run for the US Senate. 
 
MD-6: US Air Force veteran Mariela Roca, who finished third in a six-way 2022 Republican congressional primary, announced yesterday that she will again run in her western Maryland district next year. 

The 6th District, which the court-drawn plan made more Republican by removing a huge section of Montgomery County, appeared headed for a close finish between Rep. David Trone (D-Potomac) and state Delegate Neil Parrott (R-Frederick). After the late votes were recorded, however, Rep. Trone recorded a substantial 55-45% victory, a margin of almost 25,000 votes. Rep. Trone would be a prime Senate candidate should incumbent Ben Cardin (D) decide to retire.
 
NY-19: Attorney Josh Riley (D), who lost 49.9 – 48.4% to now-freshman Rep. Marc Molinaro (R-Red Hook), announced this week that he will return for another campaign in 2024. The Upstate New York 19th District, anchored in Ulster and Dutchess Counties, is rated as R+1 from the FiveThirtyEight data organization, while Dave’s Redistricting App sees the partisan lean as a much different 52.0D – 44.6R. 

Democrats are already committed to targeting the Hudson Valley seats, so expect this race to transform into a national congressional campaign.

STATES

Ohio: The No Labels organization is attempting to qualify for ballot position in many states with the goal of offering centrist candidates in various races, possibly including President. The entity has so far qualified for a ballot line in Alaska, Arizona, Colorado, and Oregon. This week, Ohio Secretary of State Frank LaRose (R) announced that the No Labels organization has petitioned for recognition in the Buckeye State. Mr. LaRose indicated that the signature verification process has begun.
 
Though the No Labels leadership, which includes former US Senator and 2000 Democratic Vice Presidential nominee Joe Lieberman and ex-Maryland Gov. Larry Hogan as national co-chairmen, has so far indicated they are not looking to file a presidential candidate, both major parties are wary that they might. 

POLITICAL PARTIES

Democratic National Committee: For the twelfth time, the Democratic National Committee has selected Chicago to host its national convention. The 2024 gathering will be the 50th such national conclave. A total of 18 cities have held the 50 Democratic conventions, with Chicago doing so most often. Late last year, the Republicans chose Milwaukee as the site of their 2024 national convention.