Biden budget emphasizes deficit reduction, climate and supply chain resilience

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Biden budget emphasizes deficit reduction, climate and supply chain resilience
“Budgets are statements of values,” said President Joe Biden in unveiling his first budget proposal on Monday. The President’s budget for FY 2023 would reduce the federal deficit by approximately $1 trillion over the next 10 years, while funding cross-agency climate initiatives, health proposals including better access to care for mental health and cancer, and incentives for domestic manufacturing. The budget would raise taxes on the wealthiest Americans to raise an additional $2.5 trillion in the next decade. It would increase defense spending by four percent while increasing non-defense spending by 11 percent, with the largest boosts going to the Departments of Commerce, Education, HHS, HUD, Interior, and Veterans Affairs. The Commerce increase includes more funding for NOAA, the Census Bureau, NIST, the International Trade Administration, and the Economic Development Administration. The budget would also fund an additional 1,900 full-time employees at the Environmental Protection Agency. Senators Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have already objected to some of the budget’s proposed tax increases and incentive repeals.

Tai reports successful use of USMCA enforcement tools, calls for more innovation
US Trade Representative Katherine Tai spent four hours testifying before the House Ways and Means Committee and almost three hours in front of the Senate Finance Committee this week, laying out President Biden’s trade agenda and listing the Administration’s trade successes over the past year. Among those successes were the first uses of the USMCA’s Rapid Response mechanism to encourage free union votes at two companies in Mexico and the first use of the USMCA’s dispute settlement system against Canadian dairy supports. Tai called for new trade enforcement tools such as those included in the bipartisan Level the Playing Field Act 2.0, which was incorporated into the House-passed America COMPETES Act. The Level the Playing Field Act 2.0, cosponsored by Reps. Terri Sewell (D-AL) and Bill Johnson (R-OH), would give the Department of Commerce additional powers to counteract “country hopping” and China’s Belt-and-Road Initiative subsidies. Tai emphasized her commitment to consulting with Congress in all trade negotiations.

Manufactured housing, local zoning changes are important for addressing the housing shortage, says Thompson
The Federal Housing Finance Agency (FHFA) has been working with Fannie Mae and Freddie Mac to find ways the government-sponsored enterprises (GSEs) can help address the nationwide housing shortage, FHFA Acting Director Sandra Thompson said this week in a “fireside chat” sponsored by the Bipartisan Policy Center. The FHFA has asked the GSEs to focus on areas and sectors that are less easy to serve, and therefore more likely to be offered higher-cost loans. Those include rural areas and manufactured housing communities. Thompson said they’d been looking at manufactured housing initiatives as a strategy for increasing the housing supply, as those communities are faster to build, and modern construction can be equivalent to stick-built housing. “I think we need to do a better job with the narrative” around manufactured housing, Thompson said. She also praised Fannie and Freddie’s pilot programs to encourage construction of accessory dwelling units (ADUs), or in-law apartments, but noted that local zoning ordinances are the biggest barrier to those.

SEC adds crypto compliance to examination priorities for 2022
The Securities and Exchange Commission (SEC) published its 2022 examination priorities this week, noting that they are “not exhaustive and will not be the only areas” the Division of Examination focuses on. Those priorities include reviews of whether broker-dealers and registered investment advisers (RIAs) that use emerging financial technologies have designed their regulatory compliance programs to consider “the unique risks these activities present.” Examinations will assess whether operations and controls related to emerging technologies and crypto assets “are consistent with disclosures made and the standard of conduct owed to investors.” Other examination priorities for this year include the registered investment advisers who manage private funds; ESG-related advisory services and investment products; standards of conduct for broker-dealers and RIAs who serve retail investors and working families; and registrants’ information security and operational resiliency.

Himes supports CBDC, says Congress’s role in crypto is to set investor protection standards and counteract fraud
In a Washington Post Live event this week, Rep. Jim Himes (D-CT) said that federal oversight of digital assets was not a partisan issue, and that it was no longer controversial to say that “the time is now” to regulate cryptocurrencies. Innovations will benefit from clear and uniform federal standards, he said; the major policy disagreement is between libertarians who see anonymity as a core value of cryptocurrency and those who see anonymity as a tool for wrongdoers. Himes is a principal cosponsor of HR 3506, the 21st Century Dollar Act, introduced by Rep. French Hill (R-KY). HR 3506 would require the Treasury to set a strategy for keeping the US dollar the world’s dominant reserve currency in a digital-assets world. “I’m a yes” on the question of creating a central bank digital dollar, Himes said. The House Financial Services Subcommittee on National Security, International Development, and Monetary Policy, which Himes chairs, is working on a white paper that will lay out what a US CBDC should look like.

The Week Ahead

April 5 at 10:00 am House Committee on Oversight and Reform holds a hearing on “It’s Electric: Developing the Postal Fleet of the Future.”

April 5 at 10:00 am Senate Committee on Banking, Housing, and Urban Affairs holds a hearing on “Keeping Markets Fair: Considering Insider Trading Legislation.”

April 5 at 10:00 am Senate Environment and Public Works Subcommittee on Fisheries, Wildlife, and Water holds a hearing to examine implementation of the Drinking Water and Wastewater Infrastructure Act, focusing on stakeholders’ needs and experiences.

April 5 at 2:00 pm House Financial Services Subcommittee on Oversight and Investigations holds a hearing on “An Enduring Legacy: The Role of Financial Institutions in the Horrors of Slavery and the Need for Atonement.”

April 6 at 10:00 am House Committee on Financial Services receives the Secretary of the Treasury’s annual report on the state of the international financial system.

April 6 at 10:00 am Senate Banking Committee holds a hearing to consider the nominations of Ms. Ventris C. Gibson to be Director of the Mint and Mr. Paul M. Rosen to be Assistant Secretary of the Treasury for Investment Security.

April 6 at 2:30 pm Senate Banking Subcommittee on Housing, Transportation, and Community Development holds a hearing on “Advancing Public Transportation in Small Cities and Rural Places under the Bipartisan Infrastructure Bill.”

April 7 at 4:00 pm Washington Nationals play their first game of the 2022 Major League Baseball season against the New York Mets.

The Ellis Insight - Jim Ellis on political news

SENATE

Alabama: A new Emerson College survey (3/25-27; 687 AL likely Republican primary voters; live interview, interactive voice response, text and online) confirms what we saw from the Cygnal research group last week. That is, retired “Black Hawk Down” pilot and Alabama businessman Mike Durant leading former Business Council of Alabama president and CEO Katie Britt, with US Rep. Mo Brooks (R-Huntsville) falling well behind.

The new Emerson numbers find Durant ahead of Britt and Brooks, 33-23-12%. The previous Cygnal poll pegged the race at 35-28-16% in the same candidate order. Both studies suggest, at this point in time, that Mr. Durant and Ms. Britt will advance to a secondary runoff election. The Alabama primary is May 24. If no one receives majority support, the top two finishers will advance to the August 23 runoff election. Incumbent Sen. Richard Shelby (R) is retiring.

Alaska: The lone announced Democratic US Senate candidate, state Senator Elvi Gray-Jackson (D-Anchorage), issued a statement declaring that she is not going to enter the statewide race, and instead will seek re-election to the legislature. Ms. Gray-Jackson’s departure leaves the Democrats without a Senate candidate under a system where at least one Democrat would be all but certain to qualify for the general election under the state’s new top-four primary system.

It was thought that 2020 nominee Al Gross who raised almost $20 million for his previous campaign against Sen. Dan Sullivan (R) would eventually enter the race, but he chose to join the at-large open US House special election field to replace the late Rep. Don Young (R-Ft. Yukon). The candidate filing deadline is June 1 for the August 16 regular primary election, so party officials have remaining time to recruit another candidate.

Louisiana: First-term Louisiana Senator John Kennedy (R) may only have to participate in one election this year if the trends found in a new poll are a true precursor. The JMC Analytics survey research organization released their new Louisiana study (3/21-23; 600 LA likely voters; live interview) and sees Sen. Kennedy holding 53% support with his closest competitor, 2021 special congressional candidate Gary Chambers (D), well behind at only 14%.

Under Louisiana election law, if a candidate receives majority support in the jungle primary contest, which is run concurrently with the general election and this year on November 8, the individual is declared the official winner and the campaign ends. If no one receives majority support, the top two finishers, regardless of political party affiliation, advance to a post-election runoff in December. This JMC survey suggests that Sen. Kennedy has a chance to claim a second term outright on November 8.

Missouri: A new Trafalgar Group survey (3/24-29; 1,079 MO likely Republican primary voters; live interview, text, online panel) finds Missouri US Rep. Vicky Hartzler (R-Harrisonville/Columbia) forging into her first US Senate Republican primary campaign lead, as she tops former front runner Eric Greitens, the resigned Governor who now faces domestic and child abuse allegations from his ex-wife, Attorney General Eric Schmitt, and fellow US Rep. Billy Long (R-Springfield).

The count breaks 25-24-22-8%, suggesting a tight August 2 primary result. Since Mr. Greitens is already beginning to drop after the increased revelations about his personal history were made known, it is likely we will see his downward trend continue. The campaign evolving into a two-way race between Rep. Hartzler and AG Schmitt as we approach August is a distinct possibility.

North Carolina: A statewide North Carolina Republican primary survey finds US Rep. Ted Budd (R-Advance) overtaking ex-Gov. Pat McCrory as the two continue to pull away from the rest of the open GOP field.

According to the Vitale and Associates survey (3/22-23; 504 NC likely Republican primary voters; live interview and interactive voice response system), Rep. Budd draws 32% support as compared to 29% for Mr. McCrory. Trailing well behind are former US Rep. Mark Walker and author Marjorie Eastman at 12 and 2%, respectively. The North Carolina primary, a prelude to one of the cycle’s most important Senate races, is scheduled for May 17.

Oklahoma: In what is the first public survey offering testing the new Sooner State special US Senate election, we see that eastern Oklahoma US Rep. Markwayne Mullin (R-Westville) is the early front runner.

The Amber Integrated survey organization conducted the statewide Oklahoma survey (3/24-27; 455 OK likely Republican primary voters; live interview) and found the Congressman posting 39% support, a full 25 points ahead of his closest challenger, former state House Speaker T. W. Shannon.

Following in single digits are state Sen. Nathan Dahm (R-Broken Arrow), ex-congressional aide Luke Holland, who carries resigning Sen. Jim Inhofe’s (R) endorsement, and former National Security Council official Alex Gray. The poll finds the race breaking 39-14-6-2-1%, respectively, when adding those who support, or say they are leaning toward, a particular candidate.

Pennsylvania: Emerson College released their new statewide survey testing both the Democratic and Republican fields for the open Pennsylvania Senate race. According to the Emerson data (3/26-28; 1,069 PA registered voters; 471 likely Democratic primary voters; 372 likely Republican primary voters; interactive voice response system and online) Lt. Gov. John Fetterman continues to comfortably lead the Democratic primary with 33% preference, while Rep. Conor Lamb (D-Pittsburgh) drops back to just 10%, just ahead of state Rep. Malcolm Kenyatta (D-Philadelphia) who posts 8% support.

Emerson finds the Republicans locked in a tie at the top with former hedge fund CEO Dave McCormick and television doctor Mehmet Oz deadlocked in first place. The two only have 14% support, apiece, however, still suggesting this is anyone’s race.

Former US Ambassador Carla Sands, ex-congressional candidate and Trump campaign activist Kathy Barnette, and former Lt. Governor nominee Jeff Bartos all trail with 6, 6, and 5%, respectively. One possible reason for the low support identification figures for all the GOP candidates could be the low sample size for a large statewide primary electorate.

Utah: A Dan Jones and Associates poll for the Deseret News organization and the Hinckley Institute of Politics (3/9-21; 804 UT registered voters) finds Utah Sen. Mike Lee (R) holding what the pollsters term a “comfortable” lead of 43-19-11% over Independent Evan McMullin and Democrat Kael Weston. There was talk of Democrats trying to unite behind Mr. McMullin and not fielding a nominee of their own to avoid splitting the anti-Lee vote, so we will see if such a move transpires at the Utah Democratic nominating convention scheduled for April 23.

HOUSE

FL-20: New Florida Congresswoman Sheila Cherfilus-McCormick (D-Miramar) won her special election Democratic primary by just five votes over then-Broward County Commissioner Dale Holness. Former Broward County Commissioner Barbara Sharief finished third, some 3,000 votes behind the top two finishers.

It appears we will see a one-on-one re-match between Rep. Cherfilus-McCormick and Mr. Holness. The latter has already announced his candidacy. Ms. Sharief, on the other hand, will launch a Democratic primary challenge to state Senate Minority Leader Lauren Book (D-Plantation), per her candidacy declaration within the last week. The 20th District Democratic primary, scheduled for August 23, will certainly be one to watch.

NE-1: A Los Angeles, CA jury convicted Nebraska US Rep. Jeff Fortenberry (R-Lincoln) of three felony counts late last week. The jury ruled he concealed illegal campaign funds from a foreign national, and for lying to federal investigators. At this time, the Congressman remains on the May 10 Nebraska primary ballot, but has announced that he will resign from the House on March 31. Rep. Fortenberry says he will appeal the verdict. Since filing has closed, it is unclear as to whether the Congressman’s name will be removed from the primary ballot.

State Sen. Mike Flood (R-Norfolk) is the leading GOP candidate in Mr. Fortenberry’s absence. Retired Air Force officer John Glen Weaver, teacher Thireena Yuki, and welder Curtis Huffman round out the Republican congressional field. The consensus Democratic candidate is state Sen. Patty Pansing Brooks (D-Lincoln).

The FiveThirtyEight data organization rates the new NE-1 as R+17, down from R+21. Dave’s Redistricting App calculates an average Republican percentage at 56.3 as compared to the Democratic figure of 40.3%. A special election will be called to fill the balance of the term. Republicans, likely in the person of Mr. Flood, are clear favorites to hold the seat.

REDISTRICTING

Maryland: The Maryland legislature is complying with a state judge’s schedule to return a new less partisan congressional map to the court. Senior Judge Lynne Battaglia last week struck down Maryland’s new congressional map as an “impermissible partisan gerrymander.”

The legislature’s new effort would restore Rep. Andy Harris’ (R-Cockeysville) Eastern Shore 1st District as safely Republican, while also making Rep. David Trone’s (D-Potomac) 6th CD less Democratic. Even the new map, if approved, would likely yield a 7D-1R delegation split, however. Despite the legislature’s compliance with the court, Maryland Attorney General Brian Frosh (D) announced late this week that the state will appeal the judge’s initial decision. Should a higher court overturn this district court ruling, the rejected map would then return.

New York: A New York district judge rejected the 22D-4R congressional map that the legislature and Governor passed under that grounds that the legislative branch did not have the power to assume district creation once the appointed commission members failed to produce maps at the stated deadline.

For now, the judicial move invalidates one of the Democrats’ two best maps in the country. The judge ordered a new map must have “bipartisan support,” but did not define the phrase in terms of numbers of votes. The Democratic legislative leadership immediately pledged to appeal the ruling.

Ohio: It appears the legislature-passed congressional map will be used for the 2022 election. Last week the state Supreme Court indicated that it could not hear complaints against the new map because a final ruling was issued when rejecting the original plan. The court informed the Democratic plaintiffs that they would have to file a new lawsuit. They did so, but the briefing schedule has been set for a period two months after the state’s May 3 primary. Therefore, the new congressional map looks to remain in place for 2022.

GOVERNOR

New York: Resigned New York Governor Andrew Cuomo (D) has not yet ruled out trying to regain his position in this year’s election, and a new Siena College Research Institute poll (3/20-24; 804 NY registered voters; 309 Democratic primary voters) suggests that he might be competitive should he enter the race.

The primary breaks only 38-30-10-7% in the Governor’s favor over Mr. Cuomo, US Rep. Tom Suozzi (D-Glen Cove), and NYC Public Advocate Jumaane Williams, respectively. While 41% of Democrats would either like to see Mr. Cuomo run for Governor as a Democrat (33%) or in the general election as an Independent (8%), a majority of 54% desires that he not run for Governor this year. Without Cuomo on the Democratic ballot, Gov. Hochul would lead Mr. Williams and Rep. Suozzi, 52-12-11%.